Senior Living News Wire

Cambridge Closes $42.8 Million of Senior Housing & Care Loans

Cambridge Closes $14.9 Million Nursing Home Loan

Cambridge Realty Capital Companies recently announced the closing on a $14.9 million loan to refinance Green Park, a 188-bed skilled nursing home in St. Louis, Mo., announced chairman Jeffrey Davis. 

The fully-amortized, 36-year term loan was arranged for the owner, an Ohio limited liability company, using the HUD Section 232/223(a)(7) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois, the Cambridge business that specializes in underwriting FHA-insured HUd loans. 

Cambridge Closes $12.6 Million Loan for Ill. Senior Care Property

Cambridge Realty Capital Companies recently reported closing a $12.6 million first mortgage loan for Hawthorne Inn of Danville, a 140-bed skilled nursing care and assisted living property in Danville, Ill.

The fully-amortized, 30-year term mortgage loan was arranged using the HUD Section 232/223(a)(7) refinance program and was underwritten by Cambridge Realty Capital Ltd. 

The property has 76 skilled care beds and 65 assisted living units, according to Cambridge chairman Jeff Davis. 

Cambridge Closes $3.9 Million Loan for Texas Senior Care Center

Cambridge reported closing a $3.9 million first mortgage loan for Windsor Care Center, a 108-bed skilled nursing home in Terrell, Texas.

The fully-amortized, 35-year term mortgage was arranged for the owner using the HUD Section 232/223(a)(7) refinance program and was underwritten by Cambridge Realty Capital Ltd. of Illinois with an undisclosed interest rate. 

Cambridge Closes $2.4 Million Loan for Wisc. SNF

Cambridge recently reported closing on a $2.4 million loan to refinance Alden Meadow Park, a 94-bed skilled nursing home in Clinton, Wisc. The fully-amortized, 30-year term loan was arranged using the HUD Section 232/223(a)(7) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Cambridge Closes $9 Million of Loans for Two Indiana Nursing Homes

Cambridge Realty Capital Companies reports arranging $9 million worth of loans to refinance two skilled nursing home properties in southern Indiana.

The fully-amortized, 24-year term loans were arranged for the owner, Transcendent Healthcare, for properties in Boonville and Owensville, Ind. One loan, for $4.68 million, was used to refinance the 88-bed Transcendent Healthcare of Boonville property. A $4.32 million loan was arranged to refinance the 68-bed Transcendent Healthcare of Owensville.

Both loans were arranged using the HUD Section 232/223(a)(7) funding program and were underwritten by Cambridge Realty Capital Ltd. of Illinois.

Lancaster Pollard Closes $11.4 Million Refinance for Ohio SNFs

Lancaster Pollard recently assisted Hennis Care Centre with the refinancing of two of their skilled nursing facilities: Hennis Care Centre of Bolivar, a 99-bed SNF, and Hennis Care Centre of Dover, a 137-bed SNF with 10 assisted living units, both located in Northeast Ohio.

The facilities were refinanced using the FHA-insured HUD Sec. 232/223(a)(7) program. The total loan amount of $11.4 million will allow Hennis Care Centre to achieve significant debt service savings. Kass Matt, out of Lancaster Pollard’s headquarters in Columbus, Ohio, led the transaction.

Ziegler Closes $21.6 Million Financing for Kendal at Oberlin

Ziegler recently announced the closing of the $21.6 million tax-exempt, fixed-rate Kendal at Oberlin Series 2013A Bond issue. Kendal at Oberlin is an obligated group which owns and operates a continuing care retirement community in Oberlin, Ohio.

The borrower is a subsidiary of Kendal Northern Ohio, which is affiliated with The Kendal Corporation.

Proceeds from the sale of the Series 2013A Bonds together with available funds will be used to refund and retire the outstanding County of Lorain, Ohio Health Care Facilities Revenue Refunding Bonds, Series 1998 A and a loan from Lorain National Bank to the borrower in the principal amount of $2.38 million. 

The proceeds will also be used to pay or reimburse the borrower for the payment of certain costs of acquiring, constructing, installing, and equipping the project, and to fund a portion of the debt service reserve fund for the benefit of the Series 2013A Bonds, along with paying certain expenses associated with the cost of issuing the bonds. 

The Series 2013B bonds will consist of a bank direct placement by Lorain National Bank to fund future capital expenditures over the next three years. The bank has a 13-year commitment through the final maturity of the Series 2013B bonds, and Kendal at Oberlin will also amend the existing Series 2009A&B bank qualified bonds to match the bank’s commitment to the final maturity of the bonds and to lower the fixed interest rate. 

Cambridge Provides $21.7 Million Loan for Senior Apartment Complex

Cambridge Realty Capital Companies recently provided a $21.7 million loan to refinance Morningside North Apartments, a 256-unit senior apartment complex in Chicago. 

The fully-amortized, 33-year term loan was arranged using the HUD 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois, according to Cambridge chairman Jeffrey Davis. 

Love Funding Closes $22.7 Million in Financing for Mass. SNF Portfolio

Love Funding recently announced the closing of three loan refinancings totaling $22.7 million for a portfolio of skilled nursing facilities in Massachusetts.

Leonard Lucas, a senior director out of Love Funding’s Boston office, secured the loans through the HUD Section 232/223(f) LEAN loan program for long-term care facilities. 

The facilities benefiting from the refinancing are Royal Cape Cod Nursing and Rehabilitation Center in Buzzards Bay, Royal Falmouth Nursing and Rehabilitation Center in Falmouth, and Royal Taber Street Nursing and Rehabilitation Center in New Bedford. The centers offer a total of 270 beds and are operated by Royal Health Group, a family-owned company founded by James Mamary Sr. in 1997.

Lucas also secured an $8.7 million loan refinancing for Country Villa Rehabilitation Center, a Los Angeles skilled nursing facility, last month. 

Love Funding Secures $4.34 Million in Financing for Maine Senior Care Portfolio 

Love Funding recently closed three loan refinancings totaling $4.34 million for a portfolio of senior care properties in Maine. 

Leonard Lucas, a senior director out of Love Funding’s Boston office, secured the loans through the HUD 232/223(a)(7) LEAN loan program. 

The refinanced facilities are Klearview Manor in Fairfield; Northland Living Center in Jackman, and Sanfield Rehabilitation and Living Center in Hartland. The centers offer a total of 64 beds and are operated by North Country Associates Inc.

Freddie Mac Approves Greystone as Designated Seniors Housing Seller/Servicer

Greystone announced on Tuesday that it has been approved as a National Senior Housing Seller/Servicer by Freddie Mac to originate and service multifamily seniors housing loans nationwide.

The designation allows Greystone to better meet the financing needs of the rapidly growing senior sector, according to the company. To be considered for the designation, lenders are evaluated by Freddie Mac based on a number of qualifications, including GSE loan origination and underwriting experience for seniors housing properties, staff experience in the seniors housing market, and track record of seniors housing loan performance. 

“Freddie Mac’s capabilities and specialized team of Seniors Housing experts have already added value to one of our long term clients and we are excited to bring Freddie Mac to all our clients going forward,” said Scott Kavel, Managing Director for Greystone’s senior housing lending business.

Lancaster Pollard Closes Loans for Two Midwest Senior Care Properties

Lancaster Pollard recently reported completing a $6.9 million refinancing of a 92-unit assisted living, independent living, and memory care property in Bridgman, Mich. using the HUD Section 232/223(f) program.

The provider was able to refinance its existing term note and line of credit, which provided significant debt service savings and funded a large deposit to replacement reserves for ongoing capital needs, including $25,705 in repairs to the facility. The family-owned organization was able to remove personal guarantees under the new financing structure, freeing up borrowing capacity to fund future growth.

Brendan Healy, a vice president out of Lancaster Pollard’s Columbus office, led the transaction.

Lancaster Pollard also recently worked with The Birches Assisted Living, a 90-unit licensed assisted living facility in Clarendon Hills, Ill., to refinance the facility’s existing FHA loan. The firm closed financing for the provider through the HUD Section 232/223(a)(7)  program to obtain a reduced interest rate and help realize nearly $60,000 of annual debt service savings, totaling more than $1.8 million for the remaining life of the loan.

Steve Kennedy, senior vice president and regional manager with Lancaster Pollard out of the firm’s Columbus office, led the transaction. 

ELS Initiates $435 Million Refinancing

Equity LifeStyle Properties, Inc. (NYSE:ELS) announced on June 3 its plans to obtain $435 million in new mortgage loans from institutional lenders, secured by mortgages on 25 manufactured home and RV properties. The loans are expected to bear a blended interest rate of 4.3% per annum, and to have maturities ranging from 10 to 25 years with a weighted average maturity of about 18 years.

