Senior Housing Finance Activity: Love Funding, Capital Funding Group

Love Funding Secures $26.3 Million Loan Senior Apartment Community in Texas

Washington, D.C.-based Love Funding, a provider of FHA multifamily, health care and affordable financing, recently closed a $26.3 million loan for the construction and permanent financing of Overlook at Prestonwood, a senior apartment community with 183 age-restricted apartments currently being developed in Carrollton, Texas. 

Overlook at Prestonwood will consist of one four-story building and five stand-alone cottages. The community’s one-, two- and three-bedroom units will feature low energy windows, ENERGY STAR appliances and additional efficient utility systems. 

Love Funding Senior Director Laura Saull-Smith secured the financing through the U.S. Department of Housing and Urban Development’s (HUD) 221(d)(4) loan insurance program. The HUD program provided the development team with non-recourse, low-rate financing for the duration of construction and for a subsequent 40-year term. Warsaw Realty Group President James Sawyer brought the transaction to Love.

The principals of the ownership group include Luke Harry, Charlie Nicholas, Steven Rumsey and Chris Willhite. Willhite helped arrange for the zoning/entitlement approvals and the land acquisition. NE Construction will serve as the general contractor, and the management agent chosen for the marketing and lease-up of this project is Capstone. Brian Rumsey, president of Cross Architects, will serve as the project’s architect of record.

Arcadia Communities Secures $12.1 Million Construction Financing Through Lancaster Pollard’s Propero Equity Structure

Louisville-based senior housing owner/operator Arcadia Communities received about $12.1 million in financing for the construction of a 79-unit independent living, assisted living and memory care community in Clarksville, Tennessee, called Arcadia Senior Living-Clarksville.

Arcadia decided that Lancaster Pollard’s Propero structure provided an equity solution that enabled them to minimize the amount of upfront capital and offered a clear path to ownership. The transaction closed in July 2016.

Arcadia, a repeat client of Lancaster Pollard and its Propero Seniors Housing Equity Fund, was established in 2008 and owns and operates three seniors housing and care properties in Louisiana, Kentucky, and Michigan. 

With the first fund—Propero Seniors Housing Equity Fund I—fully invested in early 2016, Lancaster Pollard raised its second fund—Propero Seniors Housing Equity Fund II—in April, 2016. Fund II, in terms of equity commitments, is about twice the size of the first fund. Chris Mauger led the transaction for Propero and Chris Blanda served as the lead for Lancaster Pollard’s investment banking platform.

Ziegler Prices $130 Million Presbyterian Retirement Communities Northwest Financing

Ziegler, a Chicago-based specialty investment bank, announced the successful pricing of the $130.29 million, Fitch rated ‘BB+’, fixed-rate Series 2016A&B Bond issue for Presbyterian Retirement Communities Northwest (PRCN). The issue is slated to close on October 5, 2016. PRCN is a Washington-based nonprofit corporation that was founded in 1956 to own, operate and develop senior living communities. PRCN currently owns or controls three communities, all located in Seattle.

Proceeds of Series 2016A Bonds will be utilized to; (i) refund all of the outstanding principal amount of the $98.93 million Series 2007A Bonds; (ii) pay or reimburse PRCN for the expenses of renovating, remodeling and equipping of senior housing and associated facilities of PRCN at Park Shore; (iii) fund a debt service reserve fund, and (iv) pay specific costs of issuance of the Bonds. Proceeds of the Series 2016B (Taxable) Bonds will be utilized to; (i) repay, or reimburse Fred Lind Manor for the repayment of the outstanding principal balance of a taxable HUD loan incurred by Fred Lind Manor; (ii) pay or reimburse Fred Lind Manor for the costs of the renovation, remodeling and equipping of senior housing and associated facilities of Fred Lind Manor; (iii) reimburse PRCN for the costs of acquiring three condominium units located proximate to Park Shore to be utilized as senior housing communities; (iv) fund a debt service reserve fund for the benefit of the Bonds; and (v) pay specific costs of issuance of the Bonds.

The Series 2016 Bonds, totaling $130.29 million in aggregate, are entirely made up of BB+ (Fitch) rated fixed-rate bonds. The arbitrage yield on the issue (including taxable debt) was 3.455%, with an average yield to maturity of 4.160%.

“This financing cements, reinforces and bolsters PRCN’s core operations,” Sarkis Garabedian, senior vice president in Ziegler’s senior living practice, said in a press release. “Bringing PRCN’s three existing communities together into one Obligated Group provides a strong capital foundation from which this growing system will continue to build.”

“PRCN was able to not only realize significant savings on the Skyline refinancing, but also reinvest over $30 million in its Park Shore and Fred Lind Manor campuses while simultaneously reducing its annual debt burden,” Garabedian added. “In the end, Ziegler was able to leverage PRCN’s improving credit profile, market position and new BB+ credit rating with great effect, securing orders from over 20 institutional bond funds to participate in the issue – driving PRCN’s bond yield below 3.50% fixed for 35 years.”

Lancaster Pollard Assists with Memory Care Refinancing

Lancaster Pollard recently helped a memory care provider refinance its construction loan using the Fannie Mae Seniors Housing Program. Kyle Hemminger led the transaction for Lancaster Pollard.

The memory care provider’s 40-unit community opened in fall 2014 and reached stabilization quickly. Lancaster Pollard recommended utilizing the Fannie Mae Seniors Housing Program due to its benefits, including a low, fixed interest rate, and a long-term and nonrecourse feature. 

Capital Funding Group Announces Two HUD 232 Closings

Baltimore, Maryland-based Capital Funding Group recently announced the closing of two HUD 232 transactions: a $24.24 million HUD Refinance for Middletown Park Rehabilitation and Health Care Center in Middletown, New York, and a $44.12 million HUD Refinance for Morningside Nursing & Rehabilitation Center in Bronx, New York.

Middletown Park Rehabilitation and Health Care Center is a skilled nursing facility with 250 beds. Capital Funding, LLC provided a $24.24 million HUD loan for the borrower. About $2 million of the loan proceeds will be utilized for capital expenditures to upgrade the facility. Craig Casagrande, Capital Funding Group’s director of real estate finance, originated the loan, which closed on August 15, 2016.

Morningside Nursing & Rehabilitation Center is a skilled nursing facility with 314 beds. Capital Funding, LLC announced the closing of a $44.12 million HUD loan to refinance existing debt. About $3 million of the loan proceeds will be utilized for capital expenditures to upgrade the facility. Casagrande originated the loan, which closed on June 29. Capital Funding Group is a full-service provider of comprehensive financing solutions for health care facilities around the country, focusing on the assisted living, long-term care and hospital industries.

Written by Mary Kate Nelson