Bond Financing
Bond Financing
HUD 232 223(f) Program
Eligible Properties: Assisted Living Facilities, Intermediate Care Facilities, Board and Care and Nursing Homes.
Borrower: A single asset and single purpose entity, either for-profit or non-profit
Highlights:
· 35-year fixed term or up to 75% of building’s economic useful life
· Non-Recourse loan
· Assumable
· Rate Locked for life of Loan
Maximum Loan is the lesser of:
1. Percentage of Value 80% * (Cashout subject to different rules)
2. Debt Service Coverage 1.45x (using a maximum 35 year term/ amortization)
3. 100% transaction costs (refinance) and 85% transaction costs (purchase)
Escrows Escrows for taxes, insurance & mortgage insurance premium are required
Replacement Reserves Initial and monthly deposits required based on long term physical needs
Secondary Financing Available
Professional Liability Insurance Minimum $1,000,000 / $3,000,000 coverage for operators and managers
Commercial Space Permitted up to 20%
HUD Exam Fee $3 per $1,000 of loan amount
HUD Inspection Fee 1% of estimated cost of repairs or $30 per unit/bed
Rate Lock Deposit Typically 0.50% of mortgage amount, refunded at closing
Mortgage Insurance Premium
Firm Application Submitted – will include:
o Final Appraisal
o Property Capital Needs Assessment
o Phase 1 Environmental Assessment
o Financials and/or credit information on sponsor and management company
o Three years of complete financials for the project and borrowing entity
o Past due accounts payable and outstanding liabilities
o Management Documents
o Evidence of site control/last arm’s length transaction
o Legal Documents (organizational docs, title)
o Rent Rolls
Fannie Mae Seniors Housing Program
Description: Non-recourse, assumable financing for the acquisition or refinance of stabilized independent living (IL) and assisted living (AL) properties; Properties that assist residents with Alzheimer’s (ALZ) and/or Memory Care (MC) are eligible for financing under the Fannie Mae Program.
- IL communities must have achieved and sustained at least an average of 90% economic occupancy for the proceeding months (12 months);
- AL/MC communities must have 90% economic occupancy for the proceeding months (15 months)
- Newly constructed and stabilized Senior Housing facilities are also eligible for the Fannie Mae program.
- Building must be fully sprinklered
- At least 80% of the beds must be private pay
- CCRCs are eligible on a case by case basis
Loan Amount Minimum $5,000,000, with exceptions, Supplemental Loans are also available
Loan Terms 5-, 7-, 10-, 15-, or 18-year balloons; 20-,25-, and 30-year fully amortizing
Amortization 30 years maximum
Borrower A single asset and single purpose entity, either for-profit or non-profit
Ownership/Management Must demonstrate at least five years’ experience with properties of similar
composition, and should have a minimum of five properties in their portfolio.
Coverage
1.30x for independent living
1.40x for facilities with assisted living and/or ALZ/MC component greater than 50%
1.45x for standalone ALZ / MC facilities
1.50x for properties containing Skilled Nursing
Prepayment Yield Maintenance, Defeasance, and Graduated Prepayment Premium
Escrows Escrows for taxes, insurance & mortgage insurance premium are required
Replacement Reserves Required based on long term physical needs
Rate Lock Deposit Typically 1.00% of mortgage amount, refunded
Application Submitted – will include:
o Final Appraisal
o Property Capital Needs Assessment
o Phase 1 Environmental Assessment
o Financials and/or credit information on sponsor and management company
o Three years of complete financials for the project and borrowing entity
o *** A Regulatory Compliance Report is required for all licensed properties ***
o Past due accounts payable and outstanding liabilities
o Management Documents
o Evidence of site control/last arm’s length transaction
o Legal Documents (organizational docs, title)
o Rent Rolls
Freddie Mac Seniors Housing Program
Freddie Mac Seniors Housing Program
Description: Non-recourse, assumable financing for the acquisition or refinance of stabilized senior housing assets.
Eligible Properties: independent living (IL), congregate care, and assisted living (AL) properties; Properties that include some set-aside for skilled nursing or residents with Alzheimer’s (ALZ) and/or Memory Care (MC) are eligible for financing at Freddie Mac’s discretion.
Seasoning and Occupancy:
- The property must be fully completed and have been in operations for a minimum of 12 months, with at least 90% physical occupancy for 90 consecutive days.
- Under certain circumstances, Freddie Mac may accept a shorter stabilized operating history if the borrower provides performance escrows or other acceptable collateral
Loan Amount Minimum $5,000,000, with exceptions, Supplemental Loans are also available
Loan Terms 5-, 7-, 10-, 15-, or 18-year balloons; 20-,25-, and 30-year fully amortizing
Amortization 30 years maximum
Borrower A single asset and single purpose entity, either for-profit or non-profit
Ownership/Management Must demonstrate at least five years’ experience with properties of similar
composition, and should have a minimum of five properties in their portfolio.
LTV Constraints
1 – 75% for IL and AL Properties
2 – 70 - 75% for partial interest only for IL and AL properties
3 – 70% for full term IO mortgages on IL properties
4 – 70% for full term IO mortgages on AL properties
DSC Coverage
1.30x for independent living
1.40x for facilities with assisted living and/or ALZ/MC component greater than 50%
1.45x for standalone ALZ / MC facilities
1.50x for properties containing Skilled Nursing
Prepayment Yield Maintenance, Defeasance, and Graduated Prepayment Premium
Escrows for taxes, insurance & mortgage insurance premium are required
Replacement Reserves Required based on long term physical needs
Rate Lock Deposit Typically 1.00% of mortgage amount, refunded
Application Submitted – will include:
o Final Appraisal
o Property Capital Needs Assessment
o Phase 1 Environmental Assessment
o Financials and/or credit information on sponsor and management company
o Three years of complete financials for the project and borrowing entity
o *** A Regulatory Compliance Report is required for all licensed properties ***
o Past due accounts payable and outstanding liabilities
o Management Documents
o Evidence of site control/last arm’s length transaction
o Legal Documents (organizational docs, title)
o Rent Rolls
