$3,980,000
August 2017
Garnet Valley, PA
PARTNERED RIGHT
Naamans Creek Country Manor is an existing 90-bed skilled nursing facility located in Boothwyn Township in the greater Philadelphia, PA – Wilmington, DE metropolitan area. The Project is owned by an affiliate of the Guardian Foundation, a not-for-profit organization that owns and/or operates nursing homes in Pennsylvania and Florida through related companies. The Project had high-coupon, 30-year tax-exempt bonds that could be prepaid with a slight penalty. Interest rates for HUD-insured loans were quite attractive, and the fixed-rate structure would enable Guardian to lock-in savings over the long-term.
STRUCTURED RIGHT
SMF secured a $3,980,000 loan under the Section 232/223(f) program to refinance the bonds and fund capital reserve and repair escrows. Because the LTV ratio was approximately 50%, the HUD loan committee approved the transaction without any risk mitigation after there was a short-term drop off in the Project’s net operating income between the time the loan application was filed and the time it was placed in review. The loan featured a 30-year maturity, at Guardian’s request, and had a debt service coverage ratio of approximately 3.40.
EXECUTED RIGHT
SMF obtained a key exemption for the Project’s management agent from HUD’s requirement for the
agent to be a party to a HUD Regulatory Agreement. The exemption enabled the refinancing to move forward under the structure in place before the refinancing. SMF seamlessly coordinated the closing of the HUD-insured loan with the notice of redemption of the tax-exempt bonds, resulting in minimal payment of double interest.
FINANCED RIGHT®
Because of the HUD-insured refinancing loan, Naamans Creek Country Manor lowered its annual debt service by approximately $130,000. In addition, with over $360,000 in a reserve fund for replacements, the Guardian will be able to address future capital needs that will maintain the Project’s competitiveness.
