Senior Housing Finance Activity: Grandbridge, Ziegler

AdCare Health Systems Leases 10 Ark. Skilled Nursing Facilitates 

Long-term care provider AdCare Health Systems, Inc. (NYSE MKT: ADK), (NYSE MKT: ADK.PRA), as part of its ongoing strategic plan to transition from an owner and operator of healthcare facilities to a healthcare property holding and leasing company, signed an agreement with Aria Health Group, LLC operators to lease 10 of its skilled nursing facilities in Arkansas.

The lease on the 10 facilities in Arkansas will be effective on March 1, 2015, when all licenses and other approvals required by the State of Arkansas are expected to be obtained by the operator.

Under the terms of the triple net lease agreements, the lessees of the facilities will be responsible for day-to-day management, ongoing maintenance and facility improvements for the duration of the leases.

The initial term of the leases is five years with a five year renewal option. The annual rent in the first year will total $6.5 million and will escalate at 2% each year through the initial term and 3% per year upon renewal.

“We are pleased and excited to work with a new operating partner in Arkansas,” said Bill McBride, AdCare’s president and CEO, in a statement. “This transaction represents another significant step forward in the execution of our strategic plan of transitioning to a healthcare property holding and leasing company.”

Management currently expects that a majority of the remaining facilities will be leased or subleased, subject to approval from landlord, lenders, regulators, and/or the U.S. Department of Housing and Urban Development (HUD), by the end of the first quarter of 2015.

Aria Health Group, LLC, currently operates six facilities in Arkansas, and is a full-service management company focused on the hospice, long-term care, and senior housing sectors of the health care industry.

Since the board approved the strategic plan to transition the company’s business from an owner and operator of healthcare facilities to a healthcare facilities holding and leasing company, the company has entered into agreements to lease or sublease 24 of its 37 healthcare facilities. Of these 24 healthcare facilities, eight are completed transactions.

The company expects to complete transfer of operations on the 10 Aria buildings during the first quarter of 2015.The remaining six healthcare facilities are expected to close during the first quarter of 2015 when financing approval is obtained from HUD.

Grandbridge Facilitates $21M Acquisition for Ariz. Retirement Resort 

The Atlanta-based Seniors Housing and Healthcare Finance team of Grandbridge Real Estate Capital recently closed a $21,200,000 fixed rate nonrecourse loan secured by Thunderbird Retirement Resort, a 345-unit seniors housing community located in Phoenix, Ariz.

Funding for the acquisition loan was provided through BB&T Real Estate Funding’s Structured Loan Program, Grandbridge’s exclusive balance sheet lending platform focused on interim bridge first mortgage and construction loans, and featured a three-year term with a two one-year extensions.

The initial term is interest-only with amortization beginning in the extensions. The loan includes approximately $5,000,000 for renovations and repurposing.

Senior Vice President Richard Thomas and Vice President Meredith Davis originated the transaction.

“The loan closed 28 days (including Thanksgiving) after the term sheet was issued,” Thomas said in a statement.

“We look forward to working with Grandbridge again as we manage ROC Seniors’ investment in over $1.0 billion of seniors housing in the next 36 months,” said Phil Anderson, ROC Seniors Housing Fund Manager Chief Investment Officer.

Located in the Phoenix MSA, the community will provide for aging in place with a mix of independent living, assisted living and memory care and will offer residents numerous amenities that include an on-site salon, spa with massage services, library, fitness classes, private dining room and additional common room amenities.

Ziegler Closes $33M Financing for La. CCRC

Ziegler, a specialty investment bank, closed $33,080,000 non-rated, tax-exempt, fixed-rate Series 2014  Bonds for Christwood.

Christwood, a Louisiana nonprofit corporation, was incorporated in 1991 and owns and operates a “Type B” continuing care retirement community known as Christwood.

Located on approximately 125 acres in Covington, La., Christwood opened in May of 1996. Covington is a suburb of New Orleans, located approximately 40 miles from downtown New Orleans.

Christwood consists of 161 independent living residences, of which there are 143 apartments and 18  cottages, 34 assisted living units, 30 skilled nursing beds, and related common areas, amenities and  recreational areas.

Since 1999, the Christwood has engaged Life Care Services, LLC as its management company.

The Series 2014 Bonds will be used to refund the outstanding Series 1998 Bonds, refund an outstanding bank loan, pay a termination fee on an interest rate swap associated with the bank loan, provide $6 million towards campus improvements including the construction of a 28-unit memory care facility, fund a debt service reserve fund and pay a portion of the costs of issuance.

“By capitalizing on the reduced interest expense from the refinancing component and extending the final maturity by five years, we were able to obtain the $6 million in required funding for Christwood’s memory care expansion without increasing annual debt service from prior levels,” said Brandon Powell, director in Ziegler’s senior living practice, in a statement.

Berkely Point Facilitates $15M Refinance of Ill. Senior Housing Community 

Berkeley Point Capital closed the refinancing of Cedarhurst of Shiloh, a 95-unit seniors housing community located in Shiloh, Ill. The cash-out refinancing was structured as a cash-out fixed rate Freddie Mac 10-year loan term with a period of interest only.

Cedarhurst of Shiloh opened in 2011 and consists of one three-story assisted living and memory care building, as well as two independent living cottages containing two independent living units each. The community totals 91 units.