Proceeds from the financing will be used to repay debt with a weighted aerate effective interest rate of 5.7%. This includes ELS’ remaining 2013 debt maturities as well as approximately $102 million maturing in 2014 and about $295 million maturing in 2015. ELS elects to use available cash to pay approximately $37 million in prepayment penalties.

The financing is expected to close in stages beginning in the second quarter of 2013 with the final closing expected to occur in April 2014.

“The current financing environment offers an opportunity to obtain long-term financing for our RV and MH assets at historically low interest rates. This transaction allows us to reduce our overall cost of debt approximately 20bps to 5.3% and extend our weighted average maturities from 4.5 years to more than 7 years,” said Marguerite Nader, CEO of ELS. “In addition, through this transaction we expect to restructure our debt maturities so that we have no more than $300 million maturing in any single year going forward.”

Ziegler Closes $24.8 Million Financing for Plymouth Place

Ziegler announced on Thursday the closing of the $24,765,000 tax-exempt, fixed-rate Plymouth Place Series 2013 bond issue. Plymouth Place is located in LaGrange Park, about 15 miles outside of downtown Chicago, Ill., and is managed by Providence Management. 

Proceeds from the sale of the Series 2013 Bonds, together with other funds, will be used to refinance the outstanding Series 2005B and Series 2005C Bonds, all of which were variable rate demand bonds with credit enhancement through letters of credit. The Series 2013 Bonds consist of one fixed-rate, tax-exempt term bond. Principle on the 2013 bonds will be amortized during 2038-2043, after the final maturity of Plymouth Place’s only other debt, the fixed-rate Series 2005A bonds. 

Love Funding Closes $4.74 Million Loan for Okla. Assisted Living Community

Love Funding recently announced the closing of a $4.74 million loan refinancing for Heritage Assisted Living, a 79-unit assisted living center in Yukon, Okla.

Love Funding Senior Director Robyn Cunningham of the St. Louis office, together with Director Adrian Hartman, secured the financing through the Department of Housing and Urban Development’s Section 232/223(f) LEAN loan insurance program.

Heritage Assisted Living was built in 2000, and joined Oklahoma’s Advantage Waiver Program in 2010. The property was the first assisted living center in the Oklahoma City area to join the state’s long-term care program, which provides Medicaid-funded home and community-based services to frail elders and adults with disabilities.

Eskaton Properties Issued $51.9 Million Tax-Exempt Fixed-Rate Bonds

Cain Brothers recently served as sole underwriter and swap advisor in the issuance of the Eskaton Properties, Inc. Series 2013 Bonds, issued as unenhanced fixed rate bonds rated “BBB” by S&P on the underlying credit strength of Eskaton.

The bonds were used to refinance EPI’s Series 2008B Variable Rate Demand Bonds, backed by a U.S. Bank Letter of Credit; fund the termination payment for an interest rate swap related to the Series 2008B bonds; pay for the cost of issuance; and fund a debt service reserve fund.

Through the bond financing, Eskaton has a more stable capital structure by mitigating common risks associated with Letter of Credit-backed variable rate demand bonds. The corporation also reduced its bank exposure by $43.6 million, or 36% of its outstanding debt. The concurrent termination of Eskaton’s interest rate swap that hedged the 2008B bonds eliminated the counterpart and basis risks, while removing a $9.6 million swap liability from its balance sheet.

The Series 2013 bonds mature in 2035 and were issued in the amount of $51,875,000 at an average yield of 3.96%. 

Oak Grove Capital Closes $1.8 Million Loan for Senior Apartments

Oak Grove Capital recently reports closing a $1.8 million Fannie Mae loan for Fair Oaks Estates, a senior housing complex in Carmichael, Calif. The community offers assisted living, memory care, hospice, and respite care and has above 95% occupancy, according to its website.

Skilled Healthcare Group Receives HUD Loan Commitments

Skilled Heatlhcare Group, Inc. (NYSE:SKH) announced Thursday it has received its first commitments by the Department of Housing and Urban Development to insure loans secured by nine skilled nursing facilities, up to an aggregate amount of $79.8 million.

 ”This is a key step in our efforts to secure long-term low cost financing through participation in the HUD program,” said Boyd Hendrickson, Chairman and CEO of Skilled Healthcare Group.  ”We anticipate that these loans will fund within approximately six weeks.”

SKH plans to use the net proceeds to reduce the term debt portion of its senior secured credit facility. The loans are fully-amortizing over 30-35 years with a projected fixed-rate cost of about 4.6%.

“We have concurrently sought additional HUD loan commitments to approximately match the aggregate $250 million level allowable under our credit agreement, and will evaluate further HUD opportunities under the $460 million portfolio capacity at that time,” Hendrickson said.

The Carlyle Group Seeks $4 Billion Fund Raise

The Carlyle Group, a private equity firm with ties to Capitol Seniors Housing, is looking to launch a U.S. real estate fund and raise up to $4 billion, according to the Wall Street Journal.

“We believed in the inherent value of the investments we were making despite the noise in the market,” Robert Stuckey, head of Carlyle’s U.S. real estate group, told the WSJ without specifically discussing the new fund raise. 

Carlyle has about $176 billion in assets under management. 

Post-recession demand for new and expanded senior living services continues to increase, and Lancaster Pollard has updated its nonprofit senior living finance guide to accessing capital at a reasonable cost to reflect current trends. 

The national investment banking, mortgage banking, and investment advisory firm, headquartered in Columbus, Ohio, recently released the updated “Financing Options for Nonprofit Senior Living Organizations” which contains insight pertaining to new construction, renovation, refinancing, and acquisitions.

“We continually update the guide so that the descriptions of the financing options are as accurate as possible,” said Lancaster Pollard CEO Tom Green. “Nonprofit long-term care providers want to provide quality of life for their residents as well as to increase marketability by updating and modernizing facilities to add amenities and services. This requires capital expenditures and these guides will aid nonprofit providers in understanding the complexities of financing in today’s economy.”

The current version of the guide highlights four trends seen in nonprofit senior living finance, including the return of tax-exempt, fixed-rate, unenhanced bonds, which Lancaster Pollard calls a “viable financing structure” for rated or stronger, non-investment grade providers as credit spreads have tightened.

Another trend is the use of taxable securities with FHA-backed mortgage insurance by nonprofit senior living providers. The typical interest rate advantage of tax-exempt bonds compared to taxable bonds has narrowed at many points along the yield curve, said Brendan Healy, a vice president at Lancaster Pollard and one of the authors of the guide.

“Bank qualified bonds and other private placements have virtually replaced the once-popular variable rate demand bond structure enhanced with bank letters of credit,” he said, citing a Bloomberg stat than when 2013′s line of credit dollar volume (from January through April) is annualized, it’s about 70% less than 2012′s volume.

The use of combination structures is another trend, according to Healy, such as private placements combined with notes or FHA-insured bonds to accomplish objectives such as refunding and reducing variable interest rate exposure. 

Other topics in the guide include integrating strategic plans and capital financing and risk management and the role it plays in an organization’s financial plan. 

Access the updated guide. 

Written by Alyssa Gerace

Lancaster Pollard Assisted Kan. CCRC with Bond Refinance

Lancaster Pollard recently assisted Brewster Place Retirement Community, a not-for-profit continuing care retirement community in Topeka, Kan., in refunding an existing bond issue.

The 30-acre CCRC has 229 independent living units, 28 assisted living units and a fully licensed 97-bed skilled nursing facility. Lancaster Pollard developed a credit profile for Brewster Place and solicited an investor that provided the lowest cost of capital with the greatest flexibility.

The organization refunded the existing bonds with a private placement of $10 million in tax-exempt bonds at a fixed interest rate of less than 3.5% for 12 years. Part of the proceeds will be used to finance nearly $2 million in general improvements. Additionally, the existing debt service reserve fund was released and not required for the new bonds. Bill Wilson, senior vice president and regional manager of the firm’s office in Lawrence, Kan., was the lead banker on the transaction.

Love Funding Secures $8.7 Million Loan for Calif. Skilled Nursing Facility

Love Funding recently announced the closing of an $8.7 million loan refinancing for Country Villa Rehabilitation Center, a skilled nursing facility in Los Angeles, Calif.

Senior director Leonard Lucas out of Love Funding’s Boston office, together with Citra Capital Management LLC, secured the loan through the Department of Housing and Urban Development’s Section 232/223(f) LEAN loan program. The loan refinanced existing debt with a low interest rate that is fixed for 26 years. The refinancing provided enough additional proceeds to fund repairs and property improvements. 

Country Villa has 180 beds and is part of the Country Villa Health Services network, a family-owned and operated company that began operations in 1969 and has grown to one of the largest skilled nursing providers in California. 

