Lancaster Pollard recently announced the closing on an $11.7 million financing to build a 63-unit assisted living facility at Tabitha Nursing and Rehabilitation Center in Lincoln, Neb. Tabitha is the first nonprofit to finance new construction under the streamlined HUD LEAN processing system of the Federal Housing Administration’s Section 232 mortgage insurance program for senior living and care providers. Only five such new construction projects have been completed via LEAN processing nationwide.
Tabitha was founded in 1886 and delivers a comprehensive system of rural and urban health care to seniors in a 29-county area of southeast Nebraska. The new facility will be financed with a taxable loan insured by the FHA Section 232 program. It will offer 63 units of memory care and assisted living along with an underground parking garage. This project is part of Tabitha’s larger master plan. As part of the structuring, Lancaster Pollard suggested that smaller projects, including the acquisition of a nearby assisted living facility, nursing home renovations and new Green House construction, be financed with tax-exempt bonds underwritten by Smith Hayes, a local broker-dealer.
“Financing the assisted living facility with FHA mortgage insurance protects Tabitha’s overall credit profile because the debt is non-recourse to the community organization,” said Quintin Harris, Lancaster Pollard vice president, who was the lead banker on the transaction. “As such, Tabitha simultaneously funded other projects working with local investors, keeping community involvement in the project. Further, we estimate that Tabitha will save over $300,000 annually using a FHA-insured funding strategy as compared to a traditional fixed-rate bond issue.” The interest rate on the debt is fixed for the life of the 40-year term.