Love Funding, one of the nation’s leading providers of FHA multifamily and healthcare financing, announced the refinancing of five loans totaling $19.9 million for a portfolio of assisted living facilities in Michigan.
Bruce Gerhart and Robert Smallwood of Love Funding’s Cleveland office secured the loans through the U.S. Department of Housing and Urban Development’s 232/223(a)(7) LEAN loan program. The properties included in the refinancing are Appledorn Living Center in Holland, Seminole Shores Living Center in Muskegon, Edgewood Living Center in Saginaw, Ludington Woods Living Center in Ludington, and Woodlawn Meadows Retirement Village in Hastings.
By utilizing the streamlined FHA 223(a)(7) insured refinance program, the properties’ owners were able to lock in a low fixed interest rate saving them a combined $252,000 in annual debt service costs. Two of the loans were extended back to their original 35-year term. The savings will increase the properties’ cash flow and keep fee increases to a minimum at a time when many assisted living residents are being squeezed by the rising costs of healthcare.
Reenders Inc., a longstanding Grand Haven-based client of Gerhart and Love Funding, has principal ownership in three of the properties and shares ownership of the other two with Leisure Living Management, another Love Funding client based in Grand Rapids.
“Love Funding’s experienced and knowledgeable staff has been an incredible asset as we have refinanced a number of our developments over the past 10 years,” said Melissa Satterfield, Reenders’ development coordinator and a member of the fourth generation of the company’s ownership. “They have been instrumental in helping us secure long-term, fixed-rate financing on a substantial portion of our real estate portfolio.”
All five existing mortgages were encumbered by prepayment penalties ranging from 2 percent to 6 percent of the outstanding loan amounts. However, the interest savings were so substantial that Gerhart and Smallwood were able to structure the transactions to pay off the penalties by returning mortgage balances to original amounts and addressing the balance with modest premium adjustments.