Senior Housing Finance Activity: Lancaster Pollard, Prudential Financial and More

Avision Young Secures $8.75M to Recapitalize Manhattan Memory Care Facility

Avison Young’s New York City-based Debt, Equity & Loan Sales team recently sourced $8.75 million of preferred equity to recapitalize Manhattan’s only dedicated memory care facility, Upper East Side Senior Residence.

The Avison Young team of Principal Justin Piasecki, Vice-President Aaron Iskowitz and Associate Peter Rotchford sourced the preferred equity from American Realty Capital for the property.

As the sole dedicated memory care facility in the high barrier-to-entry Manhattan market, Upper East Side Senior Residence offered a unique investment opportunity, the company said, which the Avison Young team was able to capitalize on to identity a preferred equity investor.

Lancaster Pollard Refinances The Bluffs Senior Community in Michigan

Arcadia Communities, a Kentucky-based senior living operator, engaged Lancaster Pollard to refinance its existing variable-rate debt on The Bluffs Senior Community in Houghton, Michigan.

The property consists of a 66-unit, assisted living facility and 17 independent living cottage units. The firm recommended refinancing via FHA’s Section 232/223(f) program. As a result, Arcadia Communities obtained fixed-rate debt at just over 4% for 35 years. In addition, it was able to fund about $5,000 in current repairs on the property and place about $175,000 into a replacement reserve fund for future repairs.

The transaction was managed by Vice President Chris Blanda, based out of Lancaster Pollard’s headquarters in Columbus, Ohio.

Lancaster Pollard Finances Ill. Supportive Living Facility Using USDA 538 Program

Built in 2011, Heritage Woods of Charleston is a 68-unit supportive living facility (SLF) located in Charleston, Ill., developed by Yost Management Company, LLC, and managed by BMA Management, Ltd.

The construction of Heritage Woods of Charleston was financed using a guaranteed loan via the USDA Sec. 538 program in conjunction with 9% low-income housing tax credits (LIHTCs), a structure typically seen in affordable housing transactions. Steve Kennedy, managing director with Lancaster Pollard, led the transaction.

Heritage Woods had access to this combination of funding structures due to its rural location and its affordability component, as a SLF is an assisted living facility that accepts Medicaid waivers and was eligible for LIHTCs and the USDA Sec. 538 program, both of which are not typically used for the financing of seniors housing properties.

The firm purchased the 538 loan from the existing USDA lender, a non-GNMA approved community bank, and refinanced it through the sale of a GNMA security, a unique financing solution typically not offered by commercial banks nor many lenders.

Without any equity requirement from the borrower, the successful transaction reduced the interest rate by more than 150 basis points and extended the term and amortization by 13 years, generating more than $60,000 of annual debt service savings.

Additionally, the refinance eliminated personal recourse, especially rare for a project that was only constructed two years earlier, the company said.

Lancaster Pollard Refinances Four Affordable Seniors Housing Communities in California

Rural Communities Housing Development Corporation (RCHDC) was seeking to refinance four of its affordable seniors housing Sec. 202 properties: Highlands Village, Lakeview Housing, Jack Simpson Apartments and North Shore Villas. RCHDC owns and provides management services for several seniors housing properties in rural northern California.

The primary objectives of the refinance were to provide for substantial renovations to improve the facilities, increase the replacement reserve accounts for the long term well-being of the facilities and to earn a developer fee for RCHDC, Lancaster Pollard said.

Lancaster Pollard recommended using the FHA Section 223(f) program to refinance the four properties.

With a total loan amount of $8.5 million, the refinance resulted in more than $66,000 in total annual debt service savings, nearly $1.9 million in total funds for repairs, just over $553,000 in increased replacement reserves and nearly $969,000 in potential developer fees. Jason Dopoulos, vice president in Lancaster’s Pollard’s Los Angeles office, led the transaction.

The transaction will allow for owner-elected repairs and substantial renovations that will extend the economic and physical life of the facilities. Major repair items include kitchen renovations, new roofs, new unit flooring and new windows.

