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Sims Mortgage Funding (SMF) Closes $22,128,200 Refinance Loan for Memory Care Facility

Partnered Right
  • Artis Senior Living owns and operates a 64-bed Memory Care Facility in Herndon, VA, outside of Washington, DC. It wanted to leverage the built-up equity in the property through its current bank lender who brought SMF into the transaction for a bridge-to-HUD structure.
Structured Right
  • SMF worked closely with the bank to structure the bridge loan to maximize the equity take-out while minimizing the time HUD would require the debt to be seasoned.
Executed Right
  • The timeframe from submission of the Firm Commitment Application to closing was about 110 days. The bridge loan used to take out the equity was outstanding for approximately 9 months.
Financed Right®
  • The bridge-to-HUD allowed the Owner to unlock a substantial amount of equity in the Project and refinance into a long-term, fixed rate loan on a timely basis.
Partnered Right

Artis Senior Living, a developer/owner/operator of assisted living residences, wanted to leverage the considerable equity it had built up in one of its memory care facilities in the Washington, DC metropolitan area. However, they wanted to transition as quickly as possible to a HUD-insured loan so as to minimize future interest rate and refinancing risk. Their Bank was willing to make a short-term bridge loan for that purpose but did not have the background in the HUD healthcare mortgage insurance space for the take-out. The Bank and Artis partnered with SMF to secure the “back-end” of the bridge-to-HUD financing.

Structured Right

Recent changes in HUD’s policies have significantly shortened the debt seasoning requirements for bridge loans. This has opened the way for more efficient and expeditious bridge-to-HUD loan executions that involve the take-out of equity. SMF worked closely with the Bank and HUD to ensure that the goals of Artis and the Bank – to allow for a maximum bridge loan without enduring a lengthy loan seasoning period – were met.

Executed Right

The $22,128,200 loan was insured under the Section 232/223(f) program and was underwritten at 64% of the appraised Market Value. The self-amortizing loan features a 35-year term and a debt service coverage ratio of 1.74. HUD approved the deal in 61 days. The Bank placed the GNMA securities used to fund the HUD-insured loan, completing the take-out of its bridge loan that was issued about nine months earlier.

Financed Right®

SMF successfully helped Artis Senior Living and its Bank execute a refinance plan that converted short-term debt into long-term financing at a competitive, fixed, interest rate and on better terms than were available through commercial financing options. With HUD’s more liberal bridge loan seasoning guidelines firmly in place, Section 232/223(f) mortgage insurance provides an excellent take-out of short-term debt used to acquire a healthcare/senior housing property or to leverage the additional equity resulting from increases in market value.