Senior Housing Finance Activity: Prudential Mortgage, Lancaster Pollard

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

Prudential Mortgage Provides $11.7M Loan to Ore. ALF, SNF, Memory Care Community 

Prudential Mortgage Capital Company, the commercial mortgage lending business of Prudential Financial, Inc. (NYSE: PRU),  provided an $11.7 million loan to West Linn Care Center Holding Company, LLC for its The Rose Linn Care Center.

Advertisement

The Rose Linn Care Center is a 141-bed assisted living, memory care, and skilled nursing facility, located in West Linn, Ore., south of Portland.

The loan was refinanced through the HUD 232/223f program and was originated and underwritten by Prudential Mortgage Capital Company’s senior housing team, which provides financing for health care, senior living properties, including those specializing in independent living, assisted living and memory care.

Casey Moore, a principal with Prudential Mortgage Capital Company, lead the transaction.

MidCap Financial Provides $18.84M Mortgage Loan for Acquisition of Ark. IL, ALF, Memory Care Community 

MidCap Financial, LLC, a leading healthcare oriented commercial finance company focused on the middle market in the United States, recently closed a transaction with Capital Health Group to acquire a senior housing facility in Hot Springs, Ark.

MidCap Financial provided an $18,836,000 first mortgage floating rate loan with a term of up to three years.

The facility was originally built as a resort hotel and was converted to a luxury senior housing facility in 2010. It is comprised of 20 independent living cottages, 88 assisted living units and 16 memory care units.

The facility was taken over by Capital Health Group in 2012 under a lease structure, with operations then turned over to an affiliate company, Compass Pointe Healthcare Systems under a management agreement. The lease structure included a purchase option, which was exercised by Capital Health Group, with Compass Pointe continuing on as the fee manager.

MidCap’s loan provides time for the facility to stabilize and season before Capital Health Group seeks to refinance with long term fixed rate debt. Capital Health Group owns 26 senior housing facilities comprising over 2,500 beds.

CBRE Capital Markets Arranges Acquisition Financing for Va. ALF

CBRE Capital Markets’ Senior Housing Debt & Structured Finance team in Houston, Texas arranged acquisition financing on behalf of a joint venture between the JF Capital Senior Living and Meridian Senior Living (MSL) for The Elms of Lynchburg, a  61 licensed bed assisted living community located in Lynchburg, Va.

The loan was originated through CBRE’s Fannie Mae DUS lending program as a Housing Delaware Statutory Trust structured transaction. CBRE secured a 10 year fixed-rate mortgage.

The community will be operated by MSL. Meridian Senior Living is based in Hickory, N.C. and Silver Spring, Md. MSL owns or manages more than 130 senior housing communities in 15 different states with the capacity to serve more than 8,000 residents.

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.

Aron Will, senior vice president of CBRE’s Senior Housing Debt & Structured Finance team lead the acquisition.

Cushman & Wakefield Arranges $82.4M in Portfolio Acquisition Capital for LCB Senior Living

Cushman & Wakefield’s Senior Housing Capital Markets Group arranged $82.4 million of acquisition financing and joint venture equity capital for LCB Senior Living LLC for the acquisition of an institutional-quality two property portfolio consisting of 322 total units.

The properties are located in Shelburne and Middlebury, Vt.

Virtus Real Estate Capital, a real estate private equity firm based in Austin, Texas, provided $25.4 million in joint venture equity, while PNC Bank provided $57 million in first mortgage acquisition financing.

Cushman & Wakefield’s Executive Managing Director Richard Swartz, Managing Director Jay Wagner, Director Aaron Rosenzweig and Associate Stuart Kim directed the capital placement efforts for this transaction.

The Lodge at Shelburne Bay consists of 191 independent, assisted and memory care units, situated on scenic Lake Champlain in Shelburne, four miles south of Burlington. The property was built in 1999 and expanded in 2011 to include an additional residential building. LCB will rebrand the community as The Residence at Shelburne Bay.

Built in 2008, the Lodge at Otter Creek consists of 131 units of independent living, assisted living and memory care units, located in the heart of Middlebury, home to Middlebury College. LCB will rebrand this community as The Residence at Otter Creek.

LCB Senior Living is a senior housing owner/operator consisting of the former management team of Newton Senior Living, which was the 16th-largest assisted living company in the nation at the time of its sale to Lazard Freres in 2005.

All of LCB’s developments, acquisitions and management contracts have been in the New England market, and this latest transaction will help the senior living provider expand its footprint in the region.

The acquisition of these two properties marks LCB’s fifth and sixth acquisitions since recapitalizing its company in 2013. Additionally, LCB has developed six senior housing properties and manages two others.

“These two properties are […] high-performing assets that yet have tremendous upside, and we’re very fortunate to have attained them,” says LCB Senior Living CEO Michael A. Stoller in a written statement.

