Senior Housing Finance Activity: NorthStar, NHI, Ziegler

| July 11, 2013

Three Pillars Senior Living Communities Issued $22.8 Million Bonds

Cain Brothers served as sole underwriter in the issuance of the Three Pillars Senior Living Communities Series 2013 bonds, issued as unenhanced fixed rate bonds and rated “A-” by Fitch on the underlying credit strength of Three Pillars. The $22.82 million bond issuance was used to refund and consolidate all four of Three Pillars’ outstanding debt obligations into a single bond issue.

The Series 2013 bond financing provides Three Pillars with a more stable capital structure by consolidating four outstanding bond issues (two fixed, two variable) into a single fixed rate tax-exempt bond issue with flexible bond covenants and 30-year level debt amortization, at an average yield of 3.99%. The Series 2013 issue enhanced Three Pillars’ risk profile by eliminating interest rate risk and bank renewal risk and improving key credit metrics.

Cain Brothers created an amortization structure that allowed Three Pillars to stretch out its debt structure from 2026 to 2043 and lowered maximum annual debt service by over $566,000—a 26% reduction. 

Three Pillars consists of Wisconsin Masonic Home, Inc., Masonic Center for Health and Rehab, Inc., and Village on the Square, Inc., which together serve as a continuing care retirement community offering independent living, assisted living, and skilled nursing care. In total Three Pillars’ facilities offer 151 independent living units, 95 assisted living units and 85 skilled nursing beds.

Cambridge Arranges $10.2 Million of Loans for Four Nursing Homes

Cambridge Realty Capital Companies reports arranging $10.2 million in HUD Lean loans to Pacifica Nursing and Rehab to refinance four skilled nursing home properties owned by North American Health Care, Inc. in California and Utah.

The fully-amortized loans were arranged for the owner using the HUD Section 232/223(a)(7) funding program and were underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in underwriting FHA-insured HUD loans.

Hymie Barber, National Originations Manager and Managing Director of Catalyst/Cambridge Healthcare Finance in Los Angeles, the company’s West Coast affiliate, led the transaction. Combined, the refinanced loans saved the owner $250,000 in mortgage payments annually, Barber said

The four senior care properties included in the Pacifica portfolio are: Pacifica Nursing and Rehabilitation, a 68-bed skilled care nursing home in Pacifica, Calif. with a $2.08 million loan total; Coventry Court, a 97-bed skilled nursing home in Anaheim, Calif. with a $2.2 million loan total; Garden View, a 97-bed skilled nursing home in Baldwin Park, Calif. with a $2.3 million loan total; and Orchard Park Care Center, an 89-bed skilled care nursing home in Orem, Utah with a $2.5 million loan total. 

Cambridge Provides $14 Million Loan for Chicago Senior Care Center

Cambridge Realty Capital Companies recently announced closing a $14 million loan to refinance Alden Northmoor Rehabilitation and Health Care Center, a 198-bed skilled care nursing home in Chicago.

The fully-amortized, 32-year term loan was arranged for the owner using the HUD Section 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois.

Ziegler Closes $14.8 Million Financing for PRCN

Ziegler recently announced the closing of a $14,840,000 tax-exempt, fixed-rate Presbyterian Retirement Communities Northwest Series 2013 Bond issue. Presbyterian Retirement Communities Northwest is a Washington-based not-for-profit corporation established in 1956 to develop, own, and operate senior housing communities.

The Series 2013 Bonds, along with other available funds, are being issued to refund all of PRCN’s outstanding Series 1999A Bonds; pay or reimburse PRCN for the costs of the acquisition of land and the acquisition, construction, remodeling, renovation, and equipping of existing facilities at Exeter House, Park Shore, and the its corporate headquarters; fund a debt service reserve fund; and pay the costs of issuing the Series 2013 Bonds and refunding the Series 1999 Bonds.

KeyBank Arranges $21 MIllion of Loans for Two Senior Housing Properties

KeyBank Real Estate Capital recently closed two HUD Section 232/223(a)(7) loans totaling $21 million for senior housing properties in Maine and Texas. 

One loan was in the amount of $12.5 million for Williamsburg Village Health Center, a 242-unit skilled nursing facility in Desoto, Texas. Alison Holland, VP of Healthcare Agency Lending for KeyBank, worked with the borrower, Stonegate Senior Living, to complete the refinance. 

