VIUM Capital did not let the difficult capital markets stop them from closing a healthy amount of financing volume in the third quarter. The firm closed nine separate transactions totaling $175 million, consisting of acquisition loans, recapitalizations and refinancings for senior care properties across seven states. VIUM also received 14 HUD 232/223f commitments during the quarter, which positions it well for a strong HUD FY 2024.
Starting with the acquisition loans, the team financed the purchase of two skilled nursing facilities with 243 beds in Louisiana from two different sellers. A balance sheet loan covers $13.926 million of initial funding for the acquisition and a $4.5 million renovation/expansion fund, with an available earnout totaling $5.07 million based on the borrower’s proforma operations. The loan has to season for two years prior to submitting the HUD applications in August 2025.
VIUM financed another purchase of two skilled nursing facilities, this time in Ohio. An established in-state owner/operator sought to acquire the facilities through a purchase option. The $20.815 million bridge loan refinanced the facilities’ maturing senior debt for the borrower and can be refinanced through HUD in 2024.
VIUM arranged acquisition financing for another purchase option in Texas. The deal included four facilities and 421 total beds that were previously owned by a publicly traded REIT. The buyer (and in-place operator) had 1031 exchange proceeds to put to use from a recent divestiture of seven skilled nursing facilities in Texas. They received $17.98 million in financing in an A/B structure to fund the acquisition.
Facility A, totaling $4.082 million, was structured to adhere to the debt replacement requirements tied to 1031 exchange transactions, resulting in a low leverage funding for the acquisition. In order to capture the upside from a recent Medicaid rate increase in Texas, VIUM structured a Facility B loan for $13.9 million to close 45 days after the acquisition. The A/B structure allowed the buyer to utilize 1031 funds for the acquisition of the real estate while also structuring an earnout to capture increased value while adhering to the 1031 exchange guidelines related to equity extraction.
Lastly, for the acquisition financings, VIUM closed $21.2 million in financing for a 162-bed skilled nursing facility in Tennessee. This was the second acquisition between the buyer and seller that VIUM has financed. The package included $16 million in initial funding, a $1.2 million working capital reserve and a $4 million earnout that helps capture value from the Medicaid rate increase in the state. The working capital line was provided for the six months post-closing to help the borrower cover operations while the Medicaid reimbursement was transferred to them.
On the refinancing front, VIUM was active, as well. A Michigan assisted living community received an $8.456 million HUD loan to take out a bridge loan for its in-state owner/operator. The bridge loan was a non-recourse loan funded through one of VIUM’s debt funds. VIUM also arranged a $13.24 million HUD loan to refinance existing bank debt of $10.4 million and an owner’s note of $2.2 million for a 124-bed skilled nursing facility in Texas.
VIUM secured several bridge refinancings for seven senior care facilities. First, the owner of three assisted living/memory care communities in Washington completed an equity-out recap with a $30 million bridge loan.
VIUM next closed a $9.08 million balance sheet loan to consolidate the debt of two assisted living/memory care communities with different lenders in Texas. One of the communities was under-levered while the other was over-levered. So, the transaction allowed the client to reallocate the debt before submitting the applications to HUD.
Finally, VIUM refinanced historic draws on a client’s corporate line stemming from the acquisition of two skilled nursing facilities with 140 total beds in Missouri and Texas. The $30.47 million in proceeds were used to release the two assets from the corporate facility as well as retire corporate debentures at a lower cost of capital. The uses all tie to the original acquisition basis, and the properties are currently performing at levels supporting a HUD takeout, so the HUD applications will be prepared immediately and submitted within the next six months.
