A national owner/operator faced with an underperforming seniors housing property in Missouri and maturing debt on the property secured a refinance thanks to JD Stettin of Carnegie Capital. The borrower, which has over 30 properties in its portfolio, acquired the 45-unit assisted living community in late 2017.
Occupancy and cash flow decreased steadily since the pandemic, and the community could not cover its debt costs from operations despite cash flow being above breakeven. It did not help that some key staff members at the community had unexpectedly left. Like so many lenders did during and after the pandemic, the existing bank extended the maturity of its loan several times but was requiring a substantial paydown to extend again. The owner had considered selling the asset rather than refinance, but they found a new administrator who was a good fit and who they believed would help realize upside at the community.
So, despite the underperforming cash flow, Carnegie secured a refinance through a local community bank prior to the maturity of the existing loan. The new, three-year loan has six months of interest only and covers 100% of the transaction costs. The loan also funded a new interest reserve that the borrower will use during lease up. This was Carnegie’s sixth transaction closed with the borrower.
