Lancaster Pollard Mortgage Company just closed its 16th HUD financing since the government shutdown ended in January. They clearly did their leg work during the shutdown, as in the first three weeks following it, 16 of the 25 FHA 232 commitments issued by HUD went to Lancaster Pollard, for a total of $224 million in closings.
The latest transaction featured a $17.3 million loan closed on behalf of Tryko Partners for its 171-bed skilled nursing facility in Brick, New Jersey. Over four years ago, Tryko had acquired the facility from Florida-based New Vision for $10 million, or under $60,000 per bed. At the time, it featured 148 skilled nursing beds and 23 assisted living units and operated around breakeven on nearly $10 million of revenues. Occupancy was also low at 75%, and the facility was about 30 years old (but was considered to be in good condition). CapitalSource Bank had provided the original bridge financing for the deal.
Luckily, it was located within four miles of Tryko’s headquarters, so they would be able to manage it pretty hands on. The company had a three-year turnaround plan and expected to invest $1.0 million in renovations. We’re not sure what the final investment added up to, but the company clearly turned the facility around and added a lot of value. Assuming a 70% loan-to-value, the per-bed value of the facility jumps to about $145,000 per bed, not too bad for its high-barrier-to-entry market.