Lancaster Pollard Finances $5.6M Ohio ALF Expansion Via FHA

Lancaster Pollard financed a $5.6 million new construction/expansion project via the FHA Sec. 232/241(a) mortgage insurance program.

Located in Sylvania, Ohio, Oakleaf Village is a 145-unit assisted living facility owned by The Wallick Companies. Built in 1987, Oakleaf underwent significant upgrades in the past decade and enjoys strong occupancy and operating performance. Expanding on that success, Wallick sought funding for the construction and permanent financing for the addition of a separate building, to be called The Grove, that would contain 40 memory care units.

The loan insured by the FHA Sec. 232/241(a) program will fund the construction costs at a low interest rate and a 40-year term.

Since Oakleaf already had an FHA Sec. 232 loan from a previous refinance, Lancaster Pollard  recommended using the FHA Sec. 232/241(a) program to finance the new construction. By demonstrating the strength of existing operations at Oakleaf, the firm was able to obtain a waiver for the vast majority of operating deficit escrow requirements, allowing Wallick to avoid contributing significant equity upfront.

In addition, by articulating the facility’s ability to support the new construction project’s future capital needs, Lancaster Pollard was able to demonstrate that Oakleaf was contributing more than necessary in monthly capital reserves. As a result, the firm facilitated a substantial reduction in replacement reserve deposits, providing further income for Wallick. Finally, Lancaster Pollard assisted with expediting an early start on the new construction, enabling Oakleaf to start in the fall of 2013 and make significant progress prior to winter.

Once complete, The Grove at Oakleaf Village will contain four wings with 10 memory care units in each.

The transaction was led by Kass Matt, managing director with the firm representing Ohio.

Lancaster Pollard Finances $3.5M Ohio CCRC Expansion Via FHA

Lancaster Pollard financed a $3.5 million new construction/expansion project via the FHA Sec. 232/241(a) mortgage insurance program.

Mason Christian Village, one of two 5-Star rated continuing care retirement communities (CCRCs), owned and operated by the Christian Benevolent Association, wanted to add an expansion wing that would result in 20 new  private occupancy skilled nursing units to help modernize the unit mix and improve the functionality of the campus.

Located in Mason, Ohio, Mason Christian Village already had an outstanding HUD/FHA Sec. 232 loan, so Lancaster Pollard recommended using the FHA Sec. 232/241(a) program to finance the expansion project.

In addition, the firm worked with HUD to allow Mason Christian Village to use its residual receipt funds as the borrower’s equity for the project. Also, Lancaster Pollard received approval for a term extension on the FHA Sec. 232/241(a) mortgage to extend beyond the term of the existing HUD loan.

The $3.5 million loan will provide a fixed rate, 40-year term and low cost of capital for the project.

The planned expansion will consist of a 14,336-square-foot addition featuring 20 new private occupancy skilled nursing units, a distinct entrance with canopy, a dining hall, a new sitting room, a 2,300-square-foot rehab gym and various other site improvements.

The transaction was led by Kass Matt, managing director with the firm representing Ohio.

Lancaster Pollard Refinances $35M for 3 Properties in New Jersey, Virginia, New York

Lancaster Pollard refinanced over $35 million for two senior living providers with properties in New Jersey, Virginia and New York.

Lancaster Pollard helped New York-based Kaplan Development Group refinance two of its senior living properties, one of which is jointly owned by Harrison Street Real Estate Capital, for a total of $27.9 million.

Bentley Senior Living at Pennsauken is a 161-unit assisted living facility in Pennsauken, N.J., and Bentley Commons at Lynchburg is a 108-unit assisted living facility in Lynchburg, Va. Both facilities
were refinanced with FHA Sec. 232/223(f)-insured loans for their long-term, non-recourse and fully amortizing features. The owners obtained all-in fixed-rate debt near 4% for 30-year and 35-year terms respectively, with proceeds going to pay off bonds and fund future capital needs.

Additionally, the non-recourse features of the new debt freed up extra guarantee capacity for Kaplan Development Group to use in support of several new development projects underway nationally.

In another transaction, Lancaster Pollard helped refinance The Memory Care Residences at Cottage Grove, a 48-unit non-profit, stand-alone memory care community located in a suburb of Rochester, N.Y., for $7.75 million.

The small home community was originally constructed in 2008/2009 with proceeds from letter of credit secured variable rate demand civic facility revenue bonds issued by the County of Monroe Industrial Development Agency. Rochester Presbyterian Home is the non-profit sponsor of the project and had pledged its foundation assets as collateral to secure the Series 2008 bonds.

The organization wished to develop another similar community, but wanted to leverage its foundation’s assets to obtain favorable construction financing terms. In order to do so, they needed to refund their existing bonds.

