Sims Mortgage Funding (SMF) ended the year with a HUD closing for RiverPointe Post-Acute, a 112-bed skilled nursing facility in Carmichael, California. Affiliates of Links Healthcare Group LLC own and operate the facility. Links’ portfolio comprises 42 skilled nursing facilities with 4,675 beds.
The existing bank loan was structured with A and B tranches and issued in August 2019 to finance the purchase of the asset. Forbright Bank held the A tranche, and an affiliate of SMF’s parent company, HJ Sims, issued the B tranche. SMF structured the deal so that the HUD-insured loan fully paid off the A/B tranches, and reimbursed Links for $731,000 in equity used for the acquisition and $1.168 million in capital improvements it made in 2024 to 2025.
HUD approval came quickly, seven days later, through the Express Lane. The $13.21 million loan has a 35-year amortization and is insured under the Section 232/223(f) program. The loan-to-value is approximately 50% and debt service coverage is 3.84x.
In another, separate Sims Mortgage Funding transaction, the company completed a HUD refinance for Grace Manor at North Park. The bridge component of the deal was a unitranche bank loan originally issued in February 2020 by Lakeland Bank and an affiliate of HJ Sims. The borrower used that financing to purchase the community, which has 52 assisted living and memory care beds in Allison Park, Pennsylvania.
The $9.631 million HUD-insured loan has a 35-year amortization. It represented 78.3% of value and was underwritten at a 1.46 debt service coverage ratio. The loan covered 100% of the cost of the refinancing, including capital reserves, repairs, deferred interest, HUD and lender fees, and transaction costs. SMF used the trailing six months of net operating income, annualized, for its loan underwriting on the assumption that the community’s actual performance would meet that level when HUD commenced its review. The asset ultimately hit that mark and was placed in review without delay, once a HUD underwriter was assigned.
Two months of debt service on the prior loan was saved, since the financing was based on the actual cost to refinance and was under HUD’s standard 80% loan-to-value threshold. It was applied towards meeting the tax and insurance escrows required for the HUD closing, improving the borrower’s cash flow in the transition period between the old and new loans.
This marks the first HUD-insured loan for two of the principals, and a return to HUD after a 10-year hiatus for the third principal. Their company, Magnolia Senior Living, LLC, is a relatively new owner/operator of seniors housing communities. The principals have years of experience in the field as investors, financial analysts and operational consultants.