Cain Brothers Closes $25 Million Bond Issue for Cayuga Medical Center

Cain Brothers announced it has structured and closed $25.0 million of tax-exempt revenue bonds for Cayuga Medical Center, a 190-bed health care facility located in Ithaca, N.Y. The financing consisted of a 10-year fixed rate bank direct purchase used for the purpose of reimbursing various project costs.

On behalf of CMC, Cain Brothers conducted a competitive bid process to determine the bank partner from a group of regional and national banks. Cain Brothers negotiated best and final proposals from all participants. The tailored process allowed CMC to achieve a favorable interest rate, a longer term, favorable security terms, and a reasonable covenant package.

Greystone Originations $28 Million Financing Two Senior Apartment Complexes

Greystone recently announced that it has provided a total of $28 million in bridge loan financing to United Group of Companies Inc., for two market rate senior apartment communities located in New York and Georgia. The loans were originated by Donny Rosenberg, a Managing Director in Greystone’s multifamily lending group, in conjunction with Steve Germano, Managing Director of Greystone’s Portfolio Lending Group.

The loan proceeds were used to refinance existing debt, and Greystone will work with United Group of Companies to provide long-term financing prior to the maturity of the bridge loan.

Schulyler Commons in New York and The Lodge at BridgeMill in Georgia received $28 million of loan proceeds through Greystone’s bridge loan program. Both properties received attractive terms with a new maturity allowing the borrower to execute their business plan.

Berkadia Funds $60 Million Portfolio of SNFs in Arkansas for OHI

Berkadia Commercial Mortgage, LLC recently originated $59.8 million through the Department of Housing and Urban Development’s Section 232/223(a)(7) program to refinance a portfolio of 12 skilled nursing facilities in Arkansas. 

Jay Healy, assistant vice president of Berkadia, worked with borrower Omega Healthcare Investors, Inc. (NYSE:OHI) to secure the financing. 

OHI acquired the assets in December 2011 and assumed HUD debt through a transfer of physical assets from the previous owner. Berkadia closed all 12 loans simultaneously on March 26, 2013. As a result of the portfolio refinance, OHI is realizing approximately $1 million in annual debt service savings. 

The portfolio consists of individual loans ranging from $1.9 million to $9.4 million, spanning more than 1,400 beds.

Ziegler Closes $37.7 Million SNF Portfolio Refinance

Ziegler Financing Corporation, the FHA-insured mortgage lending arm of Ziegler, recently announced the successful closing of the $37,653,300 portfolio refinancing of six skilled nursing facilities, owned and operated by Extendicare Health Services, Inc. 

Extendicare is the U.S. subsidiary of Extendicare Inc. (TSX:EXE), which operates 150 senior care communities nationwide. ZFC assisted Extendicare with the refinancing of their existing facilities located in Michigan, Minnesota, and Wisconsin using FHA’s Section 232/223(f) refinancing program. 

ZFC closed more than $136 million (par amount) of FHA-insured loans in 2010, 2011, and 2012 on behalf of Extendicare. 

LTC Properties Prices Public Offering of 3.5 Million Shares of Common Stock

LTC Properties, Inc. (NYSE:LTC) announced last Friday it priced its underwritten public offering of 3.5 million shares of its common stock at $44.50 per share. LTC Properties has also granted the underwriters a 30-day option to purchase up to 525,000 additional shares of common stock to cover over-allotments, if any.

The Westlake Village, Calif.-based REIT expects net proceeds of about $149 million from the offering, or $171.3 million if the underwriters exercise the overallotment option in full. 

Wells Fargo Securities, KeyBanc Capital Markets, BMO Capital Markets and RBC Capital Markets are acting as joint book-running managers for the Offering. Sandler O’Neill + Partners, L.P., CSCA, J.J.B. Hilliard, W.L. Lyons, LLC, JMP Securities LLC and Sidoti & Company, LLC are acting as co-managers for the Offering.

LTC Properties intends to use the net proceeds from the offering to pay down amounts outstanding under its unsecured line of credit, to fund acquisitions and the current development pipeline, and for general corporate purposes.

The offering is expected to close on May 8, 2013, subject to customary closing conditions.

Cambridge Closes $44.2 Million in Loans 

Cambridge Realty Capital Companies recently announced closing on a $19.8 million FHA-insured HUD Lean loan to refinance Horizon Health and Subacute Center, a 180-bed skilled nursing home in Fresno, Calif.

The fully-amortized, 30-year term loan was arranged for the owner, a California limited partnership, using the HUD Section 232/223(f) funding program.

Hymie Barber, Cambridge’s National Originations Manager and the Managing Director of Catalyst/Cambridge Health Care Finance in Los Angeles, the company’s West Coast affiliate, coordinated the transaction, which was underwritten by Cambridge Realty Capital Ltd. of Illinois.

Cambridge also recently announced it has closed on a $14.4 million FHA-insured HUD Lean loan to refinance Skokie Meadows, a 224-bed skilled and intermediate-care nursing home in Skokie, Ill.

The fully-amortized, 29-year term loan was arranged for the owner using the HUD Section 232/223(a)(7) funding program. Cambridge Realty Capital Ltd. of Illinois underwrote the loan.

The company announced on Thursday the closing of a $7.3 million FHA-insured loan to refinance Burbank Rehabilitation and Healthcare Center, a 188-bed skilled care nursing home in Burbank, Calif.

The 27-year term loan was arranged using the HUD Section 232/223(a)(7) program and was also arranged by Hymie Barber and underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Also on Thursday, Cambridge announced the closing of a $2.7 million loan to refinance Oakley Courts, a 46-bed assisted living facility in Freeport, Ill.

The 35-year term loan was arranged for the owner using the HUD Section 232/223(a)(7) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Oak Grove Capital Closes $259 MIllion Credit Facility for Brookdale

Oak Grove Capital this week the closing of a $259 million Fannie Mae DUS credit facility for Brookdale Senior Living Inc. (NYSE:BKD). The 10-year, variable-rate facility was used to refinance existing mortgage debt.

“Fannie Mae was very creative in designing a credit facility to accommodate differing maturity dates for Brookdale’s debt and the repayment of tax-exempt bonds on a date certain,” said Bill Kauffman, managing director of Oak Grove Capital’s Seniors Housing and Healthcare Finance Group.

Brookdale Senior Living used the new debt to refinance existing loans for 23 different properties, totaling 1,781 units. The collateral pool consists of assisted living, independent living and memory care units located in 10 states, including Florida, New York, Kansas, Pennsylvania and Texas.

Capital One Closes $19.5 Million Loan for Revera Health Systems

Capital One Bank announced on Monday it had provided a three-year, $19.5 million secured term loan to Revera Health Systems, Inc., a long-term care and rehabilitation provider with multiple skilled nursing centers across the U.S.

Proceeds of the loan were used to refinance existing senior debt on eight of the health system’s skilled nursing facilities in Maryland, New Hampshire, New Jersey, and Vermont. Revera Health Systems also expanded its relationship with Capital One Bank to include despots and treasury management services. 

Coming off a big year for agency financing in the senior living lending environment, 2013 looks to be no different in terms of the participation of the Federal Housing Administration, Fannie Mae and Freddie Mac in the market.

Some areas may even be positioned for growth.

Last year, the Department of Housing and Urban Development made headlines—and set records—for logging $5.5 billion in senior housing loans through its Section 232 LEAN program. The agency far surpassed its previous high of $3.3 billion recorded in 2011.

While it is not expected to trump its previous record by the same scale as in 2012, HUD’s participation in the market will still be strong, say those in the market for senior housing finance. Fannie and Freddie, too, will likely see stable volume this year.

Fannie Mae and Freddie Mac with their promise of quick turn times and non-recourse debt, counted 2012 as a landmark year with FNMA counting $1.2 billion in its senior housing business over the course of the year and a collective $3 billion over the past two years.

There may be an opportunity for non-government lending to make inroads on the horizon, but the senior housing industry does not appear to be headed in that direction just yet, says Michael Vaughn, senior vice president, FHA finance, for Walker & Dunlop.

“In 2012 the whole fiscal year counted 715 applications [for HUD financing],” Vaughn estimates. “This year if you annualize it, it’s at a rate of over 1000. That’s up significantly. They’re having trouble getting it all done—they’re starting to run a queue again.”

Additional pressures on HUD as a result of budget cuts will not help the processing capabilities, Vaughn says, as demand rises.

“They could gear it up a bit more, but the government is not giving them more people,” he says.

The market could be in for another record year if the levels are sustained, echoes Cambridge Capital Chairman Jeff Davis.

“The year is off to an excellent start,” Davis says. “Borrowers continue to find value in refinancing existing loans, with HUD’s 232 Lean program particularly active at this time. It’s early, but last year’s record-setting pace for FHA-approved HUD funding programs could be eclipsed if the current trend continues.”