The owners are adding two new cottages, which Berkeley Point Capital and Freddie Mac were able to incorporate into the loan structure.

“The community and market will be further benefited by St. Elizabeth’s Hospital, which plans to build a $300 million, 114-bed replacement facility in nearby O’Fallon, Ill., in addition to Memorial Hospital’s current construction of a 94-bed hospital located within close proximity to Cedarhurst of Shiloh,” the company said in a statement.

Doug Harper, director, led the Berkeley Point team structuring the Freddie Mac financing.

“This Freddie Mac loan enabled the owners to take advantage of a low fixed rate environment to significantly lower their cost of capital, while at the same time it provided cash-out proceeds to assist in their future development plans,” Harper said.

Lancaster Pollard Closes $37M in Loans For Non-traded REIT

In the fourth quarter of 2014, Lancaster Pollard closed seven transactions for a public, non-traded REIT.

The seven loans, totaling $36.9 million, are insured by the FHA Sec. 232/223(f) program and are for skilled nursing and assisted living facilities in Oregon and North Carolina.

The REIT had recently purchased the seven facilities using interim financing and was seeking a permanent financing solution.

“Traditionally, REITs have had difficulty obtaining FHA financing due to discrepancies between FHA requirements and REIT characteristics with regards to income distributions,” Lancaster Pollard said in a statement. “However, due to recent changes to the HUD LEAN handbook, as well as Lancaster Pollard’s extensive knowledge of FHA financing, the firm was able to successfully refinance the interim debt into a permanent, low interest rate, nonrecourse structure.”

Jason Dopoulos, located in Lancaster Pollard’s Southern California office, led the transactions for Lancaster Pollard.

Lancaster Pollard Refinances N.Y. Skilled Nursing Facility For $21M

Lancaster Pollard refinanced a 200-bed skilled nursing facility in Suffolk County, N.Y., with a $21 million loan insured pursuant to the FHA Sec. 232/223(f) program.

The nonrecourse loan carries a 30-year term and low fixed interest rate.

Tom Grywalski, health care banker covering New York, led the transaction for Lancaster Pollard.

Lancaster Pollard Refinances N.J. Assisted Living, Memory Care Community For $9M

Lancaster Pollard refinanced a 51-unit assisted living and memory care facility located in Branchville, N.J., with a $9 million loan insured pursuant to the FHA Sec. 232/223(f) program.

The nonrecourse loan carries a 35-year term and low interest rate.

Tom Grywalski, health care banker covering New York, led the transaction for Lancaster Pollard.

Oxford Finance Provides $7.4M Debt Financing For N.Y Nursing and Rehab Center

Oxford Finance LLC, a specialty finance firm that provides senior debt to life sciences and healthcare services companies, closed a $7.4 million senior secured term loan with Vita Healthcare Group LLC.

The funds will be used for the purchase of Diamond Hill Nursing and Rehabilitation Center in Troy, New York.

“Oxford is pleased to have the opportunity to provide financing to Vita Healthcare for the continued expansion of its portfolio of skilled nursing facilities,” said Christopher A. Herr, managing director for Oxford Finance, in a statement.

Berkeley Point Refinances Ariz. Alzheimer’s Care Community For $8M

Berkeley Point Capital closed the refinancing of Copper Canyon Alzheimer’s Special Care Center, a 66-bed Alzheimer’s care community located in Tucson, Ariz.

The cash-out refinancing was structured as a fixed rate Fannie Mae 10-year loan term with a period of interest only.

Copper Canyon Alzheimer’s Special Care Center opened in 2013 and is operated by JEA Senior Living.

“While a recently constructed community, JEA Senior Living was able to quickly lease-up the community and stabilize operations,” Berkeley Point said in a statement, adding that this enabled owners to be able to take advantage of the non-recourse permanent financing agency debt market and refinance the existing construction loan.

“It was also important to the owners to be able to close the loan by year end,” Berkeley said, adding that Berkeley Point Capital achieved a loan closing within 45 days of loan application and met the borrower’s timing request.

Doug Harper, director, led the Berkeley Point team to structure the Fannie Mae fixed rate financing.

Ziegler Closes $40M Sale of Wis. Senior Housing Community 

Ziegler, a specialty investment bank, closed the $40,430,000 sale of Coventry Village on behalf of Harris Webber, Ltd., a regional senior housing operator.

Coventry Village is a 176-unit senior housing community offering independent living, assisted living, and memory care services in Madison, Wis. In addition, there are 46 owner-occupied condominiums with an opportunity to build an additional 11 units.

Coventry Village was developed by Harris Webber, Ltd., based in Libertyville, Ill.

Built from 1999 to 2004, the community represents one of the newer, age-restricted, senior living  developments in Wisconsin. Positioned as a high-end senior living alternative, the community was built to the highest construction standards, with large unit sizes and incorporates superior finishes and amenities.

Occupancy was stabilized and the community had experienced strong cash flow margins over the previous three fiscal years. With a strong reputation and expansion potential, the community represented a unique opportunity to acquire an established, high-end senior living community in Wisconsin.

The Ziegler Corporate Finance team worked closely with the senior management team to market the community to logical buyers assist with negotiating their terms, coordinate due diligence and bring the transaction to a successful closing, Ziegler said in a statement.

Senior Housing Properties Trust purchased the community and Five Star Quality Care will operate.

Written by Cassandra Dowell