Senior Housing Finance Activity: AEW’s $500 Million Senior Housing Fund

AEW Raises $500 Million for U.S. Senior Housing Fund

Boston-based AEW Capital Management recently raised about $500 million for its third U.S. senior housing fund, IPE Real Estate reported. AEW aimed for a total equity raise of $500 million, IPE noted, citing a consultant of a pension fund intending to commit to the fund. The total amount in the fund is currently $495.5 million, which represents the largest raise that AEW has done in its senior housing series.

AEW closed its first U.S. senior housing fund in 2009 and its second U.S. senior housing fund—AEW Senior Housing Investors II, L.P.—in 2014. The second fund closed with a total of $371 million in equity commitments, against a goal of $250 million.

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AEW has told new investors that it will not be accepting any new commitments for AEW Senior Housing Investors III fund, sources told IPE. The value-add fund is not closed, a company representative of AEW said, though the representative would not provide additional comment.

Teacher Retirement System of Texas is a lead investor in this most recent fund, with a $150 million commitment, or more than 30% of the capital raise. Teachers’ Retirement System of Louisiana, meanwhile, has committed $50 million to the fund. 

AEW intends to invest 50% of capital for Housing Investors III in development properties, due to the attractive risk-adjusted returns linked to building from the ground up, as opposed to purchasing existing properties that are outdated, IPE reported.

The real estate fund manager plans to use as much as 65% of debt. The assets will be a combination of independent living, assisted living and memory care operations, and the anticipated holding period is five to eight years per asset.

Lancaster Pollard Closes Six Refinance Transactions for Apple Rehab

Columbus, Ohio-based Lancaster Pollard, a financial services firm that helps senior living, health care and housing providers expand and improve their services by providing financial advice and financing solutions, recently closed six refinance transactions for Apple Rehab.

Lancaster Pollard, led by Aaron Becker, secured six loans for the Connecticut-based short-term rehab provider insured by the FHA Sec. 232/223(f) program with a total loan amount of $40.7 million.

The facilities refinanced are T.A. Coccomo Memorial in Meriden, Connecticut; The Clipper Home in Westerly, Rhode Island; Plainville Health Care Center in Plainville, Connecticut; Apple Rehab Colchester in Colchester, Connecticut; Hewitt Health & Rehabilitation Center, Inc. in Shelton, Connecticut; and Waterbury Extended Care Facility in Watertown, Connecticut. The facilities have 517 skilled nursing beds in total.

The FHA 232/223(f)-insured loans carry 30-year terms and fixed, low interest rates. The refinancing transactions will enable Apple Rehab to enjoy significant debt service savings and a substantial deposit to its replacement reserves, guaranteeing the capital needs of the facilities are properly met over the life of the loans.

Luther Center to Receive HUD Funding

The Luther Center in Rockford, Illinois, was one of 50 senior housing developments across the country to receive a three-year grant from the U.S. Department of Housing and Urban Development (HUD), the Rockford Register Star reported.

At Luther Center, the funds will be used to cover costs associated with hiring a full-time enhanced service coordinator and a part-time wellness nurse in order to connect residents with the supportive services they require to age in-place and remain in independent living.

Capital One Closes $9.3 Million FHA Loan to Refinance Chicago-Area Skilled Nursing Facility

Capital One (NYSE: COF) recently announced that it has provided a $9.3 million fixed-rate, HUD 232/223(f) loan to refinance a 112-bed skilled nursing facility in Waukegan, Illinois. The transaction was originated by Senior Vice President Joshua Rosen.

The deal represents the first time HUD approved a transaction in Illinois under new regulations that, subject to LTV requirements, permit borrowers to refinance existing debt, including a portion utilized for a cash-out, without undergoing the two year waiting period that had been mandated in the past.

“Thanks to the new waiver, the borrower didn’t have to wait two years to refinance with HUD. This enabled them to lock in today’s low rates on a nonrecourse basis for 35 years,” Rosen said in a press release. “Because of our extensive experience with HUD’s 232/223(f) program, we are in a position to act quickly and make new features available to our clients as soon as they are introduced. In this case, the long-terms savings for the borrower were substantial.”

Monticello Provides $9 Million in Financing to Skilled Nursing Facility

Monticello Asset Management, LLC (MAM) recently announced that Monticello’s investment vehicle originated $9 million in first lien debt financing to a 140-bed skilled nursing facility in Canonsburg, Pennsylvania, called Greenery Realty Group, LLC. The property comprises one 52,909 square-foot, single-story structure containing the health care facility, a two-story, 4,000 square-foot medical office building and a 1,700 square-foot maintenance building.

MAM is a registered investment advisor that, via an affiliated investment vehicle, provides Bridge-To-HUD loans to assisted living communities and skilled nursing facilities across the country.

The borrowers—Greenery Realty Group, LLC and Greenery Operating, LLC—used the funds to purchase and make renovations within the facility prior to receiving a Department of Housing and Urban Development (HUD) guaranteed mortgage within the Bridge-To-HUD term, according to a press release. The borrowers’ principals are operators that have years of experience in the skilled nursing space.

The borrowers recently spent substantial capital to make necessary updates throughout the facility, the press release states. Upon closing, the borrowers implemented an initial construction project of $1.2 million and are currently in the process of making $900,000 worth of capital expenditures.

Written by Mary Kate Nelson

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