About
Sims Mortgage Funding, Inc. originates, underwrites, and funds loans for healthcare and housing projects. We focus primarily on financing insured through Federal Housing Administration (FHA) programs, which are administered under the authority of the Department of Housing and Urban Development (HUD). Established in 1984, SMF is a subsidiary of HJ Sims, a nationally recognized investment banking firm that specializes in debt and equity financing for senior housing communities and charter schools.
At SMF, we take a hands-on approach with every client. Our technical expertise ensures a nimble, efficient process where promises are kept, expectations are managed, decisions are optimized, and even the most complicated deals are done right and on time.
SMF helps clients procure financing for:
- Construction
- Rehabilitation
- Expansion
- Acquisition
- Refinancing of existing debt, including “bridge-to-HUD” loans
- Recapitalization of affordable housing
Offering clients the best of financing solutions
In addition, we provide consulting and financial advisory services to borrowers with respect to construction loan servicing, asset management, debt restructuring, mortgage note modifications, and tax-exempt bond financing.
HUD INSURED LOANS
Map Programs for Multifamily Housing
Multifamily Accelerated Processing (MAP) loans for multifamily projects offer great terms: 80% – 90% loan-to-value, 1.11 to 1.17 debt service coverage, non-recourse provisions and up to 40-year, fully amortizing terms. With more than 100 years of collective hands-on experience with HUD, the SMF team understands every aspect of the MAP loan programs and underwriting requirements. Whether you are looking to recapitalize, construct, rehabilitate, refinance, purchase, expand, or renovate, we can help you find the MAP program to make it happen.
Recapitalization
- FHA Section 202/223(f) Loans to recapitalize Section 202 Elderly Housing projects.
Construction or Substantial Rehabilitation
- FHA Section 221(d)(4) Loans to construct or substantially rehabilitate “Assisted”, “Affordable” and “Market Rate” multifamily rental housing.
Refinancing
- FHA Section 223(a)(7) Loans to refinance multifamily rental housing currently subject to existing HUD-insured loans.
Purchasing or Refinancing
- FHA Section 223(f) Loans to purchase or refinance “Assisted”, “Affordable” and “Market Rate” multifamily rental housing.
Expansion or Renovation
- FHA Section 241 Supplemental Loans to expand or renovate existing multifamily rental projects already financed with HUD-insured loans.
LEAN PROGRAM SOLUTIONS
LEAN loans for nursing home, assisted living and memory care facilities are an excellent source of affordable capital, offering very attractive terms. They are non-recourse, with fixed rates of interest and fully amortizing terms of up to 40 years. These loans also offer 80% loan-to-value ratio, a 1.45 debt service coverage ratio, non-recourse provisions. Further, while other financing sources exhibit varying degrees of staying power in the market, HUD-insured loan programs remain constant.
Construction or Substantial Rehabilitation
- FHA Section 232 Loans to construct or substantially rehabilitate skilled nursing, assisted living and specialized use facilities.
Refinancing
- FHA Section 232/223(a)(7) Loans to refinance skilled nursing, assisted living or specialized use facilities subject to existing FHA-insured loans.
Acquisition or Refinancing
- FHA Section 232/223(f) Loans to acquire or refinance skilled nursing, assisted living and specialized use facilities.
Expansion or Renovation
- FHA Section 241 Supplemental Loans to expand or renovate existing skilled nursing, assisted living or specialized use facilities already financed with HUD-insured loans.
Construction of Substantial Renovation of Hospital Facilities
- FHA Sections 242 and 242/223(f) Loans (Office of Hospital Facilities (OHF) Processing).
- Section 242 – For new construction or substantial rehabilitation of hospitals.
- Section 242/223(f) – For acquiring or refinancing hospitals that may require moderate repair or capital needs not exceeding 20% of the loan amount.
OFFICE OF HOSPITAL FACILITIES (OHF) pROGRAMS
Section 242 of the National Housing Act enables the affordable financing of hospital projects by reducing the cost of capital and significantly enhancing the credit of hospitals that qualify for mortgage insurance. The program improves access to quality health care, reduces the cost of hospital care, supports HUD’s community development mission, and contributes revenues to the General Insurance Fund. Currently, hospitals in HUD’s Section 242 portfolio range from small rural facilities to some of the nation’s top urban teaching hospitals.
To qualify for a refinance loan, hospitals must have an average operating margin of at least 0.00% and an average debt service coverage ratio of at least 1.40 X for the past three years. To qualify for a construction or rehabilitation loan, hospitals must have an average operating margin of at least 0.00% and an average debt service coverage ratio of at least 1.25 X for the past three years.
If these tests can’t be met, there are alternative methods to determine eligibility.
- Section 242 – For new construction or substantial rehabilitation [or renovation of existing] of hospitals.
- Construction is subject to Davis-Bacon Prevailing Wage requirements
- At least 50% of patient days must be attributable to acute care; non-acute patient days include skilled nursing, rehabilitation, psychiatric and other related services. HUD will allow adjustment of the patient day calculation based on revenues.
- FHA Sections 242 and 242/223(f) Loans (Office of Hospital Facilities (OHF) Processing).
- Combines construction and permanent financing approved at the same time
- Borrowers can be non-profit, for-profit or publicly owned facilities.
- Loans involving the refinance of existing capital debt must have a construction/capital equipment component of at least 20% of the loan; of the 20%, no more than 50% can be used to purchase equipment. Hospitals seeking to refinance existing capital debt without a 20% or greater construction/capital component may qualify under Section 242/223(f).
- Hospitals must have an average operating margin of at least 0.00% and an average debt service coverage ratio of at least 1.25 X for the past three years.
- If the three-year average operating margin and debt service coverage test can’t be met, HUD will allow the tests to be recast for the prior three-year period by applying an estimate of the projected interest rate on the HUD-insured loan in lieu of the historical interest rate.
- Loans are pre-payable, assumable, and non-recourse; the maximum term is 25 years with full amortization.
- Section 242/223(f) – For acquiring or refinancing hospitals that may require moderate repair or capital needs not exceeding 20% of the loan amount.
- Maximum loan to value (LTV) is 90%, with the value being determined as the total estimated replacement cost + net property, plant and equipment.
- Loans are generally considered permanent loans in that they are disbursed in full at closing, although loans with proceeds for capital improvements can have post-closing distributions.
- FHA Section 241 Supplemental Loans to expand or renovate existing skilled nursing, assisted living or specialized use facilities already financed with FHA-insured loans.
- Maximum loan to value (LTV) is 90%, with the value being determined as the total estimated replacement cost + net property, plant, and equipment.
hud plus program
HUD Plus is a program offered exclusively through our parent company, HJ Sims. This program enables our clients to increase their leverage on a healthcare transaction beyond the standard 80% loan-to-value threshold up to 92.5% of value through the issuance of secondary financing structured in accordance with HUD’s requirements.
HUD Plus can be used in connection with refinancing existing debt or acquiring a property directly with a HUD-insured loan. Our clients have used this option to finance the acquisition of skilled nursing facilities from REITs where the lease agreement provided an option to purchase, or to recapitalize properties with high-interest rate debt.