Senior Housing Finance Activity: Lancaster Pollard, Ziegler, HCP, Ventas

Ziegler Closes $8 Million Bond Issue for Nonprofit Senior Care Community Expansion

Specialty investment bank Ziegler recently closed an $8,035,000 non-rated, fixed-rate issue for Nazareth Living Center, a not-for-profit corporation based in Missouri.

The Nazareth community includes a 150-unit assisted living apartment building and a 140-bed skilled nursing center in St. Louis, Mo. It is co-sponsored by Benedictine Health System, a Minnesota not-for-profit corporation that also serves at the center’s manager, and the Sisters of St. Joseph of Carondelet, St. Louis Province (CSJ), a Missouri not-for-profit corporation.

Proceeds of the Series 2012 Bonds, along with other sources of funds, will be used to fund an expansion of Nazareth Living Center consisting of 50 entrance fee-based independent living apartments; acquire leased land and adjoining property; fund interest on the bonds for 27 months; fund a debt service reserve fund; and pay the costs of issuance.

Other funding sources consist of an equity contribution, the receipt of upfront entrance fees received from CSJ for the purpose of occupying 30 of the planned 50 independent living units, and a sponsor commitment to provide temporary debt in the form of a taxable subordinated loan to be paid from a portion of the entrance fees collected from units not purchased by CSJ.

“This financing for Nazareth represents an opportunity to expand the continuum of services on campus, to broaden the range of senior living options, and to further cement Nazareth’s reputation as a leading Catholic, faith-based senior living community in St. Louis,” said Will Carney, Managing Director in Ziegler’s Senior Living Practice.

HCP Closes $205 MIllion Mezzanine Loan Facility to Recapitalize Senior Care Portfolio

Real estate investment trust HCP (NYSE:HCP) closed a mezzanine loan facility to lend up to $205 million to Tandem Health Care, an affiliate of Formation Capital, as part of the recapitalization of a post-acute/skilled nursing portfolio. The REIT funded $100 million at closing (the first tranche) and expects to fund an additional $105 million (the second tranche) between March 2013 and August 2013.

The second tranche will be used to repay debt senior to HCP’s loan, which is subordinate to $400 million in senior mortgage debt and $137 million in senior mezzanine debt. The loan has a fixed interest rate of 12% and 14% per year for the first and second tranches, respectively. Including fees received at closing, the loan has a blended yield to maturity of approximately 13%. The facility will have a total term of up to 63 months from the initial closing.

The tandem portfolio is comprised of 68 post-acute/skilled nursing facilities with a 93% occupancy rate, a quality mix of 52%, a net operating income margin of 17%, and in-place rent coverage of 1.3x. The properties are primarily located in Florida, Ohio, Pennsylvania, and Virginia and are in either certificate of need (CON) states or states that have placed restrictions on new post-acute/skilled nursing construction.

The portfolio is master leased to LaVie Care Centers, an operator of 208 post-acute/skilled nursing facilities in the United States.

Ventas Prices $275 Million of Senior Notes Offering

Real estate investment trust Ventas Inc. (NYSE:VTR) announced Tuesday the pricing of a public offering of $275 million aggregate principal amount of 3.25% Senior Notes due 2022 at 99.027% of principal amount.

The notes are being issued by the company’s operating partnership, Ventas Realty, Limited Partnership, and a wholly-owned subsidiary, Ventas Capital Corp., and will be guaranteed, on a senior unsecured basis, by the company.

The sale of the notes is expected to close on Aug. 3.

Ventas plans on using the net proceeds from the offering to prepay in full its $200 million unsecured term loan due 2013, which has an all-in annual fixed interest rate of 4%, to repay indebtedness outstanding under its unsecured revolving credit facility and for working capital and other general corporate purposes, including to fund future acquisitions and investments, if any.

Lancaster Pollard Closes $161 Million of Loans in June/July

Lancaster Pollard closed 22 senior living deals in June and July with a total PAR amount of $161 million as the firm continues its record-breaking year. Nineteen of those deals used the FHA-insured Section 232/223(f) funding program; two used the Section 241 program; and one used tax-exempt, bank-qualified bonds. The transactions included skilled nursing and assisted living facilities in New York, Florida, Georgia, Ohio, Oregon, Illinois, Indiana, Minnesota, Virginia and Pennsylvania.

Love Funding Secures $43.6 Million in Refis in July for Senior Care Properties

Love Funding secured a total of $43.6 million in funding in the past month to help senior care property owners refinance their existing debt and reduce their monthly debt service, says the financing firm.

• Director Chad Ricks, out of Love Funding’s Dallas office, led the transactions with a $11.5 million refinancing for a portfolio of nine assisted living facilities in Boise, Ida.
• Midwest Regional Director Bruce Gerhart originated a $4.63 million refinancing for Bay Ridge Assisted Living Center in Traverse City, Mich., and a $6.47 million refinancing for Meadowview Nursing Center in Berlin, Pa. The Meadowview transaction used HUD’s Section 232/223(f), and the borrower selected a 30-year amortization period due to the extremely low interest rate locked,  saving the property considerable interest costs over the term of the loan.
• Love Funding Director Joshua Hausfeld secured $8.03 million in financing for the Commonwealth at Kilmarnock in Virginia.
• Senior Director Laura Saull-Smith originated the $5.56 million refinancing for Meadow Glen of Leesburg closing, also in Virginia.
• Director Brian Roberston originated the $7.4 million Seabury Woods refinance in New York, using HUD’s Section 232/223(a)(7) program, enabling the borrower to generate in excess of $120,000 of annual debt service savings.

Love Funding obtained financing for six senior care transactions through HUD’s Section 232 LEAN loan program, which the firm says is “processing loan applications at the fastest pace in its brief four-year history” now that the HUD queue has been eliminated for most LEAN loan applications.

“Given the great strides HUD has made with the LEAN program, and the historically low interest rates we’re enjoying right now, there really is no better time for senior care property owners to lower their debt service,” said Jon Camps, managing director of production at Love Funding.

Cambridge Closes $3.1 Million Loan to Refinance Ill. Senior Care Community

Cambridge Realty Capital Companies recently closed on a $3.1 million loan to refinance Carlinville Rehabilitation and Health Care Center, an 86-bed skilled nursing facility in Carlinville, Ill.

The fully-amortized, 30-year term loan was arranged using HUD’s Section 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge arm that specializes in underwriting FHA-insured HUD loans.

Guilford Housing Authority Gets $2 Million in Funding for Affordable Senior Housing Units

The Guildford Housing Authority is getting $2 million in funding for nine affordable senior housing units in the Boston Terrace development, reports the New Haven Register. The funding is through the state’s Competitive Housing Assistance for Multifamily Properties (CHAMP).

CHAMP granted a total of $25 million for this round of funding, which will help finance 10 affordable housing developments in six Connecticut cities.

Guilford’s project has an approximately $2.08 million price tag, according to CHAMP documents, says the article. The development is ready to break ground; the nine units will each be 625-square-feet and have LEED certification.

“The creation of these new homes in the Boston Terrace development is a shovel-ready project that will improve not only the lives of our senior citizens, but also create jobs and help strengthen our economy,” said state Rep Pat Widlitz, D-Guilford. “The state’s support for Boston Terrace is vital and I applaud the governor for bringing this critical funding to fruition.”