Senior Housing Finance Activity: AdCare, Oak Grove Capital, Cambridge

Cambridge Subsidiary Closes $28 Million Loan Modification for Senior Housing Portfolio

Cambridge Investment and Finance Co., a subsidiary of Cambridge Realty Capital Companies, announced closing a $28 million conventional loan modification for four properties it owns and operates as SunRidge Senior Living in El Paso, Texas.

The firm purchased the portfolio 18 months ago from Emeritus Corporation (NYSE:ESC), and the properties have been managed since then by 12 Oaks Senior Living of Dallas. Combined occupancy at the SunRidge properties is up 24% since the purchase to 92%, according to Brent Holman-Gomez, senior vice president at Cambridge. 

A conventional loan from GE Capital refinanced the portfolio’s existing mortgage and mezzanine debt and provides funds for capital improvements and licensure expansion at each property. An additional 75 licensed beds are being added to the portfolio, along with continuing improvements to each community’s common areas. 

Additionally, a new certified memory care center has been added at SunRidge at Cielo Vista in El Paso. 

Cambridge acquisitions tend to be focused in secondary or tertiary markets, according to Holman-Gomez, usually in areas with a strong business environment and growth potential. Cambridge Investment and Finance Co. have acquired 16 properties since the subsidiary was formed in 2001. 

Oak Grove Capital Secures $11.14 Million Financing for Ore. Senior Community

Oak Grove Capital recently announced the origination of a $11.14 million Freddie Mac CME fixed-rate loan for Canfield Place, a senior housing community located in Beaverton, Ore. The 10-year loan, which carries a 30-year amortization period, was secured for Lytle Enterprises in order to refinance existing mortgage debt. 

The loan was originally to be engaged through the HUD Section 232/223 (a)(7) program in order to take advantage of historically low rates. However, during the course of the loan process, the borrower decided to invest more capital back into the project, says Oak Grove Capital, which then worked with Freddie Mac to secure the CME option providing for such objectives.

“Our ultimate goal is always to provide our borrower with the best financing option for their needs,” said Jeff Ringwald, senior vice president of seniors housing at Oak Grove Capital. “The original (a)(7) [program] no longer provided necessary funding for the planned improvements, so we adjusted course and provided them with a higher cash-out, fixed-rate loan.” 

Assisted Living Company Files for Bankruptcy

Jamieson Realty and three associated entities that formerly operated a nursing home filed for Chapter 7 bankruptcy on Sept. 13. 

The businesses—Jamieson Realty LLC, Lindenwood Care Corp., S&C Investment Group LLC, and Trinity Capital Associates LLC—were incorporated to operate Loving Care Home, reports the St. Louis Business Journal. In April 2006, the corporation obtained a $3.2 million loan from First Bank, court documents indicate, which matured in February 2010, at which point the lender demanded repayment. 

Following the assisted living company’s inability to pay back the loan, First Bank sought a receiver for the property and ultimately purchased the property at a foreclosure sale for $2.1 million. The companies still owe First Bank more than $1.4 million. However, the business journal reports that Jamieson Realty listed assets of $0 to $50,000 and liabilities of $1 million to $10 million in its bankruptcy filing.

Jamieson Care LLC now owns the property, which is now called Loving Care Assisted Living.  

Cambridge Closes $17.6 Million Loan for Chicago Nursing Home

Cambridge Realty Capital Companies recently closed a $17.6 million loan to refinance Bryn Mawr Care, a 174-bed intermediate care nursing home in Chicago.

The fully-amortized, 31.6-year term loan was arranged for the borrower, an Illinois limited liability company, using the HUD Section 232/223(a )(7) program and was underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in HUD financing. 

Hammond Hanlon Camp Completes Financing for N.Y. Medical Facility

Hammond Hanlon Camp LLC (H2C), through its wholly owned subsidiary H2C Securities Inc., served as the exclusive financial advisor to Ciminelli Real Estate Corporation for the financing of an innovative 300,000 square-foot medical outpatient facility currently under development in downtown Buffalo, N.Y. H2C is an independent investment banking and financial advisory firm with an exclusive focus on healthcare services companies and related organizations.

