Sims Mortgage Funding (SMF) completed its first HUD Lean Portfolio transaction at the end of September when it closed on six FHA-insured loans totaling $72,320,000 for Radius Management Services II, a regional health care company that operates through affiliates and/or manages approximately 1,900 skilled nursing, assisted living and chronic care hospital beds in Massachusetts and Rhode Island. The loans, which were insured under the Section 232/223(f) program, enabled Radius to acquire a portfolio of six skilled nursing facilities totaling 866 beds that it had been operating pursuant to leases with a national healthcare real estate investment trust (REIT). The facilities are located throughout central and eastern Massachusetts in Worcester, Southbridge, Lowell, Plymouth and Cape Cod. The six FHA-insured loans each were underwritten to 80% loan-to-values, with five of the six featuring 35 year amortizations and the sixth with a 30 year amortization. The weighted average debt service coverage ratio for the portfolio once the FHA-insured loans were priced was 2.13X based on the trailing 12 months ended 3/30/10, and the loan to acquisition cost ratios ranged from 83% to 85%. Our underwriting required a total of $207,763 in critical and non-critical repairs, $1,103,985 in initial deposits to reserve for replacement funds, and annual reserve fund deposits starting at $815 per bed.

In August 2010 Sims Mortgage Funding, Inc. (SMF) closed a new $3,068,200 FHA-insured loan for the Highland Manor Nursing Center, a 120 bed facility in Exeter, PA and a new $2,848,400 FHA-insured loan for Majestic Oaks Nursing and Rehabilitation Center, a 180-bed facility in Warminster, PA. Proceeds from the new loans were used to prepay each project's existing FHA-insured loan, fund repair escrows and deposits to the reserve for replacement funds, and cover transaction and loan closing costs.

In late July, Sims Mortgage Funding, Inc. closed a $16.455 million FHA-insured loan for Boardwalk Place Apartments, an existing 264-unit multifamily market-rate rental housing property located in Denham Springs, LA. The loan is insured under the Section 223(a)(7) program, which is designed to refinance existing, high-interest rate loans that are in HUD's portfolio, thereby decreasing risk to the mortgage insurance fund.