Senior Housing Finance Activity: HHC Finance, Berkadia, Beech Street

| August 27, 2013

Housing & Healthcare Finance Closes $160 Million of Loans

Housing & Healthcare Finance has closed $159,414,800 worth of HUD loans in the past two months in 12 transactions across six states. Eleven of the loans were for skilled nursing facilities, located in Missouri, Illinois, New York, Ohio, New Jersey, and Florida, while the twelfth transaction was a HUD new construction loan for an assisted living community in New York. The average interest rate on all the transactions was in the mid-3s. 

The loans range in size from a $6.6 million skilled nursing facility loan in Ohio to a $30.8 million loan for a New York skilled nursing facility.

The $29 million new construction loan in New York is noteworthy as it will be the only assisted living community in Scarsdale. The planned facility went through years of negotiations with the various municipal entities involved, says HHCF’s director of business development Charles Dabich, along with conservation easements that had to be resolved. Construction has begun on the project, which will have 138 beds in 115 units. 

Town and Country Manor Closes $7.7 Million Bonds

Cain Brothers served as placement agent for the $7.7 million Town and Country Manor Series 2013 Tax-exempt Bonds that were structured as a direct bank purchase. Town and Country Manor, a nonprofit CCRC in Santa Ana, Calif., used the proceeds of the direct purchase to refinance its existing Series 1990 variable rate demand bonds that were backed by an expiring letter of credit.

The transaction involved a tender and redemption of $8.7 million Series 1990 Bonds, as well as the release of the Series 1990 debt service reserve fund to fund the reduction in the outstanding debt and a new debt service reserve fund and the issuance of Series 2013 Bonds. Cain Brothers worked with Town and Country Manor to secure release of the previous trustee-held debt service reserve fund, establishment of new non-trustee held debt service reserve fund, and favorable five-year principal amortization.

The Series 2013 Bonds have a final maturity of 2038 compared to the 2020 final maturity of the Series 1990 Bonds, and the underlying documents reflect current market terms and conditions, which allow the interest rate and principal to be reset in future years without reissuance of the Series 2013 Bonds. The new capital structure enables Town and Country Manor to maintain its variable rate capital structure, which is currently resulting in an annualized cost of capital of less than 2%.

Ziegler Closes $35.8 Million Financing for Magnolia Manor

Ziegler recently announced the closing of the Series 2013A $35,840,000 tax-exempt, non-rated, fixed-rate Bonds for Magnolia Manor Obligated Group. Magnolia Manor, Inc. is a Georgia not-for-profit which is affiliated with the South Georgia Conference of the United Methodist Church.

The Obligated Group for the Series 2013A Bonds consists of the Corporation and Magnolia Manor of Columbus, Inc. The Bond proceeds together with other sources of funds will be used to refund the outstanding Series 1999 Bonds and two corporate loans. The Series 2013A Bonds are tax-exempt, non-rated, fixed-rate bonds with a 30-year final maturity.

“The Series 2013A financing enables Magnolia Manor to secure permanent financing for a recent acquisition and pursue strategic opportunities than will further enhance the strength of the organization,” said Tad Melton, Director in Ziegler’s Senior Living practice.

Berkadia Originates $172 Million Loan for 4 Brookdale Properties

Berkadia Commercial Mortgage LLC recently originated $172.1 million in financing for a portfolio of four Brookdale Senior Living senior living communities  Vice Presidents Christopher Fenton and Heidi Brunet worked with the borrower to refinance the maturing portfolio through Freddie Mac’s Capital Markets Execution (CME) program.

The individual loans were structured as seven- and 10-year adjustable-rate mortgages with 30-year amortization schedules and loan-to-value ratios ranging between 59-75 percent. The four communities, located across Illinois, Missouri, New York and Ohio, consist of 716 independent units and 157 assisted living units, with an average occupancy of 92% at the time of closing.

Ziegler Closes $22 Million BHI Senior Living Financing

Ziegler recently closed the $22,015,000 tax-exempt, fixed-rate BHI Senior Living, Inc. Series 2013A Bonds. BHI Senior Living, Inc. is a not-for-profit corporation and along with the BHI Foundation, Inc. is a member of the Obligated Group.

BHI Senior Living, Inc. owns and operates three continuing care retirement communities  and is the managing agent for two separately incorporated HUD subsidized apartment complexes for older adults and those requiring the features of a specially designed living unit. 

Proceeds from the Series 2013A Bonds will be used to fund various capital projects estimated to cost approximately $18,700,000, plus a portion of the interest on the bonds during the construction period, a Series 2013A Debt Service Reserve Fund and costs of issuance.

The capital projects span all three campuses and consist of 36 new ILUs, 36 new memory care units, demolition costs, architectural drawings for possible expansion projects, and various other renovation and infrastructure projects. Over time, the new projects are expected to add cash to the balance sheet through reimbursement for the payment of prior capital expenditures and entrance fees on the new units. New projects will also generate incremental revenues which should be accretive over time to the debt service coverage ratio and other performance benchmarks.

Love Funding Closes $20 Million of Loans for Two Texas SNFs

Love Funding recently announced the closing of loan refinancings totaling $19.3 million for two Texas skilled nursing facilities.

The loans, originated through the HUD Section 232/223(f) LEAN program, were for Park Valley Inn, a 160-bed facility in Round Rock, and Sundance Inn Health Center, a 128-bed facility in New Braunfels, Texas. 

Leonard Lucas, a senior director out of Love Funding’s Boston office, secured the loans and locked in a low, fixed interest rate for a 25-year term, generating “significant” debt service savings for the borrower. 

Beech Street Closes $55.3 Million of Loans to Refinance SNF Portfolio 

Beech Street Capital, LLC recently announced the closing of $55.3 million of loans to refinance an 808-bed portfolio of eight skilled nursing facilities in Indiana. 

Joshua Rosen, executive vice president of Beech Street, led the transaction out of the firm’s Chicago office for the borrower, Infinity Healthcare Management, LLC. The loans were originated through the HUD Section 232/223(a)(7) program and were able to lock in an attractive interest rate with 25 or 30-year terms, thereby providing significant debt service savings. 


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Category: Finance, Senior Housing

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