Berkadia Seniors Housing & Healthcare recently announced $47 million in financing for five skilled nursing facilities across the country. Managing Director Jay Healy secured the financing on behalf of the borrowers.
First, we have the HUD refinancing of a 40-bed/unit, Medicare-only SNF in Sacramento, California. The $14.45 million, 48% LTV HUD loan retired the construction debt and covered transaction costs for the California-based client. That puts the value of the property at $29.65 million, or around $740,000 per bed. We’ve heard of the high values SNFs command these days, but nothing like that. However, it was built in 2019, was certified for Medicare in August 2019 and only accepts Medicare, short-term rehab patients. Plus, we imagine given the barriers to entry in the market, there are not many facilities like that in the area. Indeed, occupancy at the time of closing was approximately 95%.
Next, Berkadia provided a $10.4 million bridge loan to refinance existing HUD debt and cover approximately $3.6 million of capital expenditures for a 105-bed skilled nursing facility located in Yakima, Washington. Funded improvements will include common area and resident room renovations, interior and exterior repainting, as well as new nursing stations throughout the building. Originally built in 1975, the facility has historically averaged 90% occupancy with a Medicare mix of approximately 30%. Berkadia plans to refinance the bridge debt through HUD in 2022.
For the third transaction, Berkadia originated a $9.2 million HUD loan secured by a 90-bed skilled nursing facility in East Haven, Connecticut. The Connecticut-based sponsor acquired the subject property and its assets for $8.5 million, or $94,400 per bed, in 2018 after the prior owner had defaulted on their debt. The sponsor subsequently invested over $1.5 million into the property for capital expenditures, including a new therapy gym. These improvements allowed the sponsor to increase occupancy to the mid-90s and quality mix to 15%, resulting in a new valuation of $11.5 million, or $127,800 per bed. The 80% LTV loan paid off the first mortgage, as well as additional debt incurred in connection with the renovation.
Finally, Berkadia completed interest rate reductions on two existing HUD loans totaling $13 million for a Baltimore-based sponsor. The borrower was able to reduce the 4% notes rates to below 3%, resulting in annual savings of nearly $80,000. The sponsor did not come out of pocket for any transaction costs, including the 6% prepayment penalties.
