The HUD market seems to be the steadiest in the senior care lending world since the onset of COVID-19, after a few hiccups and delays earlier this year. Joining the activity, M&T Realty Capital Corporation arranged a HUD refinance for an assisted living community in Spokane, Washington. The non-recourse loan totaled $13.83 million and came with a 30-year, fully amortizing term. Plus, M&T secured an interest rate well below 2.75%. Who wouldn’t take that?
Originally built in the 1940s with an addition in the early 1980s and renovations in the 2000s, the community features 212 units of independent living and assisted living in five interconnected buildings. Located adjacent to Gonzaga University, it is also the low-cost provider in the area.
The borrower, CarePartners Management Group, purchased the community in November 2018 from Kinsel Ameri Properties and operator Northstar Senior Living for a price of $10.75 million, or $51,200 per unit. At the time, the community was operating at around an 18% margin on approximately $5.1 million of revenues. The buyer immediately turned to M&T to begin the HUD process. During that time, CarePartners improved operations and invested over $500,000 in capex and cosmetic upgrades, which was taken into account in the HUD take-out. We’re not sure where operations stand now, but the pro forma figures for the 2018 acquisition were $5.34 million of revenues and $1.3 million of net income, so it could be around there.
Managing Director Steven Muth of M&T’s Richmond, Virginia office led the transaction in collaboration with Chris Tesla, the Team Leader of M&T Commercial Banking based in Seattle.
