Healthcare Loan Programs

Overview of the Program:

This loan provides non-recourse assumable loans to refinance or purchase existing assisted living, board and care, and intermediate or skilled nursing care facilities.

Loan amount for the refinance or purchase of existing properties is the lesser of

(a) 85% of market value;
(b) A mortgage amount supported by a DSC of 1.1765 (85% of NOI);
(c) 100% of the transaction cost for a refinance, and 85% of the transaction cost for a purchase transaction. Recognizable transaction costs include repairs, initial replacement reserves, third party reports, closing costs, along with eligible existing indebtedness or purchase price. Qualified non-profit borrowers can finance up to 90% of value and/or cost.

Program Highlights:

• Loan term: a maximum of 35 years, or 75% of the remaining economic useful life.
• Debt service coverage of 1.1765.
• Maximum processing occupancy: 90% - 95%.
• Underwritten on current income and expenses, unless repairs will reposition the project.
• Property must be three or more years old since final certificate of occupancy.
• Commercial space cannot exceed 10% of physical area.
• Escrows for property taxes, insurance, MIP, and replacement reserves for realty and equipment.
• Independent living units cannot exceed 25% of total units of the project.
• In skilled nursing facilities, the underwriting will likely assume Medicaid pay rates for an appropriate percentage of units or beds. A different payor mix can be used if it can be supported by 3 years operating history.

Costs of Financing:

• LF processing fee is $5,000.
• The client must pay for all third party reports, which include a market study, a phase I environmental analysis, a full appraisal, and our contracted architectural PCNA analysis. Funds must be remitted to LF and these contractors are engaged and paid by LF directly.
• Financing and permanent placement fees of up to 3.5% are based on final loan amount, due upon commitment and payable from mortgage proceeds at closing.
• Annual Mortgage Insurance Premium (MIP) is 1.0% at closing (one year pre-paid) and 0.50% annually thereafter.
• HUD inspection fee for new construction is 0.5% of mortgage amount.
• HUD application fee is 0.3% of mortgage amount due at the time of submission of the Firm Application.