Senior Housing Finance Activity: Ziegler, Cain Brothers, Love Funding, & More

Ziegler Closes $73.4 Million Financing for Hawaii CCRC

Speciality investment bank Ziegler recently announced the closing of a $73.4 million fixed-rate Series 2012 Bond issue for Kahala Nui, a 6.6 acre continuing care retirement community located in Honolulu, Hawaii.

Kahala Nui is a “type A” CCRC with 270 independent living units; 63 assisted living suites with 22 designated for memory support; and 60 private and semi-private skilled nursing suites. The community opened in 2005 after being financed by Ziegler in 2003.

The issuance is comprised entirely of “BBB-” fixed-rate bonds that are being issued to advance refund to the Series 2003 A fixed-rate bonds; fund a debt service reserve; and pay certain costs of issuance. The community took advantage of the low interest rate environment to reduce debt service by approximately $1.4 million a year.

“Kahala Nui has exceeded expectations from the start: it filled extremely quickly, has maintained high occupancy with a strong waitlist, and has established a reputation for excellence in its marketplace,” said Mary Munoz, managing director in Ziegler’s senior living practice. “Fitch’s investment grade rating affirms the solid financial stature of the corporation, which will be further enhanced with $1.4 million of annual debt service savings from the refinancing. With its strong management team, beautiful physical plant, and proactive Board, Kahala Nui is truly positioned for long-term success. It typifies the best our industry has to offer.”

Beech Street Capital Closes a $5.6 Million Loan for Ill. Senior Care Center

Beech Street Capital, LLC recently announced that it has provided a $5.6 million loan through the Department of Housing and Urban Development’s Section 232/223(a)(7) program to refinance Peterson Park Healthcare Center.

Peterson Park is a 188-bed skilled nursing facility in Chicago, Ill. The transaction was originated by Joshua Rosen, an executive vice president of Beech Street Capital working out of the firm’s Chicago office.

The financing structure Beech Street proposed allows the borrower to take advantage of “tremendous” debt-service savings with an attractive interest rate. The loan has a 17.5-year term and allows the borrower to keep the same term and amortization period as the existing mortgage.

“The loan had a complicated organizational structure, but the Beech Street team still closed the loan seamlessly,” Rosen said. “Now is the time to take advantage of record low interest rates. We have hit the floor.” 

Cambridge Closes $5.3 Million Loan for Fla. Assisted Living Community

Cambridge Realty Capital Companies recently closed on a $5.3 million HUD Lean mortgage loan for Hawthorne Inn of Lakeland, a 60-bed assisted living property located in Lakeland, Fla.

The fully-amortized, 34-year term loan refinanced the property and was underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business specializing in FHA-insured HUD loans. The mortgage was through HUD’s Section 232/223(f) program and had an undisclosed interest rate. 

Love Funding Refinances $23.7 Million Portfolio of Mass. Skilled Nursing Loans

Love Funding recently announced the refinancing of four loans totaling $23.7 million for a portfolio of skilled nursing facilities in Massachusetts.

The four properties are Willimansett Center East and Willimansett Center West in Chicopee; Chapin Center in Springfield; and Governor’s Center in Westfield. The Northeast Health Group Inc., a not-for-profit organization, acquired the skilled nursing facilities in 1995. They are operated by Airamid Health Management, based in West Palm Beach, Fla.

Love Funding Director Joshua Hausfeld, out of the firm’s Washington, D.C. office, secured the loans through the Department of Housing and Urban Development’s Section 232/223(f) loan program. Hausfeld used the program to move each of the cross-collaterialized properties from taxable bond and secondary debt to low, fixed-rate, non-recourse notes with 30-year terms. All four transactions will be processed under a newly negotiated master lease that enables the borrower to cross-collateralize the properties under  HUD’s rules.

The Northeast Health Group has been able to tackle a number of operational challenges that may have jeopardized its ability to receive HUD approval, according to Hausfeld. In the past two years, the borrower increased occupancy at its facilities, replaced temporary agency staff with full-time nurses, and hired experienced administrators and key personnel to ensure the facilities were running at their peak potential. 

“They knew what they had to do and they executed their game plan impeccably,” Hausfeld said. “Not only did the improvements they made pave the way for a successful transaction, they set up all four facilities for long-term operational and financial success.”

Cain Brothers Underwrites $27 Million Bond Issuance for Friendship Village

Cain Brothers served as sole undewriter in the issuance of $26,960,000 of tax-exempt fixed rate Series 2012 bonds for Friendship Village Sunset Hills (FVSH). The bonds were rated ‘A’ by Fitch based on FVSH’s underlying credit.

The senior living community used a portion of the bond proceeds to fund the first phase of a multi-year, multi-phase campus redevelopment plan that included the construction of 10 new villas, improvements to campus infrastructure and common areas, and the funding of predevelopment costs for the next expansion phase.

Additionally, the bond proceeds were used to refinance existing fixed and variable rate debt to take advantage of historically low fixed-interest rates and position FVSH for improved capital access and financing flexibility for future capital needs. 

The bonds were structured with serial and term bond maturities and sold to retail and institutional investors. The yield on the 30-year maturity of the bond issue was 4.55%. 

Cain Brothers worked with FVSH’s board, its management company (Life Care Services), and project developer (Life Care Services Development Company) for 18 months to help re-evaluate and modify its strategic plan, create a strategic capital plan, refine the development plan, and create a long-term financing strategy to accomplish future growth initiatives. The bonds increased FVSH’s total debt by nearly 50%, but the finance plan resulted in lower overall maximum annual debt service, the retention of the community’s ‘A’ bond rating, and the creation of a new capital access documentation structure that affords future financing flexibility. 

Oak Grove Capital Closes $14.55 Million of Senior Housing Loans

Oak Grove Capital recently originated Fannie Mae loans for three senior housing properties totally approximately $14.55 million:

• A $3.55 million loan for Columbia Cottage-Hanover in Hanover, Pa., closed on Aug. 31
• A $4.70 million loan for Columbia Cottage-Hershey in Hershey, Pa., closed on Aug. 31
• A $6.23 million loan for Chandler Place in St. Anthony, Minn., closed on Aug. 31