The other loan was an $8.5 million refinance for Mid Coast Senior Health Center, a 100-unit skilled nursing and assisted living/memory care community in Brunswick, Maine. Jack Boulder, SVP for Key Bank’s Senior Housing and Healthcare Group, and John Everett, VP of KeyBank’s Commercial Banking team, worked with the borrower, Mid Coast Health Services, on the transaction. 

Love Funding Secures $8.95 Million Refinance for Conn. Health Center

Love Funding recently announced the closing of an $8.95 million loan to refinance Birmingham Health Center, a 120-bed skilled nursing facility in Derby, Conn.

Leonard Lucas, senior director of Love Funding out of the firm’s Boston office, secured the loan through HUD’s Section 232/223(a)(7) loan program, allowing Lucas to lock in a low, fixed interest rate over the remaining term of the original loan and generating significant debt service savings for the borrower.

Birmingham Health Center was built in 1965 and underwent renovations in 2003 and 2004. It is operated by Spectrum Heatlhcare, based in Connecticut. 

Lancaster Pollard Refinances 7 Properties in N.C. and Ill. 

Lancaster Pollard recently assisted Oliver Development with the $7.5 million refinance of Cambridge Hills Assisted Living in Roxboro, N.C.

Cambridge Hills is a 120-bed, 60-unit assisted living community built in 2000. Oliver Development was looking to refinance its existing bank debt and obtain non recourse, fixed-rate financing and generate credit capacity with its bank, and followed Lancaster Pollard’s recommendation to use the HUD Section 232/223(f) program for the refinancing. 

John Randolph out of Lancaster Pollard’s Atlanta office, led the transaction, which refinanced existing debt from multiple bank loans into one loan and established a replacement reserve account along with allowing Oliver Development to benefit from significant debt service savings. 

In another transaction, Lancaster Pollard guided Petersen Health Care through its first HUD financings, recommending the Peoria, Ill.-based company to refinance six of its skilled nursing facilities using the HUD Section 232/223(f) program. 

Petersen Health Care owns and operates more than 90 senior living communities in the Midwest and the company’s leadership was looking to strengthen its financial position by refinance existing variable rate loans from a bank syndicate on the six facilities. 

The company’s new long-term FHA loans eliminate the owner’s personal guarantee from the facilities’ debt structure, appropriately leverages each property’s balance sheet, and provides more than $170,000 in annual debt service savings from a lower interest rate and approximately 30-year blended term and amortization. 

Additionally, Petersen was able to use some of the refinancing proceeds to add $1.6 million to the facilities’ replacement reserve accounts and completed $650,000 in capital improvements in conjunction with the refinance. Steve Kennedy, senior vice president with Lancaster Pollard out of the Columbus, Ohio office, led the transaction. 

Capital One Closes $48 Million Loan for LCS-Westminster Partnership

Capital One Bank announced recently it served as the lead bank and administrative agent for a $48 million, five-year term loan to LCS-Westminster Partnership, IV LLP.

The loan will be used to refinance and expand Sagewood, a newly constructed senior living community located on 47 acres in Phoenix, Ariz. with 278 independent living units, a 48-bed health center with skilled nursing and assisted living units. The loan will also be used to finance the construction of 14 additional casitas to the existing 24, and complete a second dining venue for Sagewood.

LCS-Westminster is a joint venture of The Westminster Funds and LCS, with The Westminster Funds serving as the majority equity partner for LCS-Westminster developed projects. 

Love Funding Secures $28 Million Refi for Two Miami SNFs

Love Funding recently announced the closing of two loan refinancings totaling $28 million for two skilled nursing facilities that are part of the Plaza Health Network.

Arch Plaza Nursing and Rehabilitation Center and Ponce Plaza Nursing and Rehabilitation Center are among nine senior care facilities in the Miami area that are part of the Plaza Health Network, owned by independent affiliates of the Hebrew Homes Health Network, a not-for-profit organization. 

Love Funding’s Washington, D.C. office secured the loan through the HUD Section 232/223(f) LEAN program, which enabled the borrower to lock in a low fixed-rate non-recourse loan for a 30-year term. 

Love Funding Closes $5.5 Million Construction Loan for Ill. ALF

Love Funding recently announced closing a $5.51 million construction-to-permanent loan for Cedarhurst of Edwardsville, a new assisted living community under development in Edwardsville, Ill.

Robyn Cunningham, a senior director out of Love Funding’s St. Louis office, together with Director Adrian Hartman, secured the financing through the HUD Section 232 new construction loan program. The program enabled the borrowers to lock in a fixed, low-rate, non-recourse loan for a 40-year term once construction is completed.

