Senior Housing Finance Activity: Berkadia, Lancaster Pollard, Oak Grove, HJ Sims

| January 31, 2013

Berkadia Originates $14.4 Million Acquisition Loan for Chevalier

Berkadia Commercial Mortgage LLC recently originated a $14.4 million, three-year floating rate acquisition loan to finance Chevalier International Holdings Limited’s acquisition of an 18-property portfolio of assisted living communities operated by Meridian Senior Living.

Christopher Fenton, vice president at Berkadia, arranged the loan through the firm’s proprietary lending group and worked with fellow lender GE Capital Healthcare Financial Services to help finance the acquisition. In the process, they retained the right to refinance the full $89.5 million loan through HUD.

The loan closed on Dec. 21, 2012.

Oak Grove Originates $4.2 Million Loan for Ala. Senior Care Community

Oak Grove Capital recently announced the closing of a $4,192,000 loan for Country Cottage in Montgomery, an assisted living community in Montgomery, Ala. The loan closed on Dec. 17, 2012 and was originated through HUD’s Section 232/223(f) loan program. 

Centerline Capital Refinances Wisc. Senior Housing Property with $4.05 Million Loan

Centerline Capital Group, a subsidiary of Centerline Holding Company, announced on Tuesday it had provided a $4.05 million Fannie Mae Affordable Preservation loan facility to refinance a senior housing property in Stoughton, Wisc.

Rosewood Apartments is an age-restricted affordable senior housing complex with 90 units. At closing, the property was outside of the 15-year tax credit compliance period, but within the 15-year extended-use compliance period. Portions of the proceeds from the cash out refinancing will be used to pay off existing hard debt and unsecured debt held by Centerline Capital Group. 

Stoughton Senior Housing Limited Partnership is the borrower. 

HJ Sims Advices Senior Living Provider on $120 Million Debt Restructuring

HJ Sims provided advisory services to Pacific Retirement Services, a Medford, Ore.-based senior living organization that owns, operates, and/or manages more than 50 communities primarily on the West Coast to restructure construction debt for a Seattle, Wash. continuing care retirement community.

Construction and development of Mirabella, the downtown Seattle CCRC, be can in 2006 and was financed with $256 million in tax-exempt variable rate bonds backed by a letter of credit issued by HSH Nordbank AG with participation from five other banks.

Even though it was being developed during the economic downturn, nearly 60% of the community’s 290 independent living units were filled within Mirabella’s first year of operation, with the first residents moving in by December 2008.

However, the fill-up pace wasn’t sustainable as Seattle real estate values were declining sharply and there was a spike in local unemployment, says HJ Sims, and the community needed to make “significant changes” to its entrance fee pricing structure. Also, because units were selling slower than originally expected, more working capital was needed compared to what had been budgeted for the initial lease-up timeline.

These and other factors led to restructuring the community’s debt in December 2012. Beginning in mid-2012, HJ Sims began negotiations on a fixed-rate bond financing to provide Mirabella with a stable, long-term capital structure and repay the lending banks a “significant” portion of the existing debt.

The final, agreed-upon structure repaid the banks about 74% of the outstanding debt at the time of the December refinancing, in addition to the $138 million that was repaid to that point with initial entrance fees. The banks received $30.8 million in long-term subordinated notes for the remaining amount of the existing debt. 

Lancaster Pollard Obtains $10.9 Million Loan for Tex. Senior Care Facility

Lancaster Pollard recently obtained a $10.9 million loan to refinance all the outstanding debt of a Texas nursing home and assisted living facility. 

The financing was secured through the FHA Section 232/223(f) insured loan program and has a 35-year term and low interest rate. Lancaster Pollard structured the non-recourse loan so that no cash was required at closing, and used its trading desk’s capabilities to incorporate a prepayment structure with no penalties after a five-year period, allowing ownership to maintain flexibility for future business decisions.

Bill Wilson, senior vice president and regional manager of Lancaster Pollard’s Lawrence, Kan. office, led the transaction.

Lancaster Pollard Closes $4.8 Million Refinancing for Ga. Senior Apartments

Lancaster Pollard recently closed a $4.8 million loan to refinance Cathedral Towers, a Section 202 property in Atlanta, Ga., led by Gerald Swiacki, senior vice president and regional manager out of the firm’s Atlanta office.

The loan was insured by the FHA Section 232/223(f) program, and the transaction provides for more than $1 million in repairs and improvements along with paying the organization a developer’s fee of approximately $650,000. Lancaster Pollard also assisted Cathedral Towers in obtaining a rent increase, as the project had been operating with below-market rents. 

The firm was also able to avoid the new FHA requirements for Section 202 refinance projects for a 20-year extension of the affordable housing use agreement.


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Category: Acquisitions, Finance and Development, Senior Housing

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