Senior Housing Finance Activity: HHC Finance, Cambridge, Capital One

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

Housing & Healthcare Finance Closes $19.4M HUD Loan for N.J. SNF

Housing & Healthcare Finance (HHC Finance) closed a $19.4 million 232/223(f) HUD loan for a 189 bed skilled nursing facility (SNF) in Lincoln Park, N.J. The facility was purchased in 2012 by Center Management Group which is based in Flushing, N.Y.

The facility has two buildings, the second of which was completed in June 2013 and is designated for short term/rehab beds.

The fixed-rate 35 year HUD loan refinanced the facility’s higher rate, shorter term conventional acquisition debt as well as capital expenditures.

Housing & Healthcare Finance Closes $24.7M HUD Loan for N.J. SNF

Housing & Healthcare Finance (HHC Finance) closed a $24.7 million 232/223(f) HUD loan for a 204 bed/113 unit skilled nursing facility (SNF) in eastern New Jersey.

The facility leases part of its overall space to a local hospital which serves children affected brain injury, spinal cord dysfunction and injury, premature birth, autism, developmental delays, and life-changing illnesses.

The fixed-rate 35 year HUD loan refinanced the facility’s higher rate, shorter term conventional debt as well as recently completed renovations.

RED Mortgage Capital Provides $31M FHA-Insured Loan to Expand Colo. ALF

Red Mortgage Capital (Red), the mortgage banking arm of Red Capital Group, LLC, closed a $31 million FHA-insured 232/241(a) supplemental loan to develop Parker Senior Living by MorningStar, a senior housing community located in the town of Parker, Colo.

The deal was a joint venture between two Denver-area firms, Faestel Properties and JHL Constructors. MorningStar Senior Living currently operates the existing building and is slated to manage the expansion.

Currently on the project site is an existing 64-unit assisted living and memory care community named Parker Assisted Living by MorningStar. The original project was also financed by Red with an FHA-insured Section 232 New Construction loan.

The original development leased up within 10 months of opening and is currently full with a waiting list.

The FHA Section 232/241(a) supplemental loan will provide construction and permanent financing to fund two new senior resident buildings, adding 49 units of independent living, 54 units of assisted living, and 24 units of dementia/memory care to create the Parker Senior Living by MorningStar campus.

Red obtained approval for an early start to construction for the new memory care building while the application was still in review at HUD. As a result, it is anticipated to open by October 2014 — within four months of initial closing. There are prospective residents already on a waiting list for this new building. The second larger assisted and independent living building is scheduled to be open by late 2015.

“We were able to structure the deal with a lower equity requirement compared to a conventional bank loan, offer a non-recourse, low-interest, 40-year loan plus the construction period, and lead the development team through a successful early start so that they could open the doors to the memory care building sooner,” said Mark Tran, director of seniors housing originations for Red, in a news release.

Acceptance of the original building led Faestal Properties to the decision to expand the senior housing offerings within the community, said Joel Faestel, vice president of Faestal Properties.

“Over the years, we have continued to show our commitment to smart growth in the area,” Faestel said.

Cambridge Arranges $6.3M HUD Loan to Refinance Maine SNF

Cambridge Realty Capital Companies arranged a $6,330,400 HUD Lean loan to refinance the Oak Grove Center skilled care nursing home in Waterville, Maine.

The fully-amortized, 40-year loan was arranged for the owner, a Maine limited liability company, using the HUD Section 232 pursuant to Section 223(a)(7) funding program, which is used to refinance existing HUD loans, said Cambridge Chairman Jeffrey A. Davis, in a news release.

Underwriting the transaction was Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in underwriting FHA-insured HUD loans.

Oak Grove Center is a 90-bed skilled care nursing home. It provides a range of medical and health services including audiology care, colostomy care, dementia care, IV therapy, psychiatric care, speech, physical and occupational therapy, podiatry care, vision care, wound care, medication management and palliative care. Non-medical services include meals, beauty/barber services, housekeeping services, on-site laundry facilities and a 24-hour emergency alert and response system.

CBRE Secures $10.2M Non-Recourse Loan for Va. ALF, Memory Care Community

CBRE’s Senior Housing Debt & Structured Finance team in Houston, Texas arranged acquisition financing on behalf of Capitol Seniors Housing (CSH) for Sudley Manor House, a 72 unit/78 bed assisted living and memory care community located in Manassas, Va. (Washington DC MSA). Aron Will, senior vice president of CBRE’s Senior Housing Debt & Structured Finance led the financing.

CBRE secured a $10.2 million non-recourse loan from a regional bank which includes five years of interest and a $2 million earn out feature. The loan also included a sub 3% spread over 30 day LIBOR. CBRE secured non-recourse quotes from two other lending sources.

The community will be operated by The Arbor Company (Arbor), which is the owner/operator of independent living, assisted living and memory care communities with over 27 years of industry experience. The Arbor Company currently operates 20 properties in Georgia, Texas, Pennsylvania, Florida, North Carolina, South Carolina and Tennessee totaling 1,770 units.

CSH plans to implement a capital improvement program, adding several assisted living units through Arbor’s implementation of a number of operational changes.