By refinancing with a FHA Sec. 232/223(f)-insured loan made by Lancaster Pollard, Rochester Presbyterian Home was able to improve its financial flexibility by freeing up its foundation assets. The all-in interest rate on the new loan is near 4% and fixed for 35 years. The loan proceeds were used to pay off bonds, terminate an interest rate swap derivative, and fund future capital needs.

Tom Grywalski, a vice president for Lancaster Pollard based out of the firm’s Philadelphia office, led the refinancing.

Lancaster Pollard Refinances Mass. ALF Property for $5 Million

Lancaster Pollard underwrote an assisted living property through FHA mortgage insurance Broad Reach Healthcare, a multisite provider in Massachusetts, and engaged the firm to refinance remaining variable-rate debt from a 2010 renovation/expansion of its 40-unit assisted living property, The Victorian, which is located in North Chatham.

The firm underwrote the $5 million loan insured by the FHA Sec. 232/223(f) program at a fixed rate of just over 4% for 35 years. This refinancing eliminated interest rate risk and provided further debt service relief by extending the term of the loan.

The transaction was managed by Vice President Aaron Becker, who is based out of the firm’s Philadelphia office.

Mansa Capital Closes $10M Financing with Healthsense 

Healthsense, Inc., a provider of technology-enabled care solutions for the senior care continuum, closed on $10 million in financing led by Mansa Capital, a Boston-based private equity firm focused on the $2.8 trillion U.S. healthcare market.

Previous investors Merck Global Health Innovation Fund and Radius Ventures LLC also participated in the round.

“Mansa Capital possesses exceptionally strong relationships that Healthsense can leverage to expand our reach into the managed care and home health markets, where we see major growth opportunities,” says Healthsense President and CEO A.R. Weiler in a written statement. “Mansa Capital’s involvement will extend the exceptional benefits we have realized from previous investments with Merck GHI, Radius and B.C. Ziegler and Company, influential investors whose market knowledge and resources have helped us achieve our continued growth and success.”

With Healthsense’s growing focus on helping managed care organizations optimize care, the firm has deployed several pilot programs within the last year including partnerships with Humana Cares/Senior Bridge, Fallon Health, and various others.

Early program results suggest a positive impact of the Healthsense eNeighbor remote monitoring platform on improving care outcomes for those with chronic health conditions by providing earlier interventions and readmission rate reductions in various care environments.

“We seek to engage with companies that demonstrate both strong growth potential and the ability to advance the healthcare industry’s triple aim of improving care, reducing costs and enhancing the patient experience,” says Mansa Capital Managing Partner and Chief Investment Officer Ruben King-Shaw Jr., who will join the Healthsense Board of Directors. “Healthsense embodies all that we look for when considering an addition to our healthcare portfolio, particularly given the ever-increasing industry focus on managed care.”

Ziegler Closes $51.3M Refinancing for Ala. Hospital 

Ziegler, an investment bank to community and regional healthcare providers nationwide, closed a $51.3 million refinancing of Coosa Valley Medical Center (CVMC) through Ziegler’s Financing Corporation (ZFC), the FHA-insured mortgage lending arm of Ziegler.

This transaction represents the first FHA Section 242/223(f) community hospital refinancing transaction in the country under HUD’s new regulations issued in 2013.

Coosa Valley Medical Center is a 248-bed, not-for-profit, acute care hospital located in Sylacauga, Ala. In 2005, the Ziegler Healthcare Investment Banking team led by John Hanley, assisted CVMC in the issuance of the Series 2005-A Bonds.

CVMC had about $50 million in outstanding tax-exempt bond debt with an average interest rate of 6%. By analyzing the options, including the issuance of tax-exempt debt through the capital market and private placement markets, Ziegler identified the use of FHA Section 242/223(f), a new program offered by HUD.

Ziegler’s Healthcare Investment Banking team worked alongside ZFC through the FHA process, which lead to a new mortgage loan underwritten by ZFC. CVMC’s new financing has a 25-year term with a fixed rate of just over 4%. With the new loan structure CVMC was also able to capitalize on about $792,000 for its hospital renovations in addition to lowering its annual debt service costs by up to $677,000. The entire recapitalization provided a solid foundation for future growth and success at CVMC.

“Ziegler was instrumental in guiding us through the new FHA Section 242/223(f) refinancing program, allowing us to partner with HUD and take advantage of the low, fixed interest rates available in today’s market,” says Chief Executive Officer of CVMC Glenn Sisk in a written statement. “With this refinancing, we were able to significantly lower our debt service which will provide a solid  foundation for CVMC’s future growth in the ever-changing healthcare environment.”

The new Section 242/223(f) program provides “a compelling alternative available to not-for-profit hospitals to refinance their existing debt,” says Bill Mulligan, president of ZFC.

Ziegler was represented by Krooth & Altman LLP in the transaction.

Written by Cassandra Dowell

Companies featured in this article:

, , , , , , ,