Senior Housing Finance Activity: Lancaster Pollard, NorthStar Healthcare, Greystone

Here’s a roundup of some of the most recent financing transactions in senior housing and care.

Housing & Healthcare Finance Closes $205M HUD Loan for SNF Portfolio

Housing & Healthcare Finance (HHC Finance) closed a $205 million HUD loan portfolio consisting of 25 skilled nursing facilities located in the Southeast. The 232/223(f) loans refinanced existing conventional debt into stabilized, long-term debt at a fixed interest rate and funded capex.  

“The financing presented a number of challenges to close including, a mid-size portfolio review at HUD, adapting to new documentation required under the HUD 232 program during the financing process and a simultaneous close on 25 properties in three states,” says HHC Finance’s Michael Gehl, in a news release. “However, collaborating with the borrower and operator enabled the team to achieve a successful transaction for all parties involved.”

The deal was the largest HUD loan portfolio deal this year.

Lancaster Pollard Refinances Two Properties in Oregon and Colorado for $11.6M

Lancaster Pollard refinanced two separate properties in Oregon and Colorado via the FHA Sec. 232/223(f) mortgage insurance program for a total of $11.6 million.

East Cascade Retirement Community, located in Madras, Ore., is operated by Senior Housing Management and consists of 12 independent living units, an assisted living and Alzheimer’s unit with 52 beds and 20 skilled nursing beds. Lancaster Pollard underwrote the $5.7 million loan insured by FHA Sec. 232/223(f) to refinance the facility’s bank loans. Working with HUD, the firm was able to close the refinancing before the existing debt matured. The transaction consolidated four loans into one that will generate substantial annual debt service savings as well as fund over $250,000 in repairs and improvements.

Lancaster Pollard also used the FHA Sec. 232/223(f) program to refinance bank debt for The Oberon, a three-story, 61-unit assisted living facility located in Arvada, Colo. As a result, The Oberon was able to reduce its interest rate by 144 basis points for an annual debt service savings of $92,000. Additionally, initial proceeds from the $5.9 million refinancing will go towards repairs and improvement in updating the facility for ADA compliance.

Both transactions were led by Matt Lindsay, a vice president with the firm and Pacific Northwest regional manager. 

Trilogy Health Services Refinances Four Skilled Nursing and Assisted Living Facilities for $38.5M

Lancaster Pollard assisted Trilogy Health Services with the refinance of four of its skilled nursing and assisted living facilities: St. Elizabeth Healthcare (Delphi, Ind.), Franciscan Healthcare Center (Louisville, Ky.), Cumberland Pointe (West Lafayette, Ind.) and Blair Ridge Health Campus (Peru, Ind.). The four facilities contain a total of 281 skilled nursing units and 184 assisted living units.

Lancaster Pollard orchestrated the $38.5 million refinance using the FHA Sec. 232/223(f) program. The transaction funded nearly $3 million in repairs and over $2.5 million in an initial replacement reserve deposit. In addition, the firm was able to facilitate a capital expenditures look-back, providing funds for Trilogy to reimburse itself for previous repairs and capital expenditures. The new loans reduced Trilogy’s interest rate by over 300 basis points and carry terms between 30 to 35 years.

Chris Blanda, vice president and health care banker representing Indiana and Kentucky, led the transaction for Lancaster Pollard.

Healthmark Services Refinances Ark. ALF for $6.4 million

Lancaster Pollard assisted Healthmark Services, Inc., with the refinance of The Crossing at Malvern, a 77-unit assisted living facility in Malvern, Ark.

The firm successfully closed a $6.4 million loan using the FHA Sec. 232/223(f) program that provides a low, fixed interest rate and 35-year term.

In addition, the refinance provides for a substantial deposit to the replacement reserve account and will generate annual debt service savings.

Mike Ashley, health care banker representing Arkansas and Missouri, led the transaction for Lancaster Pollard.

NorthStar Income II Originates $17.5M Senior Loan Secured by Atlanta Area Multifamily Portfolio

NorthStar Real Estate Income II, Inc. (NorthStar Income II) originated a $17.5 million senior loan secured by a portfolio of three multifamily properties in suburban Atlanta.

A Georgia-based real estate developer owns the properties, which contain 893 units and 956,000 square feet. The borrower recently completed a $5.5 million renovation at the properties and plans to make additional improvements using proceeds from the senior loan.

In total, affiliates of the borrower have completed five transactions totaling $91.5 million in aggregate loan proceeds with investment vehicles sponsored by NorthStar Asset Management Group Inc. (NYSE: NSAM), successor to NorthStar Realty Finance Corp.’s (NYSE: NRF) asset management business.

“Our investment team is committed to driving value through similar transactions as we continue to build momentum and ramp the NorthStar Income II portfolio, says Daniel R. Gilbert, chief executive officer and president, in a news release.

NorthStar Income II’s portfolio consists of four senior mortgage loans with a combined principal amount of $157.2 million as of July 2. 

NorthStar Healthcare Closes $75 Million Mezzanine Loan

NorthStar Healthcare Income, Inc. (NorthStar Healthcare) closed an investment in a $75 million mezzanine loan made in connection with the $940 million financing of a national portfolio of 167 skilled nursing facilities. The portfolio consists of more than 20,000 licensed beds in 19 states, concentrated in Texas, North Carolina, Colorado and Maryland. Affiliates of Sava Senior Care, the nation’s sixth largest operator of skilled nursing facilities, manage the portfolio.

The loan bears interest at a floating rate of 10.27% over the one-month London Interbank Offered Rate and has an initial term of 24 months, with three one-year extension options available to the borrower.

NorthStar Healthcare’s portfolio consists of 14 investments with an aggregate total cost of $318.2 million, including 11 equity investments with an aggregate total cost of $217.6 million, two senior loans with an aggregate principal amount of $25.9 million and one mezzanine loan with a principal amount of $75.0 million, as of July 2.
 
Greystone Provides $9 Million HUD Loan to Refinance Texas Affordable Housing Properties

Greystone provided $9 million in HUD financing for two multifamily affordable housing properties in the greater Houston, Texas region. 

Lexington Square, an 80-unit Section 8 property in Angleton, Texas, located about 50 miles south of Houston, was refinanced with 30-year HUD 223(f) loan terms. Countryside Village, a 182-unit Section 8 property in Humble, Texas, located about 20 miles north of Houston, was refinanced with 35-year HUD 223(f) loan terms.

National Community Renaissance (National CORE) is one of the nation’s largest non-profit affordable housing developers with over 75 properties nationwide, spanning Arkansas, California, Florida and Texas. 

“Their expertise in financing affordable housing properties and navigating the HUD lending process not only benefits CORE, but the thousands of residents who rely on our ability to provide social services such as youth development andfinancial literacy,” says Steve PonTell, CEO of CORE, in a news release.

The transactions were originated by John Williams, a senior mortgageoriginator at the firm.

Greystone provides mortgage finance solutions across multiple platforms, including FHA, Fannie Mae, Freddie Mac, USDA, CMBS, bridge, mezzanine and other proprietary loan programs.  

Written by Cassandra Dowell