Senior Housing Finance Activity: Skilled Healthcare Group, Greystone, Lancaster Pollard

Greystone Closes $117 Million Portfolio Acquisition of Affordable & Senior Housing

Greystone recently announced the closing of a $117 million multifamily transaction in Georgia to be used toward the acquisition and rehabilitation of 44 affordable housing properties, more than half of which are designated senior housing.

The portfolio contains 1,362 units that serve low-income households in 30 counties across the state. The aged USDA Rural Development Section 515 portfolio was acquired by WWJ, LLC, an affiliate of Boyd Management, Inc., and the rehabilitation is expected to be completed within 12 months.

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Greystone worked with National and State USDA Rural Development, the Athens Housing Authority Georgia Department of Community Affairs, and Fannie Mae to coordinate and secure the financing needed to acquire and rehabilitate the portfolio.

The financing involved in the transaction was a combination of both public and private funding and included $26.9 million in Fannie Mae loans spread over 37 properties; a $47.2 million issuance of tax-exempt bonds by the Athens Housing Authority; the purchase of 4% state and federal low-income housing tax credits by a Community Affordable Housing Equity Corporation affiliate, generating more than $31.7 million in capital contributions; and the assumption and subordination of more than $35.9 million of original USDA RHS 515 debt.

Other funding sources included additional financial support totaling more than $2.2 million.

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The rehabilitation plan consists of substantial improvements for all apartment units within the 44 communities. Planned interior improvements will include new flooring, energy efficient appliances, hot water heaters, upgraded HVAC, kitchen cabinets and countertops, as well as fixture upgrades. Electrical improvements will include the replacement of all interior and exterior light fixtures, new GFI outlets and new smoke detectors. Planned exterior improvements include new insulated double-pane windows, doors, gutters, siding and a new roof system. Landscape enhancements will also be implemented. 

More than $34 million will be spent in construction costs, the majority of which will be spent directly with Georgia contractors on physical goods and improvements. 

Lancaster Pollard Closes $220 Million of Loans in July & August

Lancaster Pollard closed a total of 26 senior housing transactions totaling more than $219.6 million in July and August, with a majority of loans through the HUD Section 232/223(f) or Section 232/223(a)(7) programs. 

Lancaster Pollard Closes $14.2 Million Refinance

Lancaster Pollard recently assisted Harrison Senior Living with the refinancing of two of its skilled nursing facilities—Harrison House of Christiana, located in Christiana, Pa., and Harrison House of Georgetown, located in Georgetown, Del.

Both facilities are 139-bed SNFs that had recently undergone renovations, improving their financial performance. Ownership sought to refinance its existing debt to lower its debt service and provide funding for repairs. Lancaster Pollard was able to obtain loans in the combined amount of $14.2 million through the HUD Sec. 232/223(f) program.

The transactions, as well as the recent renovations done by ownership, allowed for over $1.1 million in total funds for repairs as well as a $2.75 million total deposit to the replacement reserves accounts of the two facilities. The large replacement reserve initial deposits will strengthen the operating cash flows of the facilities.

The refinancing also paid off ownership’s outstanding debt, avoiding pending balloon payments and providing a permanent financing solution at low fixed rates and 30-year terms.

Ken Gould, senior vice president and regional manager of Lancaster Pollard’s Philadelphia office, led the transaction.

Lancaster Pollard Provides $3.2 Million Refinance for Kentucky ALF

Lancaster Pollard was recently engaged by the owners of The Paragon of Madisonville to refinance the property, which was built in 2000 through a HUD Section 232 loan and refinanced in 2005 with a HUD Section 232/223(a)(7) program. 

The firm obtained the $3.2 million loan for the Paragon,  a 42-unit assisted living community in Madisonville, Ky., with an interest rate reduced by 2.2 percentage points, resulting in annual debt service savings of more than $39,000. 

Lancaster Pollard Refinances 3 SNFs for $19.4 Million

Lancaster Pollard refinanced three Indiana skilled nursing facilities for $19.4 million. Using the HUD Sec. 232/223(a)(7) program, Lancaster Pollard was able refinance each property’s existing FHA mortgage down to well below 4%, resulting in combined annual savings of more than $161,000 for the owner.

