Senior Housing Finance Activity: Ziegler, Capital One, Oak Grove

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

Berkadia Secures Over $156M in Financing for Capital Senior Living

Berkadia Commercial Mortgage LLC (Berkadia) worked with Capital Senior Living Corporation to arrange $156.6 million in financing for a portfolio of 15 seniors housing properties located across seven different states.

Senior Vice President Lisa Lautner of Berkadia’s Seniors Housing and Healthcare group worked with Fannie Mae to originate $135.5 million for 12 properties located in Texas, Ohio, Missouri, Kansas and Mississippi.

The 10-year, fixed-rate loan amortizes over 30 years and has a 4.24% interest rate. The properties contain 1,575 total units, including assisted living and independent care units. Lautner closed an additional $9.3 million for two properties located in Shreveport, Louisiana and Oklahoma City.

The one-year, floating-rate interim financing was secured through Berkadia’s Proprietary Bridge Lending Program and will be used to prepare the properties for sale. The properties consist of 119 independent living units each. Lautner also secured an $11.8 million two-year, floating-rate loan through Berkadia’s Proprietary Bridge Lending Program for a property located in Canton, Ohio. The interim financing will be used to renovate and reposition the property, which consists of 239 independent living and assisted living units. 

“Berkadia’s Seniors Housing and Healthcare group leveraged its traditional and bridge lending capabilities to close all three deals just 45 days from first receiving Fannie Mae’s quote,” Lautner said in a news release. 

Capital Senior Living Corporation operates 113 senior living communities in geographically concentrated regions with an aggregate capacity of about 14,700 residents.

Ziegler Closes $44.97M Financing for Fla. CCRC

Ziegler closed $44.97 million tax-exempt, fixed-rate Series 2014 bonds for Presbyterian Retirement Communities, Inc (PRC). 

PRC and affiliates comprise the Obligated Group for the Series 2014 Bonds and constitute the largest group of continuing care retirement communities (CCRCs) in Florida with a total of 3,311 units including 2,093 residential units, 467 assisted living units and 751 skilled nursing units. The Obligated Group is the ninth largest nonprofit operator of senior living units in the United States, according to the 2013 LeadingAge Ziegler 100.

Proceeds of the bond money will be used to refund the outstanding Series 2004A Bonds, reimburse the Obligated Group for previous capital expenditures, fund future capital expenditures, establish a debt service reserve fund and pay the costs of issuance. The refunding portion of the financing provided 14.3% in net present value savings. The Obligated Group will also use a portion of its reimbursement for previous capital expenditures to redeem its outstanding taxable Series 2004B variable rate demand bonds. 

PRC was chartered in 1954 as Presbyterian Homes of the Synod of Florida and opened its first CCRC, Westminster Manor in Bradenton, in 1961. The Obligated Group currently consists of seven members, five of which own and operate nine CCRCs. 

“An attractive bond market [allowed us] to produce a pricing on the Series 2014 Bonds that allowed PRC to generate significant net present value savings on their refunded bonds and further reduce the organizations exposure to interest rate and bank risk accomplishing the dual objectives that were established at the beginning of the transaction,” says Rich Scanlon, senior managing director in Ziegler’s Senior Living practice, in a news release.

Ziegler, a specialty investment bank, offers services including investment banking, financial risk management, merger and acquisition services, investment management, seed capital, FHA/HUD, capital and strategic planning as well as senior living research, education, and communication.

Ziegler Closes $60M Financing for Oregon Nonprofit CCRC

Ziegler closed $60.6 million unrated, fixed-rate Series 2014 Bond issue for a nonprofit continuing care retirement community (CCRC) in Oregon.

Rose Villa, Inc. (Rose Villa) was established in 1957 to provide housing and supportive services to people aged 55 years and older.

The CCRC provides independent living and 24-hour nursing care to about 200 residents on a 21.5-acre site southeast of Portland, Ore. in unincorporated Clackamas County.

While the community was originally comprised of 260 independent living apartments, management has reduced the number of units over the years by combining units to meet market preferences for larger units, removing a number of units, reassigning units for office and other common space usage, and in the past two years, taking units out of inventory at turnover in anticipation of the project. There are 134 independent living apartments in inventory.

Proceeds of the bonds will be used to fund the redevelopment of the community, including the addition of 75 new independent living apartments — including 40 cottage homes in one-story buildings and 35 apartments — and a Main Street commons featuring a performing arts center, wellness center, spa, newsroom, library, technology and learning center and other common areas, and internal and external renovation of existing apartments upon turnover of current residents. Monies will also finance a debt service reserve fund, and fund a portion of interest and certain costs of issuance of the bonds.

“We give management and the development team a lot of credit for aggressively moving to prepare for the future,” says Mary Muñoz, managing director in Ziegler’s senior living practice, in a news release. 

Ziegler, a specialty investment bank, offers services including investment banking, financial risk management, merger and acquisition services, investment management, seed capital, FHA/HUD, capital and strategic planning as well as senior living research, education, and communication.