The $100 million medical office building will be in the heart of the growing Buffalo Niagara Medical Campus. Called Conventus—Latin for “coming together”—the new facility will be physically connected with nearly every existing and planned facility, creating a new model for healthcare outpatient facilities. The campus is home to Kaleida Health, the largest health system in the two-county Buffalo area. Other recently completed or planned developments include additions to the John R. Oishei Children’s Hospital and the new University of Buffalo Medical School. Conventus is an integral part of this campus expansion. Construction, which commenced with site work in April, is expected to be completed in the second quarter of 2015.

Through a carefully managed process, H2C obtained numerous highly competitive term sheets prior to the final selection of Seavest Healthcare Properties LLC to be Ciminelli’s partner.  Seavest’s investment rounded out the capital stack which included the developer’s equity and a construction loan with a regional bank.  Construction, which commenced with site work in April, is expected to be completed in the second quarter of 2015.

AdCare Subsidiary Enters $5 Million Loan Agreement with H&H Funding

QC Property Holdings, LLC, a subsidiary of AdCare Health Systems, Inc., entered a loan and security agreement with Housing & Healthcare Funding, LLC for a $5 million principal amount secured credit facility. 

The proceeds were used primarily to repay certain outstanding bonds assumed by AdCare in the July 2012 acquisition of a 118-bed skilled nursing facility in Oklahoma City, Quail Creek Nursing & Rehabilitation Center. 

The facility matures on September 27, 2016, with interest accruing on the principal balance at an annual rate of 4.75% plus the current one-month LIBOR rate, for a minimum interest rate of 5.75%. The credit facility is secured by a first mortgage on the nursing home property and a first-priority interest on all furnishings and equipment associated with the property, along with an assignment of all rents paid under any existing of future leases and rental agreements with respect to the Quail Creek Facility. 

USDA Approves $12 Million Loan for Senior Community Construction

Castle Peak Senior Care Community, a planned 64-bed skilled nursing and assisted living community to be located in Eagle Ranch, Colo., has secured a $12 million loan through the USDA Rural Development Community Facility loan program, reports VailDaily.com.

The project has taken a big step forward with approval for the loan, which bears a 3.5% interest rate and a 40-year term.

“The low interest rate and favorable term will go a long way in ensuring the success of the project,” said Craig Kittelson, chief financial officer of Augustana Care, a not-for-profit that’s partnering with Eagle County to develop the community. 

Augustana Care and the county will contribute a combined $5.4 million to the project comprised of subordinate debt. The planned community will cost an estimated $21.8 million to develop, according to VailDaily, leaving a $4.4 million funding gap. 

Read more. 

Cambridge: We’re Ready for New Construction Lending

Cambridge is now encouraging new construction submissions for HUD Section 232 financing, says chairman Jeffrey Davis. 

“All of our recent market studies have indicated there is strong demand for new senior housing construction in many markets. This demand can no longer be ignored. It needs to be addressed,” he said. “Like other HUD lenders, Cambridge had shied away from new construction projects because of difficulties involved in underwriting and closing these deals. But our attitude has changed over the last six months.” 

Cambridge recently closed on two separate Section 232 construction loans totaling more than $40 million for the same owner and operator, Davis says, who was able to demonstrate strong marketplace demand for the properties. 

In addition to being an experienced owner, the borrower also had significant equity in other properties. A similar formula, says Davis, can work for other borrowers. 

“What we’re seeing in the marketplace today are baby boomer children responsible for the placement of their parents being attracted to newer, more contemporary properties with features and amenities they believe will appeal to their parents. However, this trend is somewhat at odds with what’s available in the market today,” he says. “Particularly with skilled nursing facilities and to a lesser extent with assisted living properties, senior housing stock is becoming dated.”