There’s no doubt that construction lending has slowed, and the loans that do close are much more conservative and now almost always require some sort of recourse. Nevertheless, Live Oak Bank closed three construction financings in December alone, capping off a successful year for the bank’s senior care lending platform.
First was an $8.5 million loan for a to-be-built senior living community in Reidsville, North Carolina. ALG Senior had controlled a Certificate of Need to operate assisted living in the county for many years and eventually purchased a 12.5-acre site. The community will feature 58 units and 75 beds of both independent living and assisted living, and it will stand out among the local competition which averages 26 years in age. Assuming a conservative 65% loan-to-value, that puts the development cost around $225,000 per unit.
Next, in Dallas, Georgia, Live Oak provided a $13 million loan to Phoenix Senior Living for the development of 56 independent living cottages at its existing senior living campus there. The second phase of a three-phase campus construction, the project will include 14 quadplex cottages, each offering high quality finishes and garage parking. There are also 10 additional acres slated for apartment-style independent living and/or assisted living to be built at a future date. Again, assuming a 65% loan-to-value, development cost nears $360,000 per unit for the expansion.
The final construction loan was closed for a 127-unit assisted living/memory care project in Brookfield, Connecticut. Carnegie Capital advised the borrower/developer, Columbia Pacific Real Estate Fund III, on the transaction, which featured a $24.9 million loan with a five-year term and interest rate in the low 4s. Leisure Care will operate the community going forward. The construction cost for this project was around $37.7 million, or about $290,000 per unit.
Live Oak Bank rounded out its December activity with an acquisition/renovation loan for a joint venture between Prevarian Senior Living and Harrison Street. The deal financed the acquisition of a 129-unit/140-bed independent living and assisted living community in Lakeland, Florida from a family-owned company. Planned renovations include the addition of a new memory care wing, enhanced amenities, common areas and an increase in licensed bed capacity. The community is set on seven acres of lakefront property that was originally a congregate living community for retirees of a local carpenter’s union. The building underwent a gut renovation in 2016, but many of the original 1920s architectural features were preserved.