Senior Housing Finance Activity: GE Capital, Berkadia

GE Capital Provides $48.5M Financing for Acquisition of Four Ariz. Senior Care Facilities 

GE Capital’s Healthcare Financial Services (HFS) business was the administrative agent and a lender on a $48.5 million financing to a joint venture among LTC Properties Inc., Silverstone Healthcare Real Estate and Senior Lifestyle Corp.

The funds were used for the acquisition of four senior housing facilities in Arizona owned by LSREF Sun Devil REIT, Inc. HFS has already provided $46 million of initial funding, the company said in a statement.

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Three of the buildings being acquired are part of the Amethyst Campus in Peoria, Ariz., which consists of independent living, assisted living and memory care units. The other property is Emerald Springs, a 148-unit assisted living and memory care facility in Yuma, Ariz.

“This is a case where we had longstanding relationships with the both buyer and the seller,” said James Seymour, senior managing director of GE Capital, Healthcare Financial Services’ real estate financing team, in a statement. “I’m pleased that we were able to leverage our experience and relationships to meet the tight closing timeframe required by the parties.”

Lancaster Pollard Helps Paramount Healthcare Consultants Refinance Portfolio

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Headquartered in Monroe, La., Paramount Healthcare Consultants (PHC) is a locally-owned company that provides seniors in Louisiana with services across the continuum of care.

PHC had bank debt and a plain vanilla interest rate swap (pay fixed/receive variable) on three of its facilities that it wanted to refinance in order to lower its debt service and pay off the swap, Lancaster Pollard said in a statement.

Lancaster Pollard obtained a favorable valuation of the three-facility portfolio. The firm then obtained three loans insured by the FHA Sec. 232/223(f) program with a total loan amount of $20.2 million to refinance the facilities.

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“It was determined that HUD/FHA financing would be the ideal funding route in order to achieve its goals,” Lancaster Pollard said. “The three facilities PHC sought to refinance were Avalon Place, a 115-bed skilled nursing facility; Leslie Lakes, a 150-bed SNF and 19-unit IL facility; and Princeton Place, a 112-bed SNF.”

Lancaster Pollard also assisted PHC with a corporate restructuring to ensure compliance with HUD’s single asset entity and master lease requirements.

The existing indebtedness and swap termination fee were completely funded through the FHA Sec. 232/223(f) loans and no equity was required from PHC. The loans carry low interest rates and limited lockout and prepayment penalties, which provide PHC with financial flexibility should they decide to sell or recapitalize at a later date.

PHC owns several facilities that offer independent living, assisted living, short-term rehabilitation, long-term nursing, specialized bariatric and Alzheimer’s care. The facilities of PHC specialize in helping residents return to their homes. Each facility has a full-time staff of therapists, including physical, occupational and speech.

Scott Blount, health care banker out of Austin, Texas, led the transaction for Lancaster Pollard.

Lancaster Pollard Provides $13M Refinance for Ohio Senior Housing Community 

Lancaster Pollard assisted Jennings Center for Older Adults with a $12.6 million refinance.

The main campus is located in Garfield Heights, Ohio, and was founded in 1942. The nonprofit Jennings, which is sponsored by the Sisters of the Holy Spirit, offers several services including: 174 private suites of skilled nursing, 54 suites of assisted living, 10 independent living villas, adult day services, child day care, a wellness center, transportation services and community programs.

Jennings also serves over 200 individuals in four independent living apartments.

Lancaster Pollard was able to refinance Jennings’ Series 2009 bonds using the FHA Sec. 232/223(f) program.

“The result is a low interest rate just above 3% that will generate significant annual debt service savings,” Lancaster Pollard said in a statement. “With its improved financial outlook, Jennings is in an optimal position to serve its residents while also pursuing new services to further its mission.”

Kass Matt, managing director, led the transaction for Lancaster Pollard.

Ziegler Closes $69M Financing for Nonprofit Va. Senior Housing Corp. 

Ziegler, a specialty investment bank, closed a $68,815,000 tax-exempt, fixed-rate Series 2015 Bond issue for Goodwin House, a long-standing client of Ziegler.

Goodwin House Incorporated (Goodwin House) is a not-for-profit Virginia corporation incorporated in 1955. Goodwin House owns and operates two Life Care continuing care retirement communities (CCRCs) in Northern Virginia ranking Goodwin House 4th in Virginia and 94th in the nation according to the 2014 LeadingAge Ziegler 150.

