Senior Housing Finance Activity: Ziegler, Lancaster Pollard

Lancaster Pollard Secures $7 Million Refinancing for New York Assisted Living Community

Lancaster Pollard recently assisted The Lake Shore Assisted Living Home, a 200-unit assisted living community in Lake Ronkonkoma, New York, with a $7 million refinance utilizing the FHA Sec. 232/223(f) program.

The Lake Shore Assisted Living Home was searching for a more beneficial long-term debt solution than the full-recourse, variable-rate loan it previously had with a bank, Lancaster Pollard said in a press release. So, Lancaster Pollard obtained a Sec. 232/223(f)-insured loan that is non-recourse, featuring a 30-year term and a low, fixed interest rate. Additionally, the community set aside a large initial deposit to its replacement reserves while still maintaining a low loan-to-value, enabling it to reduce its yearly contribution and improve its cash flow and debt service coverage.

Senior Managing Director Ken Gould led the transaction for Lancaster Pollard.

Ziegler Closes $42.14 Million Friendsview Manor Financing

Chicago-based specialty investment bank Ziegler announced the closing of the $42.14 million, un-rated, fixed-rate Series 2016 Bond issue for Oregon-based not-for-profit corporation Friendsview Manor, d/b/a Friendsview Retirement Community, a client new to Ziegler.

Friendsview, a registered, Type A life plan community, has two campuses located in Newberg, Oregon. In total, Friendsview operates 317 homes, including 239 entry-fee independent living homes, 31 residential care apartments, 29 residential care health beds and 18 residential care memory beds.

Proceeds of the 2016 Bonds will be utilized to (i) refund all of the outstanding principal amount of the $23.4 million Series 2014A (Tax-Exempt) Bonds; (ii) refund all of the outstanding principal amount of the $880,000 Series 2014B (Federally Taxable) Bonds; (iii) fund swap termination payments; (iv) finance the development and construction of a 38-unit independent living expansion project known as University Village to be located adjacent to Friendsview’s main campus in Newberg, Oregon; (v) refinance specific taxable bank indebtedness of the corporation outstanding in the amount of about $700,000; (vi) fund a debt service reserve fund for the benefit of the Bonds; and (viii) pay specific costs of issuance of the Bonds.

“Ultimately, 28 funds participated in the offering, helping drive the bond yield below 4%—the lowest we have ever seen for a senior living transaction of this type,” Sarkis Garabedian, senior vice president in Ziegler’s senior living practice, said in a press release.

CBRE Secures $60 Million Loan for Capitol Senior Housing, The Carlyle Group Joint Venture

CBRE National Senior Housing Vice Chairman Aron Will arranged acquisition financing on behalf of a joint venture between The Carlyle Group and Capitol Seniors Housing for a portfolio of four purpose-built senior housing communities located in markets in the Seattle metropolitan statistical area.

Of the portfolio’s 368 total units, 91 are independent living units and 277 are independent/assisted living. After the aquisition, the portfolio is expected to be managed by MBK Senior Living.

Specifically, CBRE secured a $60+ million, non-recourse floating rate loan which has a five-year term with 36 months of interest only. Total loan proceeds include a loan of $51.9 million for the acquisition of the property, as well as a loan of $8-plus million for planned capital improvements. The borrower’s business plan includes the deployment of capital expenduture funds to be spent upgrading units and the renovation of all finishes in common areas, CBRE said in a press release.

Capitol Seniors Housing is a 13-year-old senior housing investment company that currently owns 19 properties with 2,015 total units. Washington, D.C.-based Carlyle is a global alternative asset manager that currently owns and operates 6,700 senior housing units across 38 senior housing assets.

West Coast-based MBK currently operates 18 senior housing properties located in California, Arizona, Colorado, Washington and Utah. MBK also has a strong geographic footprint in the Pacific Northwest, with seven other assets under management.

Ziegler Closes $64.42 Million Baptist Life Communities Financing

Ziegler, a Chicago-based specialty investment bank, announced the successful closing of the $64.42 million, tax-exempt, non-rated Series 2016A&B financing for Kentucky-based Baptist Life Communities, a client new to Ziegler.

Baptist Convalescent Center, Inc., d/b/a Baptist Life Communities, currently owns and operates three senior living campuses: Baptist Convalescent Center of Newport in Newport, Kentucky, which has 167 skilled nursing beds and 30 personal care units; Baptist Village in Erlanger, Kentucky, which has 80 independent living units and 100 skilled nursing beds; and Griesser Farm in Burlington, Kentucky, which has 12 independent living units.

