RED hot HUD deal

ORIX USA Corporation just increased its ownership interest in RED Capital Group, the multifamily/affordable/seniors housing lender, from 88% to 100%. ORIX made its original investment in 2010, but RED has continued to operate as an independent entity based in Columbus, Ohio. And with that, RED Mortgage Capital, the mortgage banking arm of RED, closed a $21.2 million HUD loan with a 30-year term to refinance a 220-bed skilled nursing facility in Butler, Pennsylvania. Previously owned by Butler County, this facility was built in 1963, with an addition in 1982 and a $7 million renovation in 2009. Under county-ownership, operations suffered with a high Medicaid census, and despite being 96% occupied, the facility lost about $300,000 on $18.1 million of revenues in 2014, prompting the sale. The buyer, now borrower, was Investment360, which paid $20.5 million, or $93,200 per bed, after a competitive bidding process. Two years later, quality mix and operations have improved, and Investment360 enlisted the help of James Scribner of RED to receive non-recourse, low-interest rate permanent financing with a flexible pre-payment schedule.