Prudential Financial Provides $15M to Refinance Three Senior Housing HUD Loans

Prudential Mortgage Capital Company, the commercial mortgage lending business of Prudential Financial, Inc. (NYSE: PRU), recently provided about $15 million to Rehabilitation Associates Inc. to refinance three existing HUD loans for Lydia Taft House, Pope Nursing Home and Timothy Daniels House.

A $5.6 million loan refinanced Lydia Taft House, a 53-bed skilled nursing facility located in Uxbridge, Mass. A $3.2 million loan refinanced Pope Nursing Home, a 49-bed skilled nursing facility located in Weymouth, Mass, and a $6.3 million loan refinanced Timothy Daniels House, a 40-bed skilled nursing facility located in Holliston, Mass.

All three loans, which were refinanced through HUD’s 232/223 a(7) program, were originated and underwritten by Prudential Mortgage Capital Company’s senior housing team, which provides financing for health care, senior living properties, including those specializing in independent living, assisted living and memory care. Casey Moore, a principal with Prudential Mortgage Capital Company, led the transactions.

Rehabilitation Associates, Inc, owns and manages nine small, home-like rehabilitation and skilled nursing centers, as well as an outpatient rehabilitation center, with all of their facilities located within eastern Massachusetts.

Oak Grove Capital Arranges $9M Financing for N.C. Skilled Nursing Acquisition

Oak Grove Capital, a national provider of real estate financial services, recently arranged an $8.9 million bridge loan to facilitate the acquisition of Hugh Chatham Nursing Center, a 127-bed skilled nursing and assisted living facility in Elkin, N.C. The high-leverage balance sheet loan was provided by a correspondent lender with whom Oak Grove Capital has a long-standing relationship, according to the company.

The borrower, an affiliate of Cary-based Century Care Management, plans to complete capital improvements and execute a business plan to improve property performance. Given the unique circumstances, Oak Grove Capital structured the debt using outside financing to ensure the borrower’s specific goals and objectives were met. Upon stabilization at the new operating levels, the borrower will seek to refinance the bridge loan through an FHA/HUD 232/223(f) permanent loan provided by Oak Grove Capital.

Joel Mendes, senior vice president in Oak Grove Capital’s Seniors Housing and Healthcare team, and lead banker on the financing, said in a news release, “when taking into account all of our customer’s needs for this particular transaction, we determined that an outside capital partner was a perfect match. We made this connection, and helped structure the debt, without taking any fees.”

Bob Gilliam, CEO of Century Care, said in the same release, “We have a great relationship with Oak Grove Capital and they were my first phone call to secure the non-traditional financing needed to satisfy our goals with this acquisition. Oak Grove delivered for us quickly. We are excited for the opportunity to further the facility’s great reputation in Elkin and to serve current and future residents.”

Ziegler Closes $3.1M Refinancing for Oregon ALF

Specialty investment bank Ziegler recently announced the successful closing of the $3.1 million refinancing of Corvallis Caring Place (CCP), managed by Mennonite Management Services, Inc., the management company affiliated with Mennonite Services Northwest.

CCP opened in 2002 as a 42-unit nonprofit assisted living residence located in Corvallis, Oregon.

CCP had approximately $2.5 million in outstanding bank debt that had a balloon payment coming due in March 2015. Ziegler Senior Living Finance along with Ziegler Financing Corporation (ZFC), the FHA-insured mortgage lending arm of Ziegler, recommended refinancing the current debt with the FHA Section 232/223(f) program to allow CCP to lower its debt service and eliminate bank-related financing risks by locking in a 35-year long-term, low interest rate.

Ziegler’s worked to help recapitalize the facility approximately 12 years after construction and provided a foundation for future growth. In addition, the financing capitalized a planned repair program for approximately $240,000 to rehabilitate various aspects of the building including a new roof, updating the common areas, refurnishing dining room furniture, and making other miscellaneous repairs, as well as lowering the annual debt service costs.

“This refinancing represents a significant step in ZFC’s utilization of the HUD 232 LEAN program to aid not-for-profit borrowers in taking advantage of the low, fixed interest rates available in today’s market.” said Bill Mulligan, President of ZFC in a news release. “We were very pleased to work with Mennonite Management Services and the Board to complete this transaction.”

Written by Cassandra Dowell