JD Stettin of Carnegie Capital closed the refinance of two assisted living/memory care communities totaling 130 units about 80 miles outside of San Francisco, California. After acquiring the communities in late-2019 and 2020, the borrower began to renovate and reposition them. However, given the pandemic, repositioning the communities took longer than initially anticipated, and upon closing the refinance, the in-place, portfolio-wide EBITDAR was still negative and occupancy was under 50%. The borrower was still implementing capex projects at one of the properties, which affected census, as well.
The borrower originally purchased the assets with cash but looked to secure a loan to complete the renovations and fund reserves at both locations. Carnegie sourced terms from multiple lenders and ultimately closed the refinance with a CDFI (Community Development Financial Institution) for $5 million, featuring a 7.85% interest rate fixed for five years, 1.5 years of interest only, and recourse limited to the corporate fund guarantor.