Likewise, the GSEs are not slowing down in their appetite and capacity for senior housing projects in 2013.

“We have seen business pick up significantly over the past few months and were very busy in 2012,” says Bob Simpson, Vice President, Seniors and Affordable Multifamily Mortgage Business at Fannie Mae. “As busy as we are today, one of our competitive strengths is execution and response time.”

Fannie Mae says it is looking for growth opportunities through new partnerships in the coming year. It may mean more work with regional or mid-sized operators, and not just those that have existing relationships with the corporation.

“We are looking to establish relationships with borrowers who may not have used Fannie Mae financing in the past,” Simpson says. “A lot are emerging borrowers and may not have thought FNMA was interested. There are a lot of opportunities in this middle part of the market.”

Those potential operators are often regional, with communities in one state or a few states in a small geographic footprint, says Chris Honn, director of Fannie Mae’s seniors housing group.

“Typically they have at least two properties they own and operate with up to 30 to 50 properties in their portfolio,” he says. “One of the key items for us is identifying how much experience they have in this industry.”

With HUD and GSE financing expected to remain strong, a question remains of whether other financing sources are seeking expansion in seniors housing.

Real Estate Investment Trusts (REITs) have been very active in acquiring senior housing portfolios following the housing crisis and the market is seeing more competition from life insurance companies, say the Fannie Mae reps.

With slowing demand for debt financing, GSE activity could begin to taper off as well, says Nick Gesue, chief credit officer at Lancaster Pollard.

“Fannie and Freddie had very good years [in 2012],” Gesue says. “Volume was down relative to historic volume but both agencies were fairly pleased with the volume. Interestingly it has been curtailed a lot by two factors in particular, probably the biggest being REIT activity, and the elimination of need for debt financing. That’s the biggest eroder of their volume.”

Yet REITs are likely to continue as a strong financing source.

“They still have a lot of cash and a strong appetite for properties,” Gesue says. “One thing that will be interesting is seeing how much they get into short term lending, whether mezzanine or true first mortgage debt to bridge acquisitions, or as a way to deploy some of the cash they have at a better return.”

Written by Elizabeth Ecker

The Department of Housing and Urban Development (HUD) could be forced to suspend endorsing multifamily and healthcare loans by the end of March as a result of reaching its commitment authority.

However, a new deal in the works would extend HUD’s fiscal year 2012 commitment authority of $20 billion to fiscal year 2013. 

The clock has been ticking on the limit under which HUD must remain for its multifamily housing programs. Once that limit, or HUD’s commitment authority, is reached—expected to take place later this month—HUD will no longer be able to make loans under those programs without the approval of additional commitment authority from Congress. 

HUD last week informed industry partners in its multifamily and healthcare sectors that it will likely reach its limited commitment authority some time before March 27, leading the agency to prioritize loans in the meantime. 

“HUD is currently operating under a Continuing Resolution, which expires March 27, 2013, and under which FHA has partial-year mortgage insurance commitment authority,” HUD wrote to its lending partners. “At the average daily rate of insurance issued fiscal year to date, FHA expects that it will utilize the limited resources during the current Continuing Resolution period.”

Any commitments that have already been issued will move forward, according to the letter, but mortgages seeking insurance prior to March 27 may face delays until the Federal Housing Administration can receive an extension of commitment authority—a measure that will have to meet congressional approval. 

Insurance will still be issued on a first-come, first-served basis, with priorities spelled out by HUD for Priority Projects including affordable, RAD, projects under any Multifamily or Healthcare program in Hurricane Sandy impacted areas and others; as well as Section 223(a)(7) and market rate 223(f) projects and new construction/substantial rehabilitation applications. 

Although the expected increase to HUD’s commitment authority won’t happen, the House is expected to pass a continuing resolution on Wednesday, March 6, extending the budget to September 2013, which the Senate will likely also pass on Thursday without amendment. 

Prior to the announcement of the continuing resolution, lenders expressed concern over the potential lost time that receiving new commitment authority will require. 

“Right now, HUD thinks they will hit the cap in the next three to four weeks,” says Nick Gesue, chief credit officer for Lancaster Pollard. “They just have to go to Congress…which should be a no brainer, but it’s gridlock right now.”

Congress is expected to pass the recently-announced continuing resolution extending last year’s commitment authority, said Michael Vaughn, Senior Vice President, FHA Finance, at Walker & Dunlop, during a session at NIC’s 2013 Regional Conference. However, HUD might be about a billion dollars short by the time September rolls around, he said, which could cause delays for some deals. 

“The thing is, HUD can’t do too much more than they did last year,” Vaughn said. “They’ll probably stay within the limit, and if they’re off by about a billion, there are a lot of deals that can be done once fiscal year 2013 ends.”

Written by Elizabeth Ecker and Alyssa Gerace

Lancaster Pollard Closes $63.4 Million Refinance for Trilogy Health Services

Lancaster Pollard recently closed on a $63.4 million portfolio refinance for Trilogy Health Services, LLC, which operates multiple senior care communities throughout Kentucky, Illinois, Indiana, Ohio, and Michigan. 

The transaction refinanced eight of Trilogy’s facilities, comprising a total of 568 skilled nursing beds and 340 assisted living units. 

Lancaster Pollard first obtained bridge financing for Trilogy to purchase the real estate associated with the eight leased properties as part of the refinancing structure. The firm then recommended using the FHA Section 232/223(f) program to refinance the bridge debt to take advantage of the federal program’s low fixed rates and achieve significant cash flow savings compared to their former lease payments. 

The firm was able to originate eight non-recourse FHA Section 232/223(f) mortgages with matching term/amortizations of 35 years. The transaction also bolstered Trilogy’s long-term maintenance needs by establishing a well-funded replacement reserve escrow account. 

Sabra Expands New Dawn Relationship With $12.8 MIllion Loan Origination

Sabra Health Care REIT, Inc. (NASDAQ:SBRA) announced on Monday it had entered a $12.8 million mortgage loan agreement with an affiliate of New Dawn Holding COmpany, secured by a first trust dead on a 48-unit memory care facility in Sun City west, Ariz. 

The loan has a 5-year term and bears interest at a fixed rate of 9.0% a year. The loan cannot be prepaid during the first three years of the loan term.

Beginning April 2014, Sabra has an option to purchase the facility that secures the Sun City West mortgage loan for a price equal to the greater of (a) the annualized EBITDAR for the trailing three months prior to option exercise, divided by an EBITDAR coverage ratio of 1.3 and further divided by an implied lease rate of 8.25% (subject to adjustment up to 9.00%), and (b) $16 million.

If Sabra does exercise the purchase option, the REIT would expect to enter a long-term lease with New Dawn affiliates with an initial cash yield consistent with the lease rate used to determine the option exercise price.

The memory care facility was built in 2012 and is operated by affiliates of New Dawn. Sabra funded the loan with available cash. 

Beech Street Capital Closes $6.1 Million in Loans for Two Senior Care Facilities

Beech Street Capital, LLC recently announced the closing of $6.1 million in loans used to refinance a portfolio of two assisted living communities, one in Wheeling, Ill. and the other in Northville, Mich.

The portfolio has a total of 88 units and exclusively care for residents with memory impairments. 

Joshua Rosen, executive vice president of Beech Street, origination the transaction out of the firm’s Chicago office. 

“We were able to achieve significant debt service savings for the borrower on both properties, which will allow them an opportunity to deploy excess capital into other opportunities that may arise,” said Rosen.

Beech Street was also able to extend the term of the Harbor House loan.  

HFF Gets National Seniors Housing Designation from Freddie Mac

HFF announced Tuesday that it had been approved for a National Seniors Housing Designation effective February 1st from Freddie Mac.  HFF is now authorized to sell and service conventional loans secured by multifamily seniors housing properties nationwide.

Cain Brothers Advises Riverside for $75 Million Bond Placement

Cain Brothers served as financial advisor to Riverside Health System in connection with a private placement of $75 million revenue bonds, which closed on Dec. 20, 2012. 

Newport News, Va.-headquartered Riverside is an integrated health system that includes acute care hospitals, senior housing communities, and nearly 500 employed physicians and advance practice providers.

The borrowing proceeds were used to fund capital improvements at Riverside’s flagship hospital, Riverside Regional Medical Center.

Cain Brothers negotiated a 10-year fixed rate direct bank placement with PNC Bank and was able to secure an attractive cost of capital without any adjustments to Riverside’s existing security package, the investment banking firm announced. 

Ensign Doubles Revolving Credit Facility to $150 Million

The Ensign Group, Inc. (NASDAQ:ENSG) announced on Wednesday that the company and its operating subsidiaries had increased its revolving credit facility from a six-bank lending consortium arranged by SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC by $75 million to an aggregate of $150 million, $20 million of which was drawn as of Feb. 1, 2013. 