Both the Kentucky and Indiana transactions were completed by Chris Blanda, a vice president with Lancaster Pollard in Columbus, Ohio, in late June.

Skilled Healthcare Group Announces $21.6 Million HUD Loan Fundings

Skilled Healthcare Group, Inc. (NYSE: SKH) recently announced the funding of its first loans insured by the U.S. Department of Housing and Urban Development (HUD). The loans have a combined principal balance of $21.6 million and are secured by three skilled nursing facilities.  

The HUD-insured loans bear an approximately 4.6% interest rate with amortization terms of 30 to 35 years. The net loan proceeds of $20.4 million will be used to pay down outstanding term debt in Skilled Healthcare Group’s senior secured credit facility, which has a maturity date of April 2016 and an all in interest rate of approximately 6.8%.  

Loans from current loan commitments that would be secured by an additional seven facilities in the amount of $66.0 million with an interest rate of approximately 5.7% are expected to close before the end of the year.  

“We are pleased to have finally closed our initial loans under the HUD program. These loans strengthen our capital structure and also improve our leverage ratio, which is a metric under our senior secured credit facility comparing earnings to debt that we must maintain below an agreed level,” said Boyd Hendrickson, Chairman and Chief Executive Officer of Skilled Healthcare Group. “HUD also recently informed us that they will require an update of our corporate credit review from 2012 before issuing further commitments.”

The required update will not affect any of SKH’s current loan commitments from HUD, he added, and the company hopes to initiate the update by the fourth quarter of 2013 or early next year. 

Cambridge Arranges $3.5 Million SNF Financing

Cambridge Realty Capital Companies has closed on a $3.5 million loan to refinance Rosewood Nursing Center, a 120-bed skilled nursing home in Lake Charles, La. 

The fully-amortized, 25-year term loan was arranged for the borrower, a Louisiana limited liability company, using the HUD Section 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in HUD financing. The interest rate was not disclosed.

Cambridge Closes on $8.8 Million Loan for Calif. Retirement Center

Cambridge also recently closed on an $8.8 million loan to refinance San Dimas Retirement Center, a 258-bed assisted living and memory care facility in San Dimas, Calif.

The fully-amortized, 22.5-year term loan was arranged for the owner, a California limited partnership, using the HUD Section 232/Section 223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois.

Coordinating the transaction was National Originations Manager Hymie Barber, who also is Managing Director of Catalyst/Cambridge Health Care Finance in Los Angeles, the company’s West Coast affiliate. The interest rate was not announced.

Cain Brothers Places $33.7 Million Issuance for University Retirement Community

Cain Brothers served as placement agent in connection with the issuance of $33.7 million revenue refunding bonds, Series 2013 for the University Retirement Community at Davis, a Pacific Retirement Services-managed continuing care retirement community.

The financing strategy consisted of a direct purchase with Banc of America Public Capital Corp to refinance all of the CCRC’s existing debt, including $5.9 million of daily reset variable rate demand bonds and $27.5 million direct placement bonds.

PRS worked with the purchaser to secure a 10-year capital commitment, and Cain Brothers successfully managed an expedited financing process with closing occurring approximately 60 days after receipt of the final term sheet.

While the Series 2013 Bonds are unrated, a public rating on URCAD’s operations was required. As such, Cain Brothers assisted URCAD throughout the rating review process, and Fitch affirmed the existing rating of “BBB+” with a Stable Outlook. The 10-year commitment resulted in a low cost of capital below 2%, given market conditions at the date of closing, exclusive of URCAD’s corresponding interest rate swap.

Cambridge Provides $4.2 MIllion Loan for La. Senior Care Center

Cambridge Realty Capital Companies recently closed on a $4.2 million loan to refinance Holly Hill Nursing and Rehabilitation Center, a 120-bed skilled care nursing home in Sulphur, La.

The fully-amortized, 30-year term loan was arranged for the borrower, a Louisiana limited liability company, using the HUD Section 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois. The interest rate was not disclosed

Have financing transactions to announce? Send them to editor@seniorhousingnews.com.

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