In 2012 and 2013, CBRE Capital Markets, through its two senior housing debt producers, originated $816 million in senior housing financings across 50 assets nationwide. In 2013, CBRE closed a total of $416 million across 27 senior housing assets.

Capital One Bank Closes $8.8M to Refinance N.H. ALF

Capital One Specialty Healthcare Real Estate, part of Capital One Bank’s Commercial Real Estate Group, provided an $8.8 million HUD 232/223 (a)(7) loan to refinance Wheelock Terrace, a 70-bed assisted living facility in Hanover, N.H. The facility also provides memory care services.

The assumable, non-recourse, fixed-rate loan has a 35-year fully amortizing term which can be prepaid after a short lockout period.

Wheelock Terrace is owned by Terrace Communities, which owns assisted living communities in Vermont, Maine, and Florida, as well as in New Hampshire.

This is one of three transactions that Whatley’s Capital One Multifamily team underwrote simultaneously for Terrace Communities. They include Tequesta Terrace in Tequesta, Florida, and Windham Terrace in Windham, New Hampshire.

“It made sense from both an operational and financial standpoint for the owners to refinance all three properties at the same time,” Whatley said in a news release.

HUD issued its firm commitment for the property without special conditions, and the loan reduced the owner’s interest rate by almost 1.5%, producing annual debt service savings of $90,000.

The refinancing also allowed the owners to make improvements to the units, purchase a generator, and fund replacement reserve accounts.

Constructed in 2000, Wheelock Terrace consists of a three-story building with 87 beds on a well-landscaped, 11-acre site.

The transaction was originated by Carolyn Whatley, senior vice president of originations, headquartered in the company’s Palm Beach office.

Lancaster Pollard Assists Ind. CCRC Secure $6.6M in Tax-Exempt Bonds

Continuing care retirement community (CCRC) Christian Care Retirement Community engaged Lancaster Pollard to refund approximately $3.7 million in 2005 tax-exempt bonds. In addition, the CCRC also wanted to fund just under $3 million in capital improvements, including an expansion of its independent living units, a renovation of its assisted living cafeteria and a possible new therapy gym.

Christian Care Retirement Community, in Bluffton, Ind., is comprised of 38 independent living villas, 42 independent and assisted living apartments, and 66 skilled nursing beds.

Lancaster Pollard solicited proposals from numerous commercial banks, private finance companies and other qualified institutional buyers to determine their interest in the financing. Christian Care chose to privately place tax-exempt bonds with a commercial bank because of that structure’s ability to deliver the lowest cost and greatest flexibility.

The $6.58 million fixed-rate, tax-exempt revenue bonds were bank qualified and priced at less than 3% fixed rate for a 10-year term.

Lancaster Pollard Refinances Two Minn. ALFs for $8M

Lancaster Pollard refinanced two separate properties in Minnesota and Iowa via the FHA Sec. 232/223(f) mortgage insurance program.

Grand Meadows, operated by Progressive Care, LLC, is a 65-unit assisted living facility located in Glencoe, Minn.

Lancaster Pollard underwrote a $4.7 million loan insured by the FHA Sec. 232/223(f) program that will refinance the facility’s debt and generate annual debt service savings of $247,000.

Lancaster Pollard also used the FHA Sec. 232/223(f) program to refinance debt for Gardens at Cherokee, a 38-unit assisted living facility operated by VL Cherokee, LLC and located in Cherokee, Iowa.

The $3.3 million loan will refinance the outstanding debt, fund repairs, and fund an initial deposit into the facility’s replacement reserve.

Both transactions were led by Quintin Harris, a vice president and health care banker with the firm representing Minnesota, Iowa and Nebraska.

Lancaster Pollard Refinances Wash. SNF for $3.6M

St. Anne Nursing and Rehabilitation Center, a 47-bed skilled nursing facility in Seattle, Wash., engaged Lancaster Pollard to refinance $3.6 million of existing debt via the FHA Sec. 232/223(f) mortgage insurance program to replace a bank loan that was nearing maturity.

As a result, the owners obtained fixed-rate debt well below a 4% interest rate for a 21-year term.

The transaction was guided by Vice President Matt Lindsay, who manages the firm’s Northwest Region.

Lancaster Pollard Refinances Ind. AL, SN Facility for $7M

Lancaster Pollard recently assisted its existing client Greencroft Communities, a nonprofit senior living provider in Indiana, with the financing of one of its properties, Oak Grove Christian Retirement Village.

Lancaster Pollard arranged bank financing to fund a Medicare suite addition to the campus, then refunded the bank debt through a permanent loan insured via the FHA Sec. 232/223(f) mortgage insurance program.

With the firm’s assistance, Oak Grove obtained a nonrecourse $7 million loan with a 35-year term at under a 4% fixed interest rate.

Located in Demotte, Ind., Oak Grove consists of 39 assisted living units and 59 skilled nursing beds.

The transaction, which avoids needing to be a part of the system’s obligated group, also funded $116,000 for future capital expenditures.

Lancaster Pollard Managing Director Steve Kennedy led the transaction.

Written by Cassandra Dowell