The proceeds of the credit facility will be used to fund acquisitions, renovate and upgrade existing and future facilities, cover working capital needs, and for other corporate purposes.  Ensign’s current net-debt-to-EBIDTAR ratio is 2.34x. 

Ziegler Closes $71.25 Million Financing for ABHOW & The Terraces at Los Altos

Ziegler recently announced the closing of the $71.25 million fixed-rate, Series 2013 Bond issue for American Baptist Homes of the West’s (ABHOW) Obligated Group.

Proceeds will fund a major redevelopment of The Terraces at Los Altos, ABHOW’s first community, which opened in 1949 on about 6.3 acres in Los Altos, Calif. The Series 2013 Bond proceeds will be used to pay retain costs of the redevelopment, expansion, and operation of the community (other ABHOW funds were used for project costs up to the date of issuance of the Series 2013 Bonds), fund debt service reserve funds for each series, pay a portion of the interest on the Series 2013 Bonds during construction of the approximately 36-month project, and pay certain costs relating to the issuance of the Series 2013 Bonds.

Berkadia Originates $14.4 Million Acquisition Loan for Chevalier

Berkadia Commercial Mortgage LLC recently originated a $14.4 million, three-year floating rate acquisition loan to finance Chevalier International Holdings Limited’s acquisition of an 18-property portfolio of assisted living communities operated by Meridian Senior Living.

Christopher Fenton, vice president at Berkadia, arranged the loan through the firm’s proprietary lending group and worked with fellow lender GE Capital Healthcare Financial Services to help finance the acquisition. In the process, they retained the right to refinance the full $89.5 million loan through HUD.

The loan closed on Dec. 21, 2012.

Oak Grove Originates $4.2 Million Loan for Ala. Senior Care Community

Oak Grove Capital recently announced the closing of a $4,192,000 loan for Country Cottage in Montgomery, an assisted living community in Montgomery, Ala. The loan closed on Dec. 17, 2012 and was originated through HUD’s Section 232/223(f) loan program. 

Centerline Capital Refinances Wisc. Senior Housing Property with $4.05 Million Loan

Centerline Capital Group, a subsidiary of Centerline Holding Company, announced on Tuesday it had provided a $4.05 million Fannie Mae Affordable Preservation loan facility to refinance a senior housing property in Stoughton, Wisc.

Rosewood Apartments is an age-restricted affordable senior housing complex with 90 units. At closing, the property was outside of the 15-year tax credit compliance period, but within the 15-year extended-use compliance period. Portions of the proceeds from the cash out refinancing will be used to pay off existing hard debt and unsecured debt held by Centerline Capital Group. 

Stoughton Senior Housing Limited Partnership is the borrower. 

HJ Sims Advices Senior Living Provider on $120 Million Debt Restructuring

HJ Sims provided advisory services to Pacific Retirement Services, a Medford, Ore.-based senior living organization that owns, operates, and/or manages more than 50 communities primarily on the West Coast to restructure construction debt for a Seattle, Wash. continuing care retirement community.

Construction and development of Mirabella, the downtown Seattle CCRC, be can in 2006 and was financed with $256 million in tax-exempt variable rate bonds backed by a letter of credit issued by HSH Nordbank AG with participation from five other banks.

Even though it was being developed during the economic downturn, nearly 60% of the community’s 290 independent living units were filled within Mirabella’s first year of operation, with the first residents moving in by December 2008.

However, the fill-up pace wasn’t sustainable as Seattle real estate values were declining sharply and there was a spike in local unemployment, says HJ Sims, and the community needed to make “significant changes” to its entrance fee pricing structure. Also, because units were selling slower than originally expected, more working capital was needed compared to what had been budgeted for the initial lease-up timeline.

These and other factors led to restructuring the community’s debt in December 2012. Beginning in mid-2012, HJ Sims began negotiations on a fixed-rate bond financing to provide Mirabella with a stable, long-term capital structure and repay the lending banks a “significant” portion of the existing debt.

The final, agreed-upon structure repaid the banks about 74% of the outstanding debt at the time of the December refinancing, in addition to the $138 million that was repaid to that point with initial entrance fees. The banks received $30.8 million in long-term subordinated notes for the remaining amount of the existing debt. 

Lancaster Pollard Obtains $10.9 Million Loan for Tex. Senior Care Facility

Lancaster Pollard recently obtained a $10.9 million loan to refinance all the outstanding debt of a Texas nursing home and assisted living facility. 

The financing was secured through the FHA Section 232/223(f) insured loan program and has a 35-year term and low interest rate. Lancaster Pollard structured the non-recourse loan so that no cash was required at closing, and used its trading desk’s capabilities to incorporate a prepayment structure with no penalties after a five-year period, allowing ownership to maintain flexibility for future business decisions.

Bill Wilson, senior vice president and regional manager of Lancaster Pollard’s Lawrence, Kan. office, led the transaction.

Lancaster Pollard Closes $4.8 Million Refinancing for Ga. Senior Apartments

Lancaster Pollard recently closed a $4.8 million loan to refinance Cathedral Towers, a Section 202 property in Atlanta, Ga., led by Gerald Swiacki, senior vice president and regional manager out of the firm’s Atlanta office.

The loan was insured by the FHA Section 232/223(f) program, and the transaction provides for more than $1 million in repairs and improvements along with paying the organization a developer’s fee of approximately $650,000. Lancaster Pollard also assisted Cathedral Towers in obtaining a rent increase, as the project had been operating with below-market rents. 

The firm was also able to avoid the new FHA requirements for Section 202 refinance projects for a 20-year extension of the affordable housing use agreement.

Sunrise Announces Changes to 5.00% Junior Notes

Sunrise Senior Living, LLC announced Friday that in connection with the closing of the transactions by among Health Care REIT, Sunrise Senior Living, Brewer Holdco, Inc., Brewer Holdco Sub, Inc., and Red Fox, Inc., Sunrise delivered a notice to holders of its 5.00% Junior Subordinated Convertible Notes due 2041, pursuant to the April 20, 2011 indenture by and between Sunrise and the Bank of New York Mellon Trust Company, N.A., as trustee, of the Make-Whole Fundamental Change that occurred in connection with the completion of the transactions. The effective date of the Make-Whole Fundamental Change was Jan. 9, 2013.

The consideration due upon conversion of the notes will be cash equal to $1,443.67 per $1,000 principal amount of notes based on a conversion rate of 116.4251 in the case of a holder that elects to convert its notes in connection with a Make-Whole Fundamental Change, or cash equal to $1,338.12 per $1,000 principal amount of notes based on a conversion rate of 107.9130 in the case of a holder that elects to convert notes other than in connection with a Make-Whole Fundamental Change. Holders who wish to convert their notes must satisfy the requirements set forth in the April 2012 indenture.

Holders that don’t convert their notes during the Make-Whole Conversion Period (between the period beginning Jan. 9, 2013 to the business day immediately prior to the related Fundamental Change Purchase Date, which will be specified to holders and will be between 20-35 days following the date of the Fundamental Change Company Notice) and thus aren’t converting notes in connection with the Make-Whole Fundamental Change may convert their notes at any time prior to the close of business on March 29, 2041, the business day immediately preceding the maturity date of the notes. 

Capital One Leads Closing of $168.8 Million Secured Term Loan for SNF Acquisition

Capital One Bank announced on Tuesday it and arranged a $168.8 million five-year term loan for a healthcare real estate entity to facilitate the acquisition of a 25-property portfolio of skilled nursing facilities in Alabama, Florida, and Mississippi. Capital One Bank acted as the lead agent on the financing, providing a $63.8 million secured term loan. 

The portfolio was acquired by a newly-formed, privately-held entity and have been triple-net leased to affiliates of Gulf Coast Healthcare, LLC. The portfolio has more than 3,200 beds and offer skilled nursing and long-term care services including physical therapy, occupational therapy, speech therapy, dietary management, pain management, and Alzheimer’s care, among other rehabilitation treatments. 

Senior Housing Properties Trust Prices Public Offering of 10 Million Shares

Senior Housing Properties Trust (NYSE:SNH) announced on Wednesday that it had priced a public offering of 10 million common shares at $23.80 per share, and have granted underwriters a 30-day option to purchase up to an additional 1.5 million shares. 

The proceeds from the offering are expected to be used to repay amounts under its revolving credit facility and for general business purposes, including new acquisitions. The settlement of this offering is expected to occur on Jan. 28, 2013. 

Jefferies, Citigroup, and Wells Fargo Securities are joint bookrunning managers for this offering, with BofA Merrill Lynch, Morgan Stanley, RBC Capital Markets, and UBS Investment Bank as joint lead managers. The co-managers are BB&T Capital Markets, Janney Montgomery Scott, JMP Securities, and Oppenheimer & Co. 

