Two skilled nursing facilities in Hawaii refinanced their debt and lowered their interest rate by about 60% in a transaction led by HJ Sims. The facilities, both located in Honolulu, consisted of 92 beds and 75 beds, respectively. Before this refinancing, they were collateralized with a single, high-interest rate bridge loan that had both a short term and expensive extension provisions.
Sims Mortgage Funding (SMF) underwrote a $14.08 million loan through HUD to take out as much of the bridge debt as possible, resulting in a loan at about 80% of the estimated market value. The loan came with a 35-year term and a 2.05x debt service coverage ratio. In addition, to round out the capital stack, SMF obtained a waiver from HUD for HJ Sims to provide additional financing to the holding company that owns both facilities. Both transactions put the borrower on surer financial footing going forward, which is crucial for SNF owners to be able to invest in the appropriate capex, staff training and, of course, debt service.