Goodwin House is in the advanced planning stages of a $68.2 million project at the Alexandria campus that will include: construction of a new five-story, small-house concept health center that will house the skilled nursing units (Center of Excellence); repurposing of existing health care facilities (vacated by the units moving to the Center of Excellence) into 16 new independent living apartments and 11 assisted living units; upgrading and improvement of dining and community spaces; and upgrading and improvement of service functions, according to Ziegler.

“The Series 2015 Bond financing is unique in that Goodwin House did not have a guaranteed maximum price contract, certificate of public need, or building permits at the time of closing,” Ziegler said in a statement. “To offset potential bondholder concerns about the absence of such items, Goodwin House developed a highly credible alternative plan of finance that would deploy Series 2015 Bond proceeds for alternative capital uses in the event that any of these ‘externalities’ failed to materialize as expected.”

Proceeds of the $68,815,000 Series 2015 Bonds will be used, together with a $25 million equity contribution from Goodwin House and other moneys available therefor, to refund the outstanding principal amount of the Series 2005 Variable Rate Demand Bonds, finance the costs of improvements and additions to the Alexandria campus, pay certain costs of issuance of the Series 2015 Bonds, and fund a debt service reserve fund for the Series 2015 Bonds.

The Series 2015 Tax-Exempt Fixed Rate Bonds have a 2050 final maturity (35-years), are BBB rated from Fitch and resulted in an aggregate yield to maturity 4.48%.

Davenport & Company, LLC served as a 15% co-manager on the transaction.

Ziegler Closes $52M in Bonds for ABHOW Obligated Group

Ziegler, a specialty investment bank, closed a $52,080,000 BBB+ (Fitch) rated, tax-exempt, fixed-rate Series 2015 Bond  issue for American Baptist Homes of the West (ABHOW) Obligated Group.

ABHOW, a long-standing Ziegler client, was founded in 1949 as Pilgrim Haven Home Corporation with the establishment of Pilgrim Haven retirement community in Los Altos, Calif., now The Terraces at Los Altos.

ABHOW directly owns and operates seven CCRCs in California, and provides management services to four affiliated CCRCs and to Beacon Communities, Inc., parent company of ABHOW’s low and moderate-income senior rental housing communities.

Proceeds of the sale of the bonds and other available funds will be used to refund the outstanding Series 2006 Bonds; reimburse ABHOW in the amount of $11 million for prior capital expenditures across the communities, and fund $9 million in additional new money projects, according to Ziegler.

Costs of issuance will be paid with ABHOW equity contributed at closing.

The Bonds were structured to wrap around the existing capital structure, with principal amortizing in years 2016 through 2028, and 2037 through 2045, to create level aggregate debt service.

The bonds were successfully sold with a “springing” Debt Service Reserve Fund, saving ABHOW significant expense vs. a cash-funded Debt Service Reserve Fund, Ziegler said.

“ABHOW made a strategic decision to reduce its variable rate exposure during this recent low-interest rate period, as
well as to finance a portion of its ongoing capital improvement plan,” said Mary Muñoz, managing director in Ziegler’s senior living practice, in a statement.

Portfolio of 18 Skilled Nursing Facilities Nets $100M Refinance 

Subsidiaries of Orion Care Services received a $100 million term loan with an accordion feature to refinance a group of 18 skilled nursing facilities with embedded equity and to allow for $20 million of excess cash to fund future acquisitions and development.

Joe Resor of Resor Financial Group was the advisor on the deal, and confirmed details of the transaction with SHN.

The facilities, all located in Ohio and Michigan, totaled 1,257 beds.

The loan, valued at $79,554 per bed, came with a seven-year term and 25-year amortization. A rate of LIBOR plus 250 basis points was swapped out on 70% of the loan to a 4.30% fixed rate.

The five banks in the syndicate approved a 75% loan-to-value, but the loan ended up at 70% as a result of improved property performance, Resor said.

Orion Care Services provided a corporate parent guarantee on the syndication, and brought in Frank Conway of the Fifth Third Cleveland office as the lead arranger.

Berkadia Secures Over $93M Financing for ROC Seniors Housing Fund Manager

Berkadia arranged $93.2 million in financing for two separate transactions for ROC Seniors Housing Fund Manager, LLC (ROC).

The first transaction involved the acquisition of a portfolio of seniors housing assets located in six different states, while the second transaction involved a stand-alone facility located in Ohio.

Managing Director Christopher Fenton of Berkadia’s Seniors Housing and Healthcare group secured the financing for ROC, which is a private equity real estate manager targeting core, value add and new development seniors housing investments in the U.S.