Cedarhurst at Edwardsville will offer 54 memory care beds and is being developed by Metro Asset Group LLC. 

National Health Investors Announces $370 Million Credit Facilities

National Health Investors (NYSE:NHI) announced recently it has entered into amended $370 million senior unsecured credit facilities including a $250 million revolving credit facility and $120 million of 7-year term loans.

The revolving credit facility matures in five years, including an embedded 1-year extension option. The term loans mature in seven years. At closing, the new facilities replaced smaller credit facilities that originated on May 1, 2012 and provided for $320 million of total committed facilities. 

“We appreciate the considerable commitments offered by the banks participating in this credit facility, which result in low borrowing costs, extended loan maturities and additional borrowing capacity that offers substantial support to NHI’s growth,” said Justin Hutchens, president and CEO of NHI. 

Wells Fargo Securities, LLC, BMO Capital Markets and KeyBank National Association were joint lead arrangers for the facilities and arranged a syndicate that included nine banks. BMO Capital Markets and Wells Fargo Securities, LLC were joint lead arrangers for the $120 million 7-year term loan facility. Other banks in the credit facility are Bank of America, Regions Bank, Pinnacle National Bank, United Community Bank, Stifel Bank & Trust and UMB Bank.

The terms of the amended credit facility can be seen here.

Health Care REIT Announces Continued Conversion Option for Senior Notes

Health Care REIT (NYSE:HCN) on July 1 notified holders of its 3.00% Convertible Senior Notes due 2029 of their continued ability to convert all or a portion of their notes into cash and, if applicable, shares of the company’s common stock through the close of business on Sept. 30, 2013.

The notes remain convertible because the closing price of shares of HCN’s common stock, for at least 20 trading days during the 30 consecutive trading-day period ending on June 28, 2013, was greater than 120% of the conversion price in effect on that date.

More details can be viewed here.  

NorthStar Realty Finances Completes $1.1 Billion Offering for Non-Traded REIT

NorthStar Realty Finance Corp. (NYSE: NRF) announced on July 1 that NorthStar Real Estate Income Trust, Inc. successfully completed its primary offering having raised $1.1 billion in aggregate gross offering proceeds, including $528 million year-to-date, through its captive broker-dealer, NorthStar Realty Securities, LLC. 

“We are extremely pleased with the successful completion of our first sponsored non-traded REIT and are looking forward to capitalizing on this strong momentum with our $2.75 billion of additional non-traded products currently being offered,” said David T. Hamamoto, chairman and CEO. “These programs are expected to generate substantial long-term fee income for our shareholders and the completion of NorthStar Income is a strong testament to the growth of our asset management business and our diverse and broad commercial real estate platform.”

Capital One to Hold $100 Million Loan for Formation Capital

Capital One Bank acted as a joint book runner on a $213.5 million secured term loan to FC Ranger Acquisition, LLC, to finance the acquisition of a portfolio of 26 senior housing properties. 

Formation Capital is the sponsor behind FC Ranger Acquisition, LLC and partnered with SAFANAD for the acquisition. 

Capital One Bank will hold $100 million of the term loan and will also provide deposit and treasury management services to the facilities. 

Caremerge Raises $2.1 Million for Business Expansion

Caremerge, a Chicago-based health tech provider of mobile and web communication and care coordination solutions, has raised $2.1 million in a Series A Funding.

The company’s HIPAA-compliant and secure mobile/web apps allow senior care providers to quickly capture, chart, and share seniors’ information with families and outside stakeholders such as ACOs, MCOs, hospitals, and physicians.

“Today, long term care is challenged with increasing regulations, high staff turnover, reduced reimbursements and lower profit margins,” says Asif Khan, the founder of Caremerge. “Most people believe that the long-term care industry is slow to adopting technology. At caremerge, we beg to differ and believe that until now technology hasn’t adopted to the unique challenges and workflows of long-term care.”

Grazyna Kulczyk of Poland, an entrepreneur, real-estate developer, and art collector, led the investment, with participation from another Switzerland-based investor.

Athena Heritage, a Swiss Financial Management company, provided advisory services to the investors, and Privity FZ LLE, a U.A.E.-based company, also played a key role in the transaction. 

Caremerge was founded in 2010 and was selected by GE and StartupHealth in a Health Growth Acceleration program in April 2013. 


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Category: Finance and Development, REIT, Senior Housing, Senior Living

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