Most people think of the HUD 232 program as a financing tool used by for-profit entities. But not-for-profits can take advantage of the low rates as well. A case in point was the recent $94.3 million HUD loan arranged by Bill Mulligan and Ashley Wilkens of Ziegler for a senior living campus in North Central Florida. With more than 639 units, the loan came in around $147,500 per unit and had an interest rate just under 3.5%.
The large campus has 511 unlicensed independent living/board and care units, plus 128 units licensed for assisted living and memory care. The Ziegler team was able to convince HUD that the large IL portion met the HUD parameters because although they were “independent living,” they were really more board and care with services. In addition, the average age of the residents was 87, helping convince HUD of the average frailty of the residents.
Occupancy was 90% with a strong net operating income margin. The HUD loan refinanced tax-exempt debt with an average rate of 5.8%, which should save the owner more than $2.0 million in annual interest expense.