Chartwell Announces Name & Logo Change

Chartwell Seniors Housing Real Estate Investment Trust (TSX:CSH.UN) announced on Friday that it has changed its name to Chartwell Retirement Residences, although it will continue to trade on the Toronto Stock Exchange as CSH.UN. The change is timed to coincide with the rebranding of the 42 retirement communities Chartwell acquired with Health Care REIT (NYSE:HCN) in May 2012.

The new name makes way for a more consistent translation in French to Chartwell Résidences Pour Retraités, says the REIT. In Ontario, long-term care communities will be branded distinctively as Chartwell Long Term Care Residences, and communities will begin reflecting the new name and logo as part of a national roll-out strategy throughout 2013. 

Beech Street Capital Closes $15.9 Million Refinance for Seattle Senior Living Community

Beech Street Capital, LLC announced recently it had closed a $15.9 million loan to refinance an independent and assisted living community in Newcastle, Wash. near Seattle.

With the maturity date approaching for Regency Newcastle, a 99-unit community, time was of the essence to close the refinancing, so Beech Street recommended that the borrowers pursue a Fannie Mae conventional senior housing loan and was able to close the transaction before the deadline will securing an attractive interest rate. 

The fixed-rate loan has a 10-year term, with 9.5 years yield maintenance and a 30-year amortizing schedule. James Sherman, Beech Street’s executive vice president of seniors housing, originated the transaction. 

Beech Street Announces $4 Billion Financing Activity in 2012

Beech Street Capital also announced that it provided $4.0 billion in multifamily financing in 2012—only its third year of operation—achieving a 100% annual growth rate for the last two years. “

We were determined this year to demonstrate that we could maintain our momentum,” says Grace Huebscher, Beech Street’s president and CEO. “Thanks to our growing relationships with Fannie Mae, Freddie Mac and FHA, the support of our customers, and the determination of our team to deliver on every single transaction, we succeeded.”

Beech Street saw significant growth across its business, with Fannie Mae financing growing 150% and the Freddie Mac business tripling. The financing firm also saw a surge in its FHA business. At year end, Beech Street’s servicing portfolio consisted of 643 loans and more than $7.3 billion.

Lancaster Pollard Closes $11 Million Loan for Florida CCRC

Lancaster Pollard was recently engaged by Epworth Village Retirement Center in Hialeah Fla. to realign the CCRC’s capital structure and develop a recapitalization plan to pay off two existing loans from the Department of Housing and Urban Development as well as to fund $1.4 million in repairs and improvements. 

The Columbus, Ohio-based financing firm selected a capital partner based on the ability to deliver the lowest cost and greatest flexibility for the $11 million loan, which has an interest rate nearly 4% lower than the previous blended coupon. This significantly decreases the overall interest expense for the CCRC.

Gerald Swiacki, senior vice president with Lancaster Pollard’s Atlanta office, headed the transaction. 

Mass Development Issues $3 Million Bond for CCRC

MassDevelopment has financed the expansion of a Longmeadow, Massachusetts continuing care retirement community with the issuance of a $3 million bond, according to the Banker & Tradesman. 

The bond was issued on behalf of Glenmeadow, Inc., a nonprofit CCRC that intends to use the proceeds to renovate its main building by updating public and office spaces, building an additional dining venue, expanding wellness activities space, and improving common areas.

People’s Bank purchased the bond. 

Sunrise Stockholders Approve Acquisition by Health Care REIT, Completed Jan. 9

Sunrise stockholders voted at a special meeting on Monday to approve the company’s previously-announced merger with Health Care REIT, Inc. (NYSE:HCN). A majority (98.3%) of the votes case by Sunrise stockholders were in favor of this proposal, representing 69.4% of the shares of common stock entitled to vote.

Sunrise stockholders received $14.50 per share from the merger, which includes a $2.10 special dividend. 

On Jan. 9, HCN and Sunrise announced the completion of the acquisition, an investment valued at $3.4 billion and expected to increase to $4.3 billion by July 2013 as the REIT continues to exercise rights to acquire additional joint venture partner interests at fixed purchase prices. 

Health Care REIT expects the $4.3 billion acquisition to generate a 6.5% unlevered initial yield, or 6.1% after capital expenditures.

Health Care REIT Announces Closing of $2.75 Billion Credit Facility

Health Care REIT, Inc. (NYSE:HCN) announced on Tuesday the closing of a $2.75 billion unsecured credit facility consisting of a $2.25 billion revolver and a $500 million term loan to be funded the same day. The facility replaces the company’s existing $2.0 billion unsecured revolving credit facility. 

The new revolver matures on March 31, 2017 and can be extended for an additional year at the company’s option. The term loan matures on March 31, 2016 and can be extended up to two years at the company’s option.

Based on HCN’s current credit ratings, the revolver bears interest at LIBOR plus 117.5 basis points and has an annual facility fee of 22.5 basis points. The term loan bears interest at LIBOR plus 135 basis points. HCN has an option to upsize the facility by up to an additional $1 billion through an accordion feature, allowing for aggregate commitments of up to $3.75 billion. The facility also allows for the company to borrow up to $500 million in alternate currencies.

HCN will use proceeds from the credit facility to fund announced investment activity for general corporate purposes including investing in health care and senior housing properties.

Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC arranged the facility as joint book runners and joint lead arrangers. Bank of America, N.A. and JPMorgan Chase Bank, N.A. were co-syndication agents. KeyBanc Capital Markets Inc. was a joint lead arranger and KeyBank National Association was Administrative Agent. Deutsche Bank Securities, Inc. served as a joint lead arranger and documentation agent. 

GE Capital Agents Credit Facilities of $725 Million for Genesis/Sun Healthcare Deal

GE Capital, Healthcare Financial Services, is serving as administrative agent on a $400 million asset-based revolving credit facility, and as syndication agent on a $325 million cash flow term loan credit facility for Genesis HealthCare, being used to support the acquisition of Sun Healthcare Group, Inc.

GE Capital Markets served as joint lead arranger and sole book runner for the revolving loan and joint lead arranger and joint bookrunner on the term loan.  

Lancaster Pollard Has Record Year, $946.8 Million of Senior Housing Financing

Lancaster Pollard finished its record year with 190 closed transactions with a total loan amount of $1.4 billion. Of those transactions, 132 were in the seniors housing sector, totaling $946.8 million. The firm financed skilled nursing facilities, assisted living facilities and CCRCs in 28 states and primarily used HUD funding through FHA Sec. 232/223(f), FHA Sec. 232/223(a)(7) and FHA Sec. 232/241 programs. However, the firm also financed facilities using the Fannie Mae Seniors Housing program and privately placed tax-exempt bonds.

Lancaster Pollard Provides $6.1 Million Financing for Utah Senior Care Center

Lancaster Pollard recently announced the closing of a $6.1 million loan used to refinance Abbington Manor, a 79-unit assisted living and memory care community in Lehi, Utah.

Wentworth Senior Living Services manages Abbington Manor, which consists of two separate sites located about two miles apart.

The borrower was seeking to refinance its existing loan to take advantage of current low interest rates, benefit from debt service savings, and fund various critical repairs. Although the Abbington Manor has two separate sites, the borrower wanted to demonstrate that the sites comprised one community so it could get one loan and reduce closing costs.

HUD agreed that the two sites shared enough common resources and management to qualify as one operation, and Lancaster Pollard was able to obtain the loan using the FHA Section 232/223(f) program. The borrower will benefit from more than $95,000 in annual debt service savings with the new low interest rate and 30-year term. Additionally, the refinance will fund significant renovations associated with accessibility and safety for the community’s residents. 

Major repair items include seismic retrofitting, a fire suppression system, and a resurfaced parking lot. The borrower will also be able to make a “substantial” deposit to its replacement reserve, says Lancaster Pollard. 

HJ Sims Provides Capital for Senior Housing Acquisition

Herbert J. Sims & Co., Inc. through its affiliate HJ Sims Investments, LLC, provided financing to Watermark Retirement Communities, an affiliate of The Freshwater Group, to acquire a senior living community in Oregon. 

The finance plan included a first mortgage loan from Freddie Mac in addition to equity from a joint venture between The Freshwater Group and Prudential Real Estate Investors—10% of which needed to be provided by either TFG or a co-investment partner. 

Sims was able to structure a preferred equity investment that worked with an existing joint venture agreement between TFG and Prudential in time to close with a Freddie Mac first mortgage/bridge-to-agency senior loan.

A new entity, Fountains Acquisition Finance I, LLC was formed to issue taxable bonds, says Sims, the proceeds of which were used to make the equity investment in a new TFG/Sims partnership, which in turn invested in the joint venture with Prudential to complete the transaction. 

