Sims Mortgage Funding recently closed $22,836,000 in FHA-insured loans under the Lean program that enabled a major New England health care provider to repay a bank loan, improve its future borrowing capacity, and secure needed working capital.
In 2011, Athena Health Care of Farmington, Connecticut acquired two Rhode Island nursing homes with a $20,356,000 bank loan and $4,800,000 in preferred equity issued by SMF’s parent company, HJ Sims.
Although the bank loan was scheduled to mature in March 2019, it was imperative for Athena to retire the debt as soon as possible, as the bank’s total outstanding loans to the company would likely constrain its future lending activities.
- The FHA-insured loans, insured under the Section 232/232(f) program, covered a portfolio of two skilled nursing facilities located in Providence and East Providence, with a total 262 beds.
- The loans were underwritten at an 80% loan to value and have 35-year fully-amortizing terms.
- The average debt service coverage on the portfolio was approximately 2.77.
- Initial deposits to the reserve fund for replacements averaged $1,333 per bed, and annual deposits averaged $700 per bed.
- Transaction included a $5 million working capital line of credit for both properties collateralized by their governmental accounts receivable.
Although each loan was underwritten separately, the facilities were incorporated into a Master Lease structure. However, pursuant to the client’s request, SMF was able to ensure that HUD kept the Rhode Island transactions separate from Athena’s three other HUD Master Leases for properties in Massachusetts and Rhode Island.
Moreover, while both applications for mortgage insurance were submitted to Lean at the same time, the Firm Commitments were issued approximately 33 days apart. Despite this, SMF was able to keep both transactions on the same closing schedule, which was crucial because the bank debt being refinanced was collateralized by both properties and needed to be paid off in its entirety.
The Athena Rhode Island portfolio constituted the fifth and sixth HUD-insured loans Sims Mortgage Funding has closed for Athena since October 2013.
To learn more about these and other transactions, contact Anthony Luzzi at 201-307-9383 or email@example.com.