Baptist Life Communities plans to replace the Baptist Convalescent Center (BCC) with a new community called The Seasons at Alexandria in Alexandria, Kentucky, to be built about eight miles south of the current campus.

In Alexandria, certificate of need (CON) licenses for 117 skilled nursing beds will be provided by transferring existing bed licenses from Baptist Convalescent Center. Then, after the Alexandria campus opens and the 117 beds are transferred, Baptist Convalescent Center will “wind down” and the property will be sold, Ziegler said in a press release. CONs for 30 of the proposed 66 personal care beds in Alexandria have already been secured by Baptist Life Communities. Additionally, the Commonwealth of Kentucky has approved the CON for the extra 36 personal care units.

Phase II to the development of The Seasons at Alexandria is anticipated to include 60 independent living units, as well as associated amenity spaces.

The Series 2016A and Series 2016B Bonds were issued to (i) finance project costs and reimburse borrower of costs incurred associated with the Alexandria Project, (ii) refinance $4.58 million of existing debt outstanding, (iii) reimburse $515,000 of eligible capital expenditures incurred, (iv) fund $1.89 million of cash requirements after opening (v) fund a Liquidity Support Fund of $1 million (vi) fund a debt service reserve fund for the Series 2016 Bonds, (vii) pay for funded interest on the new money portion of the Series 2016A bonds and for all of the Series 2016B bonds for 24 months, and (viii) pay the costs of issuance. The corporation contributed $3 million of equity related to the project, Ziegler said.

The Series 2016A Tax-Exempt Fixed Rate Bonds have a par amount of $61.38 million made up of $4.34 million of refunding and $57.04 million of new money. The Series 2016B Taxable Fixed Rate Bonds have a par amount of $3.04 million. The new money and refunding components are amortized together to form level debt service. The Series 2016A Bonds amortize over 35.5 years until 2051 with a double payment in 2051 partially funded with the release of the debt service reserve fund. The Series 2016B Bonds have a final maturity in 2023.

RED Capital Closes $12.7 Million Acquisition Loan for Birchwood Health Care Properties

The proprietary debt and equity banking arm of comprehensive capital provider RED Capital Group, LLC—RED Capital Partners, LLC—completed a $12.7 million balance sheet acquisition loan on behalf of Chicago-based Birchwood Health Care Properties for the purchase of four skilled nursing facilities in Oklahoma.

The Oklahoma portfolio includes four skilled nursing facilities located in Muskogee, Oklahoma, and McAlester, Oklahoma, with 361 beds in total. Transition Health Services is expected to operate the facilities, as well as their ancillary businesses.

For this transaction, RED obtained a high-leverage bridge-to-HUD loan. A mezzanine lender provided additional proceeds used towards the acquisition of the facilities, as well as a hospice care and home health company in an associated transaction. These ancillary businesses provided credit support for RED’s acquisition loan, as well.

Under Birchwood’s ownership, the facilities are expected to undergo changes that will enhance patient care and enable them to address the community’s pressing need for facilities servicing a higher acuity population, RED Capital said in a press release.

United Community Bank Adds Senior Care Lending Group

Blairsville, Georgia-based United Community Bank (Nasdaq: UCBI) is adding to its Specialized Lending division with the creation of an experienced team specializing in financing senior care facilities, including skilled nursing facilities, assisted living communities and memory care communities. The four-person team will be based in Birmingham, Alabama, and will work throughout the Southeast, providing loans and lending expertise to senior housing operators aiming to build, renovate or expand senior living communities.

Jennifer Lawley, a five-year veteran of senior care lending, will lead the new team. Senior Care Relationship Manager Dennis Rowlen is set to assist Lawley. Additionally, Caroline Meyer joined the team as senior care portfolio manager, and Nancy Grizzard joined the team as a senior living loan assistant.

“We are particularly pleased to add this team and their capabilities to our specialized lending operation,” Charles Chamberlain, United Community Bank’s director of corporate banking, said in a press release. “Our footprint represents a desirable retirement region and we have found these types of transactions to be much more complex than other types of project financing. Having a dedicated team with this specific industry knowledge will allow United Community Bank to become a very competitive force within this sector.”

Written by Mary Kate Nelson