The bonds were structured to have a low current interest rate that grows as the cash flow improves, allowing most of the community’s current operating cash flow to be retained to further the revenue enhancement plan. 

Lancaster Pollard Refinances Hoosiers Care Portfolio for $39 Million

Columbus, Ohio-headquartered Lancaster Pollard recently refinanced seven not-for-profit skilled nursing and pediatric facilities in Indiana and Illinois owned by Indiana-based Hoosiers Care, Inc., and managed by Exceptional Living Centers of Lexington, Ky.

The refinanced facilities are:

• Exceptional Living Center of Brazil in Brazil, Ind.
• Randolph Nursing Home in Winchester, Ind.
• Richland Bean-Blossom Health Care Center in Elletsville, Ind.
• Vernon Manor Children’s Home in Wabash, Ind.
• Exceptional Care and Training Center in Sterling, Ill.
• Swann Special Care Center in Champaign, Ill.
• Walter J Lawson Children’s Home in Loves Park, Ill. 

Lancaster Pollard recommended that the owner use the FHA Section 232/223(f) program to refinance Hoosier Care’s tax-exempt bonds with 30-year, fully-amortizing, fixed-rate mortgage loans totaling $39 million. The transaction resulted in millions of dollars in annual debt service savings and also served to fund more than $1.5 million in replacement reserves and $141,000 in repairs and improvements across the portfolio.

The firm’s Steve Kennedy, senior vice president and regional manager, and Chris Blanda, vice president, led the team on the refinancing. 

Oxford Finance Provides $20 Million Financing to Senior Living Provider

Oxford Finance LLC recently announced the closing of a $16 million senior secured term loan and $4 million revolving line of credit with American Senior Living Communities.

Proceeds of the term loan were used to refinance two skilled nursing facilities in Rhode Island, while the revolver will be used to fund ongoing working capital needs at the two sites. 

Ventas Sells $925 Million of Senior Notes

Ventas Inc. (NYSE:VTR) subsidiaries Ventas Realty, Limited Partnership and Ventas Capital Corporation recently announced the issuance and sale of $700 million aggregate principal amount of its 2.00% senior notes due 2018 and $225 million principal amount of their 3.25% senior notes due 2022. View the 8-K. 

Cambridge Closes $10.8 Million Loan for Fla. Senior Care Community

Cambridge Realty Capital Companies recently closed a $10.8 million loan to refinance Hawthorne Inn of Ocala, a 156-bed skilled nursing and assisted living facility in Ocala, Fla.

The fully-amortized, 30-year term loan was refinanced for the borrower using HUD’s Section 232/223(f) funding program and underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Lancaster Pollard Obtains $14.3 Million Loan for Neb. Senior Care Facility

Lancaster Pollard recently obtained a $14.3 million loan to refinance Hillcrest Health & Rehabilitation, a Bellevue, Neb. senior care facility built in the 1960s and owned by Hillcrest Health Systems.

Hillcrest used the FHA-insured HUD Section 232/223(f) program to complete the financing, which allows for a refinance with moderate repairs and improvements of up to 15% of appraised value. The loan has a 35-year term that allows Hillcrest to meet its goals of improving the facility. The owner was able to finance a $3.2 million renovation and expansion, and will also benefit from debt service savings of more than $275,000 per year. 

The renovation and expansion project includes a new outpatient rehabilitation area, additional private rooms, and other improvements. 

Cain Brothers Arranges $9 Million Loan for Calif. ALF

Cain Brothers Funding recently arranged an $8,976,000 taxable loan insured under the FHA Section 232/223(f) LEAN program for Eskaton Village Placerville, a 64-unit assisted living facility in Northern California. 

The proceeds of the loan were used to retire existing bonds. The loan has an interest rate of 2.45% for 35 years. 

Cambridge Provides $12.9 Million Loan to Refinance Ill. Senior Care Center

Cambridge Realty Capital Companies has closed a $12.9 million FHA-approved HUD loan to refinance Renaissance Care Center, a 190-bed skilled nursing and pediatrics facility in Canton, Ill. 

The fully-amortized, 37.6-year term loan was used to refinance the borrower using the HUD Section 232/223(a)(7) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Ziegler Closes $64 Million Financing for Nonprofit Senior Services Corporation

Ziegler recently closed a $64,160,000 fixed-rate, Series 2012 Bond issue for Episcopal Communities & Services for Seniors, a California not-for-profit corporation serving seniors in the greater Los Angeles area.

The Pasadena-headquartered corporation owns two continuing care retirement communities (which comprise the Obligated Group), The Canterbury in Rancho Palos Verdes, and The Covington, in Aliso Viejo. 

The Series 2012 Bonds are being issued to refund prior Series 2002 Bonds insured by Cal-Mortgage; fund a debt service reserve; and pay certain costs of issuance. This most recent financing is driven by a desire to create a corporate and capital structure that will facilitate future growth while minimizing current capital costs, as well as to generate annual cash flow savings. 

Lancaster Pollard Closes $107.4 Million of Loans in November

Lancaster Pollard closed 16 senior living transactions for a total loan amount of $107.4 million. The 16 facilities, all located in the Midwest, contained a total of 1,239 skilled nursing beds and 416 assisted living units. All the financings used the FHA Sec. 232/223(f) to refinance existing debt and substantially lower the cost of capital. 

Health Care REIT Announces Pricing of $1.2 Billion of Senior Notes

Health Care REIT, Inc. (NYSE:HCN) announced on Tuesday it had priced $1.2 billion in aggregate principal amount of senior unsecured notes issued in the following tranches:

• $450 million of 2.25% notes due March 15, 2018 priced to yield 2.35%
• $500 million of 3.75% notes due March 15, 2023 priced to yield 3.792%
• $250 million of 5.125% notes due March 15, 2043, priced to yield 5.184%

HCN plans to use the net proceeds from the offering to repay certain secured indebtedness to be assumed in connection with the previously announced acquisition of Sunrise Senior Living, Inc. (NYSE:SRZ). If this acquisition isn’t completed or if proceeds remain following the repayment of this secured indebtedness, HCN intends to use the proceeds for general corporate purposes, including investing in healthcare and senior housing properties. 

Pending such use, the net proceeds may be invested in short-term, investment grade, interest-bearing securities, certificates of deposit, or indirect or guaranteed obligations of the United States.

BofA Merrill Lynch, Deutsche Bank Securities, UBS Investment Bank, Citigroup, and Credit Agricole CIB acted as joint book-running managers for the offering.

The offering is expected to close on Dec. 6, 2012. 

NHI Advances $10 Million to Capital Funding Group

National Health Investors, Inc. (NYSE:NHI) announced on Thursday it has funded an additional $10 million to Capital FUnding Group, Inc. for its healthcare loan investments. The total credit facility of $15 million has now been fully funded by NHI and will mature in April 2015. 

The CFG family of companies represents comprehensive financing solutions for healthcare facilities, including bridge loans and FHA-insured mortgages for the long-term care, assisted living, and hospital sectors. 

Cambridge Provides Loans for 6 Chicago-Area Properties

Cambridge Reality Capital Companies recently provided FHA-insured funding totaling $72.1 million for six properties owned by Alden Health Care & Senior Living in the Chicago metro area.

The properties were refinanced using HUD’s Section 232/223(a)(7) program with fully-amortizing, 35- or 40-year term mortgages underwritten by Cambridge Realty Capital Ltd. of Illinois, Cambridge’s business that specializes in HUD funding programs. 

The largest of the six loans was $18.7 million and was used to refinance Alden Des Plaines, a 152-bed skilled nursing and assisted living center in Des Plaines. On the other end of the scale was a $3.6 million loan to refinance Alden Bloomingdale, a 48-bed intermediate care facility in Bloomingdale. 

Cambridge Finances 10-Property Portfolio of Ill. Nursing Homes

Cambridge Realty Capital Companies recently provided $90.5 million of FHA-insured financing for a portfolio of 10 individually refinanced skilled nursing facilities in Illinois. 

The loans were arranged for JLM Financial Investments, a private equity group headquartered in Austin, Tex. that specializes in developing commercial real estate and senior housing. 

The fully-amortized loans were refinanced using HUD’s Section 232/223(a)(7) program and were underwritten by Cambridge Realty Capital Ltd. of Illinois. 

The Ensign Group to Renew Stock Repurchase Program

The Ensign Group, Inc. (NASDAQ:ENSG) announced on Wednesday that its board of directors has authorized the company to renew its stock repurchase plan, allowing the company to purchase up to $10 million of its common stock over the next 12 months. 

“This program reaffirms our continued confidence in the Company’s near and long-term financial and operating performance, and our commitment to enhancing shareholder value,” said Christopher Christensen, Ensign’s President and CEO.

