Senior Housing Finance Activity: Capital One Bank; Cambridge; Newcastle

Capital One Bank Announces $115 Million in Financial Transactions

Capital One Bank recently announced it acted as a joint bookrunner for an $85 million, seven-year senior secured term loan to subsidiaries of Parkwood Properties, Inc. and a $30 million revolver loan to Palm Garden Healthcare Holdings, LLC. Parkwood Properties will use the term loan to refinance existing debt and to finance upgrades and renovations to long term care facilities collectively owned by Florida Convalescent Centers, Inc. and Springdale Health Centers, LLC. Palm Garden and its subsidiaries will use the revolver to fund ongoing working capital requirements of the skilled nursing and assisted living facilities they now operate through the transaction closing.

Florida Convalescent Centers, Inc. and Springdale Health Centers, LLC collectively own 14 skilled nursing facilities (SNFs) and one assisted living facility in Florida, with a total of 1,921 licensed and available beds. Florida Convalescent Centers and Palm Garden also will expand their banking relationship with Capital One Bank to include deposit and treasury management services.


NHI Prices Offering, Aims at Net Proceeds of $245M

National Health Investors, Inc. (NYSE:NHI) announced the pricing of its underwritten public offering of 4.5 million shares of its common stock at $57.00 per share for net proceeds of approximately $245.3 million after related expenses. Underwriters have also been granted a 30-day option to purchase up to an additional 675,000 shares. 

NHI plans to use the net proceeds from the offering to fund a portion of the purchase price of its pending acquisition of 25 independent living communities from an affiliate of Holiday Retirement for $491 million. If the pending acquisition is not completed, the REIT will use the proceeds for general corporate purposes, including other possible future acquisitions.


Wells Fargo Securities, BofA Merrill Lynch and BMO Capital Markets acted as joint book-running managers and KeyBanc Capital Markets, Stifel, JMP Securities, BB&T Capital Markets, Credit Agricole CIB, Raymond James, RBS Securities Inc. and SMBC Nikko acted as co-managers for the offering.

Newcastle Closes Common Stock Offering, Raises $304M

Newcastle Investment Corp. (NYSE:NCT) announced on Nov. 22 the sale of 57,950,952 shares of its common stock, with gross proceeds of approximately $304.2 million.

Newcastle intends to use the net proceeds from the offering to fund a portion of the purchase price for a portfolio of senior housing properties the company has agreed to acquire from Holiday Retirement affiliates for about $1 billion.

Ziegler Closes $50 Million Ohio Presbyterian Retirement Services Financing

Ziegler, a specialty investment bank, has successfully closed the $50.6 million fixed-rate Series 2013A Bond issue for Ohio Presbyterian Retirement Services, an Ohio 501(c)(3) corporation founded in 1922. OPRS, headquartered in Columbus , owns and operates 11 communities throughout the state of Ohio.

Nine of the 11 campuses are full-service continuing care retirement communities. The organization also offers home and community based services through its senior independence practice that assists more than 85,000 adults.

The $50,550,000 Series 2013A Bonds were issued in concurrence with the 2013B Bonds, which total $25 million resulting in an aggregate amount of $75.6 million for OPRS’ 2013 financing. The 2013A and 2013B Bonds are being issued to retire a loan from PNC in the outstanding principal amount of $11 million; pay or reimburse OPRS for the payment of certain costs of acquiring, constructing, installing and equipping various capital expenditures; establish a debt service reserve fund for the Series 2013A Bonds; and pay cost of issuance for the Series 2013A and 2013B Bonds.

“The bond markets have been challenging for several months and Ziegler had been anticipating these challenges continuing through Thanksgiving and December. We were able to successfully price OPRS’ 2013A Bonds in advance of heightened year-end bond supply and we were able to add a slice of attractively priced bank capital with the 2013Bs to allow for a great overall financing for our client,” said Tom Meyers, managing director in Ziegler’s senior living practice. “OPRS will use this capital to pursue several meaningful new money projects at its Westminster Thurber, Rockynol and Breckenridge Village campuses to further support its mission of serving Ohio’s seniors.”

Cambridge Arranges $13.5 Million in Loans for 3 Calif. ALFs

Cambridge Realty Capital Companies has arranged $13.5 million in loans to refinance three assisted living facilities owned by a California limited liability company.

The fully amortized loans were arranged for the owner using the HUD Section 232/223(f) program and were underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in underwriting FHA-insured HUD loans.

Coordinating the transaction for the company was Hymie Barber, National Originations Manager and Managing Director of Catalyst/Cambridge Healthcare Finance in Los Angeles, the company’s West Coast affiliate.

The facilities included in the transaction are Glen Park West Retirement Community, a 98-bed assisted living facility in Glendale, Calif., with a $5.2 million loan; Glen Park East Retirement Community, a 97-bed assisted living and memory care facility also in Glendale with a $4.4 million loan; and Laurel Canyon Retirement Community, a 68-bed assisted living facility in North Hollywood, Calif. with a $3.9 million loan. 