Most recently, Berkadia originated an $84 million, three-year, floating-rate loan through BBVA Compass Bank (BBVA) for the acquisition of 14 seniors housing facilities located in California, Oklahoma, Texas, North Carolina, Ohio and West Virginia. Berkadia participated in the loan with BBVA and contributed $20 million of the overall financing through its Propriety Bridge Lending Program. In total, the facilities consist of 1,038 units: 719 assisted living units, 208 memory care units and 111 independent living units.

“Our ongoing relationship with BBVA allowed us to provide the necessary financing to meet ROC’s financing needs,” Fenton said in a statement.

Earlier this year, Berkadia originated a $9.2 million, three-year, floating-rate loan through its Proprietary Bridge Lending Program for the acquisition of The Landing of Canton, a 76-unit assisted living and memory care facility located in Canton, Ohio. Located at 4550 Hills and Dales Road, the community sits within five miles of all three major hospitals in the area and offers a personalized care plan for each resident. The community consists of 76 assisted living and Memory Care units.

“Berkadia’s reliable execution of the financing of these transactions was essential to our ability to close on several properties on schedule and in-line with the financing terms initially set forth,” said Phil Anderson, Chief Investment Officer of ROC Seniors.

Ziegler Closes $94M Financing for Texas Senior Housing 

Ziegler, a specialty investment bank, closed a $53,600,000 tax-exempt, fixed-rate Series 2015A and $40,590,000 tax-exempt, fixed-rate, Series 2015B Bond issues for Northwest Senior Housing Corporation.

Senior Quality Lifestyles Corporation (SQLC), a Texas not-for-profit organization, serves as the sole corporate member of Northwest Senior Housing Corporation (NSHC). NSHC owns and operates Edgemere, located in the Preston Hollow area of Dallas.

SQLC is the nation’s 30th largest not-for-profit provider of senior living services based upon the 2014 LeadingAge Ziegler 150 ranking and the largest in Texas. SQLC and NSHC comprise the obligated group for the Series 2015A&B Bonds.

In addition to NSHC, SQLC is the sole corporate member of the following organizations: Buckingham Senior Living Community, Inc. (Houston, Texas), Tarrant County Senior Living Center, Inc. (Ft. Worth, Texas), Barton Creek Senior Living Center, Inc. (Austin, Texas), Mayflower Communities, Inc. (Carmel, Ind.), SQLC Senior Living Center at Corpus
Christi, Inc. (Corpus Christi, Texas), SQLC LSA, LLC (established to provide financial support to certain LLC communities).

Edgemere is located on an approximately 16.25-acre site leased from an unrelated third-party.

The first phase of the community, consisting of 256 independent living units, 60 assisted living units, 31 memory support assisted living units and 72 skilled nursing beds, opened in December 2001 and achieved stabilized occupancy in 2004.

The second phase of the community, consisting of 48 independent living units, opened in September 2007 and achieved stabilized occupancy in October 2008.

Proceeds of the Series 2015A Bonds, rated BBB (stable) by Fitch Ratings, and other funds will be used to refund the outstanding Series 2006B variable rate demand bonds totaling $17,240,000; terminate an existing interest rate swap; reimburse NSHC for certain routine capital expenditures; fund certain campus improvements and additions (the “Renaissance Project”); fund interest for 23 months on a portion of the financing; fund a debt service reserve fund and pay the cost of issuance of the Series 2015A Bonds, according to Ziegler.

The Renaissance Project will include an expansion of the community including eight assisted living units, 11 memory support units, and 15 private nursing beds. In addition, a structured parking garage with 72 spaces and an approximately
4,000 square foot performing arts center will be constructed.

Proceeds of the Series 2015B Bonds and other funds will be used to refund the tendered Series 2006A Bonds; fund a debt service reserve fund and pay the cost of issuance of the Series 2015B Bonds. The outstanding amount of the Series 2006A term bond due in 2026 was $19,270,000 of which $9,525,000 were tendered or 49.4% at a redemption price of 107.5.

The outstanding amount of the Series 2006A term bond due in 2036 was $34,520,000 of which $29,355,000 were tendered or 85.0% at a redemption price of 106.5. Annual debt service savings as a result of the tender and refinancing of the tendered bonds is approximately $132,000 resulting in a net present value benefit of $2.06 million or 5.31% or the par amount of tendered bonds.

The issuance of the Series 2015A and Series 2015B Bonds represents the third and fourth times that Ziegler has served as the underwriter for a transaction for Edgemere and the 10th and 11th times for a SQLC sponsored community.

Written by Cassandra Dowell

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