Senior Housing Finance Activity: Capital One, Lancaster Pollard

Capital One Establishes Unitranche Loan Program

Capital One (NYSE: COF), with HPS Investment Partners as its strategic co-investor, recently established a new program to originate unitranche loans to middle-market health care companies. The program, through Unitranche Loan Transaction, LLC, will help borrowers to obtain first lien unitranche loans without a syndication process or a rating agency.

“In this competitive, fast-paced environment, private equity sponsors and borrowers can realize a significant advantage if they close financing quickly and reliably,” Capital One Healthcare President Darren Alcus said in a press release. “We are excited to add this unitranche loan program to our offerings as it will provide our clients with speed, certainty and one stop for their financing needs.”

A unitranche loan blends junior and senior debt pricing and terms into a single first lien debt facility, as opposed to creating two classes of debt and coordinating among numerous lenders. This approach increases certainty of execution, and borrowers usually benefit from a single, blended interest rate, according to the press release.

HPS Investment Partners, LLC is a global investment firm with a focus on non-investment grade credit based in New York.

KeyBank Provides Financing for Seniors’ Affordable Housing in Washington

KeyBank’s Community Development Lending & Investing group recently provided $95.2 million in tax-exempt bond financing to build two affordable housing communities in Auburn, Washington. One of the affordable housing communities—the 297-unit Reserve at Auburn—is meant for seniors. The other affordable housing community—the 295-unit Villas at Auburn—is meant for families.

AVS Communities is developing the communities, which will both house residents making 60% or less of the area median income.

KeyBank provided a $47 million construction loan for The Reserve at Auburn, with a $40.6 million Freddie Mac Tax Exempt Loan (TEL) component arranged by Key’s Commercial Mortgage Group.

The bank also provided a $48.2 million construction loan for The Villas at Auburn, with a $40.9 million Freddie Mac TEL arranged by Key’s Commercial Mortgage Group.

The tax-exempt bonds were issued by Washington State Housing Finance Commission. Al Beaumariage and Victoria Quinn arranged the financing.

Lancaster Pollard Opens Office in Montana

Lancaster Pollard, a financial services firm that helps health care, senior living and housing providers expand and improve their services by providing financial advice and financing solutions, recently opened an office in Bozeman, Montana. The new office will led by Matt Lindsay, senior vice president with the company.

Lancaster Pollard’s Montana office will be its 10th banking office in the United States. 

“The establishment of our Montana office is an integral aspect of our overall growth efforts,” Lindsay said in a press release. “Even though our headquarters is in the Midwest, we have always been a national firm. The opening of our new office in Bozeman, coupled with our Denver office we opened in 2015 and the Newport Beach office that has been thriving for years, demonstrates how we have really strengthened our presence out West.”

Lindsay is Lancaster Pollard’s regional manager for the Rocky Mountain and Pacific Northwest regions. Since joining the firm in 2006, he has concentrated his efforts on hospital and senior living finance, structuring several bond transactions and mortgage loans with a total loan amount over $1 billion for new construction, expansion, acquisition and refinance projects.

Gardner Capital Development Awarded Oklahoma Low Income Housing Tax Credits for Affordable Senior Housing

The Oklahoma Housing Finance Agency recently awarded Gardner Capital Development a $4.7 million reservation of affordable housing tax credits to develop 46 one- and two-bedroom villa-style apartments for seniors in El Reno, Oklahoma. The $6 million project will be called Ridgeview Heights.

All of the units at Ridgeview Heights will be leased to seniors 62 years old or older, with a group of apartments set aside at 40%-60% of Canadian County median income. Five of the units will be fully accessible for seniors who have physical handicaps. 

Construction of the project is expected to start in the spring of 2017, with completion anticipated about 12 months after construction begins. Gardner Capital Development will serve as the lead developer for this project, and Hans Thomas & Associates will be the project architect.

Ziegler Closes $22 Million Ohio Presbyterian Retirement Services Financing

Chicago-based specialty investment bank Ziegler recently announced the successful closing of the $21,955,000 Series 2016C, tax-exempt, fixed-rate financing for the not-for-profit Ohio Presbyterian Retirement Services (OPRS). OPRS has since changed its legal name to Ohio Living, effective Nov. 1. 

Ohio Living currently owns and operates 12 senior living communities in Ohio, 10 of which are full-service retirement communities, collectively serving over 3,000 residents. The company also delivers several community-based service programs, including, but not limited to, home health care services, hospice services, adult day care services, transportation and home meals to more than 75,000 seniors at various locations in Ohio. 

Proceeds of the Series 2016C Bonds, together with available funds, will be utilized to refund OPRS’ outstanding Series 2002A Fixed Rate Bonds; fund a Debt Service Reserve Fund; refund OPRS’ outstanding Series 2005A Fixed Rate Bonds; and pay costs of issuance associated with the Series 2016C Bond financing.

The issuance of Series 2016C Bonds is a part of the wider Capital Structure Initiative that Ohio Living implemented during the summer of 2016. The Capital Structure Initiative sought to reposition Ohio Living’s current financial covenants, including the elimination of more restrictive covenants originating with its Radian insured Series 2002A Bonds, mitigate renewal risk on bank credit, minimize variable rate risk in anticipation of a long-term rising interest rate environment, align debt service coverage ratio calculations and accomplish the leveling of annual debt service requirements between various outstanding credit agreements.

Ziegler served as the Lead Underwriter of the Series 2016C Bonds while Key Bank and PNC Bank acted as co-managers for 10% each. The 22-year bond issue achieved an average yield of 3.66% and a yield to maturity of 4.11%, according to a Ziegler press release. Net Present Value Savings on a combined basis was $1.6 million, or 6.7% of the refunded bonds.

NorthMarq Capital Secures $16 Million Refinance for Age-Restricted Apartments in New York

NorthMarq Capital recently arranged $16 million in refinancing for Springvale Apartments, a property with 524 units for residents age 55 or older located in Croton-on-Hudson, New York.

The deal was structured with a 15-year term on a 30-year amortization schedule. NorthMarq’s Robert Ranieri arranged the financing for the undisclosed borrower via NorthMarq’s seller/servicer relationship with Freddie Mac.

Written by Mary Kate Nelson