Lancaster Pollard Arranges Senior Living Transactions in 5 States

Samaritan Village

Lancaster Pollard recently helped Samaritan Village refinance $23.3 million to convert a portion of their independent living units into assisted living units to meet resident demand. Samaritan Village is a long-term care community located in Hughson, Calif. and operated by Hughson Samaritan Village.

Lancaster Pollard worked with HUD to appraise the facility at levels above historical performance. In addition, the firm negotiated a discounted payoff with existing bond holders and obtained a letter of credit with a local bank that covered the debt service reserve cash requirement. The $23.3 million loan is insured by the FHA Sec. 232/223(f) program and will allow Samaritan to rid itself of the onerous covenants imposed by the old indebtedness and benefit from approximately $560,000 in annual debt service savings. In addition, the refinance will fund $580,000 in repairs, the majority of which facilitated the unit conversion. 

Park Place Senior Living

Lancaster Pollard recently assisted Leo Brown Group, LLC, with the refinance of Park Place Senior Living, a long-term care community located in Fort Wayne, Ind. The firm financed the original construction of Park Place in 2009 using the FHA Sec. 232 program. Due to the drop in interest rates since 2009, ownership sought to refinance its existing HUD debt to lower its interest rate and achieve debt service savings.

The firm was able to structure a $14.2 million loan insured by the FHA Sec. 232/223(a)(7) program with a competitive fixed interest rate that will provide significant debt service savings for the borrower. 

Claremont Care Center 

Lancaster Pollard recently refinanced a 118-bed skilled nursing facility, Claremont Care Center of Point Pleasant. N.J., for Hoosier Care, Inc., an Indiana nonprofit organization. The firm recommended using the FHA Sec. 232/223(a)(7) program and was able to reduce the interest rate on the property’s existing FHA-insured mortgage by nearly 1.5 percentage points, resulting in combined annual savings of more than $94,715 for the owner. In addition, the firm was able to extend the maturity to 30 years. 

Parkhaven Retirement and Assisted Living Community

Lancaster Pollard was engaged to assist in financing the acquisition of Parkhaven Retirement and Assisted Living Community by Parkhaven Investors, LLC, the operator/minority partner along with other local investors. Parkhaven, located in Manhattan, Mont., offers eight units of independent living and 36 units of licensed assisted living to residents of this bedroom community of Bozeman.

The firm recommended using the HUD Sec. 232/223(f) program for its low fixed-rate, higher loan-to-value and non-recourse features. The new long-term debt structure eliminated the new owners’ personal guarantees as well as funded over $400,000 in replacement reserves from the mortgage’s proceeds.

Resthave Home of Whitesound County

Lancaster Pollard assisted Resthave Home of Whiteside County, located in Morrison, Ill., with financing a $14.2 million expansion and renovation. The firm advised on the structuring of the financing, which combined USDA funds for permanent funding and a construction loan for a portion of the construction funding. It also underwrote $7 million of tax-exempt, bank-qualified, investment-grade-rated bond anticipation notes (BANs) for a two-year term, which were used to partially fund construction.

Resthave Home was able to fund its expansion and renovation with a blended interest rate of 3.30% for construction financing and 4.43% for permanent financing. The cost of capital includes a mix of 60% fixed rate and 40% variable rate capital. The term and amortization of the loan is 40 years. The larger, updated facility will feature additional parking, a large chapel and an open-air courtyard. Steve

Cain Brothers Reworks Front Porch Communities’ Capital Structure

Cain Brothers worked closely with Front Porch Communities and Services Senior Management to create and execute a strategic re-engineering of the FPCS’s capital structure.

The first phase of the plan came to fruition in July 2013 with the closing of two new loans that funded the August 2013 refinancing of $50 million of existing tax-exempt Series 1999 Certificates of Participation with a fixed interest rate of 5.375% and final maturity of 2030. The two new loans are FHA-insured taxable loans at fixed interest rates of 2.73% and 2.80% and have final maturities of 2039 and 2045. They are secured by first deeds of trust on the refinanced properties.

The second phase of the plan came to fruition in September 2013 with the closing of a third loan that funded the redemption of an additional $29.9 million of existing tax-exempt Series 1999 Certificates of Participation. The third FHA-insured taxable loan has an interest rate of 3.74% and is secured by a deed of trust on the refinanced property.

The three new loans will reduce the annual debt service on the refinanced debt by 32% and will reduce overall annual debt service for FPCS by 13%. In addition to funding the partial prepayment of Series 1999 Certificates of Participation, the three loans include funding of approximately $5 million capital expenditures and the costs of issuance for the transactions at these very favorable rates. In addition to the economic benefit of reducing overall debt service of FPCS by $2.3 million annually, this transaction also improves the financial ratios of the Obligated Group by reducing its debt by $79.7 million and annual debt service by $7.2 million. 

FPCS owns and operates 10 multi-level retirement communities in California, including five rental and five entrance fee communities, and manages 25 affordable housing communities as well as three market rate retirement communities. The rental properties were refinanced through the FHA Section 232/223(f) program. 

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