Ensign expects to continue paying quarterly dividends and growing and diversifying its business. Christensen says the company’s “strong balance sheet, significant credit relationships, and untapped equity in its real estate portfolio” enable the “flexibility to opportunistically repurchase” Ensign shares while continuing to acquire both well-performing and struggling long-term care skilled nursing properties, assisted living communities, and start-up or early-stage hospice and home health agencies. 

Under the stock repurchase program, Ensign is authorized to repurchase its issued and outstanding common shares from time to time in open-market and privately negotiated transactions and block trades in accordance with federal securities laws, including Rule 10-b18 under the Securities Exchange Act of 1934 as amended.

The number of shares Ensign repurchases will depend entirely on the level of available cash, the attractiveness of alternate investment and business opportunities either at hand or on the horizon, and management’s perception of value relative to market price, as well as other legal, regulatory, and contractual requirements. 

Oak Grove Capital Originates $19.13 Million of Senior Housing Loans

Oak Grove Capital recently originated two senior housing loans through Fannie Mae totaling $19.13 million.

For Heathers Manor in Crystal, Minn., Oak Grove originated a $10.4 million loan for the property’s acquisition. LCS recently acquired an equity stake in Harrison Street Real Estate Capital’s portfolio of senior living properties, which includes Heathers Manor, replacing Lang Nelson’s equity interest in the property. 

Maples of Towson in Towson, Md. got an $8.73 million loan to refinance the property. 

Cambridge Closes $8.6 Million Loan for Wisc. ALF

Cambridge realty Capital Companies recently closed an $8.6 million loan to refinance Appleton Retirement Community, a 104-bed assisted living community in Appleton, Wisc. The fully-amortized, 35-year term loan was refinanced for the borrower using HUD’s Section 232/223(f) funding program and was underwritten by Cambridge Realty Capital Ltd. of Illinois. 

Changes have been afoot with the Department of Housing and Urban Development’s loan program for housing for low-income seniors that have made it more attractive for nonprofit property owners to prepay and refinance their existing loans during the current low interest rate environment, writes Lancaster Pollard.

Modifications in Housing Notice 2012-08 apply to owners of Section 202 properties constructed before 1992 who are required to get HUD’s consent to prepay their original direct loan. There are certain requirements regarding annual debt service and necessary repairs depending on the timeframe during which properties were built, which Lancaster Pollard details.

Here’s an excerpt of what has changed and some benefits: 

The major changes in the new guidance involve the use agreement, housing assistance payment (HAP) contract and the approved use of loan proceeds. Changes in each will impact property owners seeking to refinance. To ensure that the project continues to provide affordable housing to seniors, the notice requires 202 owners seeking to prepay their loan to enter into a use agreement that extends 20 years beyond the maturity of the original loan.

On a positive note, the extended use agreement also comes with a mandatory 20-year HAP contract. At the time of refinance, the owner will enter into a new HAP contract that adds 20 years to any remaining time of the old contract. For example, if an owner had 3 years remaining at the time of closing, the new HAP contract would be for 23 years.

Prior to the release of Housing Notice 2012-08, the developer fee was capped at 15% of total repairs to be performed at the property. The developer fee is now capped at 15% of acceptable development costs, which includes the cost of acquisition, loan prepayment, initial reserve deposits and transactions costs, including third-party reports, loan fees and closing costs. The developer fee is earned and paid at closing and the use of the funds is not regulated by HUD.  

…The impact of this clarification can be minimized by ownership taking full advantage of this opportunity to recapitalize its facility. The incentives established by Notice 12-08, the FAQ and Sec. 8 renewal guide encourage the owner to take the full developer fee, fully fund the replacement reserve and to perform as many repairs and upgrades as necessary. The result is a modernized facility that is well positioned to continue providing safe and affordable housing to the area’s seniors. The byproduct is that the new 202 debt service is comparable to current debt service, which minimizes the potential for a contract rent reduction. 

Lancaster Pollard supplies a chart to break down refinancing costs before and after the Housing Notice, and also mentions some disadvantages to Section 202 owners stemming from a clarification in the notice regarding how new 20-year HAP contracts are to be set. 

Read the full piece at Lancaster Pollard. 

The Federal Housing Administration might be needing a financial lifeline from the Treasury, according to Bloomberg, but lenders in the senior housing and care space aren’t expecting another hike in loan insurance premiums for FHA-insured programs. 

Continued losses stemming from the housing market collapse are hitting the FHA hard. Ahead of a financial analysis expected to be issued next week, some people with knowledge of the report say it could be setting the stage for the first draw from the Treasury in the federally-backed mortgage insurer’s nearly eight-decade history.

In recent months, FHA has raised premiums on many of its loan programs, including those related to senior housing, and has also tightened its credit standards in attempts to shore up reserves and avoid a taxpayer bailout. Considering the by-and-large positive performances of the multifamily and healthcare loan portfolio, another mortgage insurance premium hike could be a possible way to use profitable loan programs to help subsidize ones that are in the red. 

However, that’s not likely to occur, says Nick Gesue, senior vice president and chief credit officer at Lancaster Pollard. That’s because the Department of Housing and Urban Development (HUD) is “fairly compartmentalized” between its single family and multifamily portfolios, and profitability that comes from one side isn’t generally used to fund shortfalls on the other.

The agency’s problems stem from the single family portfolio and are concentrated in loans originated during the years before the 2008 housing market crash, so the possibility of a Treasury bailout for the FHA isn’t necessarily cause for concern among those involved in senior housing finance, says Michael Vaughn, senior vice president of Walker and Dunlop’s FHA Finance Division. 

Despite the profitability of the multifamily (and healthcare) loan portfolios, HUD already raised mortgage insurance premiums on these loans, effective Oct. 1, 2012, he points out. ”It would be unusual for them to be raised twice in the course of a year, especially because the increase was due to overall budgetary concerns, not the performance of the programs.”

Cambridge Realty Capital Companies’ president and chairman Jeff Davis also pointed out that the FHA’s financial woes are related to its single family portfolio.

“I’m not expecting another increased MIP for some time for multifamily or healthcare,” he says.

While it’s possible that FHA will propose another premium increase for next year, Vaughn says, “at some point the elasticity of demand for the programs will be tested and an increase would actually have counterproductive budgetary effects.”

Written by Alyssa Gerace

Reimbursement for assisted-living providers historically has been private pay. While that continues to be the case, over the last decade there has been an expansion in the number of states that contribute Medicaid dollars for some services.

On a macro level, expanding Medicaid reimbursement for AL will result in higher demand across the board. Residents who previously had no other option but to live in a nursing home may now choose assisted living instead. As a result, some demand is shifting from SNFs to ALFs.

This is positive for the entire AL industry. Most state HCBS waiver plans have long waiting lists of residents looking to participate, so there is strong demand. The effect will be even greater in states that amend their Medicaid programs to create an entitlement as this makes the pie even bigger.

Providers who accept Medicaid stand to benefit from more stable occupancy. A Medicaid resident’s ability to pay is not dependent on income or assets. Medicaid demand is driven solely by the need for assistance with ADLs. While private-pay demand decreases in a down economy for financial reasons, Medicaid demand should remain steady. Consistent demand leads to less volatile occupancy and, therefore, lowers risk. Revenue diversification can soften the blow in the event of another shock to the real-estate market or the broader economy.

But there are drawbacks as well. While reimbursement varies by state, Medicaid rates are typically below the available private-pay rate. They also are subject to change at the whim of legislators, whereas private-pay rates are determined by the market. Additional regulatory and reporting requirements will accompany Medicaid residents. For example, facilities would have to meet quality-assurance standards, keep resident records and have a mechanism for feedback. A facility may be required to set aside a certain number of units for Medicaid residents. There also may be physical-plant requirements, such as a kitchenette, adequate common space and single-occupancy units. But many of these requirements will be met by default.

Serving Medicaid residents is not for every provider, but may be very beneficial to some. New, high-end facilities with waiting lists would not see the benefit that a mature facility with lower occupancy might. Facilities with lower occupancy have the most to gain by serving Medicaid residents. Units that otherwise would be vacant could be filled, albeit at a lower margin. In states where Medicaid reimbursement is competitive with private-pay rates, the benefit is even greater.

This is an ever-evolving topic, but the trend seems to be moving in the direction of expanding Medicaid reimbursement for AL. It is state specific, so providers should evaluate the programs in the states where they are located. Agile providers who position their facilities to accept Medicaid residents could stand to benefit from more stable occupancy and consistent revenue

This article was written by Kevin Tholke, an associate with Lancaster Pollard out of the firm’s Los Angeles office, and reprinted with permission from The Capital Issue. Read the full piece at www.lancasterpollard.com.