Capital One Bank Closes $31.8M in FHA Loans for Ill. Skilled Nursing Portfolio

Capital One Specialty Healthcare Real Estate, part of Capital One Bank’s Commercial Real Estate Group, provided $31.8 million in HUD 232/223(f) loans for a portfolio of skilled nursing facilities in Illinois.  

A loan of $8.8 million will be used to acquire a 125-bed property in Marion bult in 1966 and renovated in 2011. Loans of $17.9 million and $5.1 million will be used to refinance a 228-bed facility constructed in 1996 in Chicago and a 144-bed facility built in 1975 with an addition in 1983 in Itasca.

“When there are this many moving parts, it’s critical that members of the team communicate well—with each other, with the borrower, and with HUD,” says Joshua Rosen, who leads the company’s agency healthcare efforts from the company’s Chicago office, in a news release. Rosen originated the transactions.

The fixed loan for the Marion facility has a 30-year term. Those for the Chicago and Itasca facilities have terms of 35 years.

Capital One Bank’s Commercial Real Estate Group provides financing in markets nationwide, including balance sheet and agency lending, financing, underwriting, and treasury management. 

 Capital One Bank Refinances N.Y. ALF with $24.2M HUD Loan

Capital One Specialty Healthcare Real Estate, part of Capital One Bank’s Commercial Real Estate Group, provided a $24.2 million HUD 232/223(a)(7) loan to refinance a 280-bed assisted living facility in Flushing, N.Y.

The goal of the loan was to lower the interest rate and create debt-service savings for the owners. Capital One achieved these goals by slashing the interest rate in half and securing a rare, 12-year loan term. The net result was to reduce the owners monthly debt service by approximately 50%. As part of the transaction, Capital One arranged for an unsecured promissory note from the general partner to be converted to a surplus cash note prior to closing.

The facility has 154 units and features an array of skilled nursing services and amenities. This includes rehabilitation therapy and hospice and palliative care, as well as a beautician/barber and recreational activities.

Joshua Rosen, who leads the company’s agency healthcare efforts from the company’s Chicago office, originated the transactions.

Oak Grove Capital Closes 14 Loans Totaling $89.6M for Senior Housing Facilities 

Oak Grove Capital closed 14 loans totaling $89.6 million for affordable, market rate and seniors housing facilities across the United States. The deals, ranging from $736,000 to $23 million, closed between June 13 and June 30.

Four loans totaling $49.8 million were for affordable housing, nine loans totaling $37 million were for market rate housing and one loan totaling $2.8 million was for seniors’ housing.

The largest affordable housing deal was for Marbrisa Apartments, a 368-unit complex located in Miami Gardens, Fla. The $23 million FHA Section 223(f) multifamily loan was facilitated by C.W. Early, vice president and loan officer of affordable housing for Oak Grove Capital.

The largest market rate deal was for Balboa Court, a 150-unit multifamily complex in Northridge, Calif. The $16.5 million FHA Section 223(f) loan was facilitated by Levi Brooker, vice president and loan officer for Oak Grove Capital.

The seniors housing deal was for Markham House, a 54-unit complex located in Portland, Ore. The $2.8 million FHA Section 232/223(a)(7) was facilitated by Jeff Ringwald, senior vice president and loan officer for Oak Grove Capital. 

S.D. Critical Access Hospital Finances $6.2M Long-Term Care Addition 

Fall River Health Services (FRHS), a 25-bed critical access hospital in Hot Springs, S.D., recently funded a $6.2 million expansion with a $4 million supplemental FHA loan.

Columbus, Ohio-based Lancaster Pollard was responsible for structuring the financing and underwriting of all three
phases of the hospital’s replacement project and subsequent expansions via HUD/FHA mortgage insurance programs.

“Our community was in serious need of a modern facility that could provide long-term care to area residents,” said FRHS
Chief Executive Officer Tricia Uhlir in a news release. “Once completed, the new LTC unit will provide quality care efficiently to 48 residents.”

Prior to 2010, Fall River Hospital and its long-term care (LTC) facility were housed in the same century-old facility. To secure funding in 2007 as the financial crisis unfolded, the capital project was divided into three stages to make it financially feasible.

First, FRHS completed a 15-bed replacement hospital in 2009, financed by the FHA 242 mortgage insurance program. Meanwhile, the LTC unit, now called Castle Manor, continued to operate in the original facility. Next, FRHS expanded the project in 2010 by an adding another 10 inpatient rooms.

The final stage, which began this year, will bring back long-term care to Fall River Hospital by building an addition to house a 48-bed LTC unit. To finance the construction, Lancaster Pollard recommended using the FHA Sec. 241(a) program to obtain a $4 million supplemental loan. The hospital would then contribute $2.2 million in equity to completely fund the addition, which is expected to be completed by the fall of 2014.

“By constructing the entire project in stages, FRHS was able to keep its overall risk to prudent levels,” said Bill Wilson, senior vice president with Lancaster Pollard. “In addition, the drawdown feature of the structure is saving the hospital considerable interest expense because funds are allocated at each construction phase instead of being funded entirely at the project’s start.”

Written by Cassandra Dowell