New HUD Option Opens Market for Loans on Hold

The newest drafting of a Department of Housing and Urban Development loan type is providing flexibility to senior housing providers in states where Medicaid reimbursements are known to take several months at a time.

The first of the new Intercreditor Agreements, an account receivable loan type provided under HUD’s 232/223 program, was closed by Beech Street Capital in the amount of $23.1 million to refinance Lake Shore HealthCare and Rehabilitation Centre, a Chicago-based 281-bed skilled nursing center.

In states such as Illinois, where reimbursements typically take several months—sometimes as many as six months—to complete, the availability of such funding is paramount, says Josh Rosen, senior vice president of Beech Street Capital, who heads the company’s seniors housing and healthcare practice and who originated the transaction for the ManagCare property.


Though HUD has previously drafted the agreement, in its past iteration it didn’t make sense for those operators in the states that needed it most, Rosen told SHN. The redrafting of the intercreditor agreement, currently open for public comment, is providing a viable new option for providers to attain the accounts receivable financing—and they are already under way.

“It was a huge relief,” Rosen said of the new language. “There were dozens of deals on hold at HUD just because of this one piece of paper. Some couldn’t operate. They were stuck. Accounts receivable lenders weren’t going to sign it.”

HUD quickly attended to the language, Rosen says, which is leading to properties like Lake Shore HealthCare and Rehabilitation Centre to receive financing under the program.


ManagCare was identified as a fit for the loan early on, he said.

“At Beech Street, we look out for our clients long after the transaction closes. In this case, we were familiar with ManagCare’s portfolio and believed that HUD financing was the best option for minimizing annual debt service, while also allowing the borrower to recoup recent capital expenditures,” he said.

Beech Street monitored the deal for several months prior to engaging the transaction.

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While the agreement is currently open for public comment, HUD is allowing deals to close under the current wording when both parties agree to accept the terms as currently drafted.

Written by Elizabeth Ecker

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