HUD - 232/223(f) - Refinance or Purchase of Skilled Nursing and Assisted Living Facilities

ELIGIBLE PROPERTIES:
Skilled nursing assisted living, intermediate care and board and care facilities, or any combination thereof which are at least 3 years old from the date of initial occupancy. Moderate rehabilitation is permitted.

LOAN TYPE:
Permanent loan.

MAXIMUM LOAN:
The lesser of the following criteria:

1. 85% of HUD appraised value;
2. 1.17 debt service coverage.

Refinance Transaction:

1. The existing indebtedness plus transaction costs.

 Purchase Transaction:

1. 85% of the cost of acquisition.

INTEREST RATES:
Fixed rate determined by market rates at the time of rate lock.

AMORTIZATION:
Up to 35-year, fully amortizing loan.

PERSONAL RECOURSE:
Non-recourse.

ASSUMABILITY:
Assumable, subject to CWCapital approval.

SUBORDINATE FINANCING:
Allowable, subject to HUD criteria.

PROFESSIONAL AND GENERAL LIABILITY INSURANCE:
Required.

ANNUAL MORTGAGE INSURANCE PREMIUM:
1.0% of the mortgage amount is payable at closing. Thereafter, the MIP is escrowed monthly based on a rate established by HUD. The rate is fixed at loan endorsement.

ESCROWS:
Monthly escrows for property insurance, real estate taxes, reserves for replacement, sinking fund (if applicable) and mortgage insurance premiums.

An initial deposit to replacement reserve and 100% of repair costs (both as determined by HUD) are escrowed from mortgage proceeds.

COMMERCIAL SPACE:
Commercial area shall not exceed 20% of the total net rentable area of the project and commercial income shall not exceed 20% of effective gross income.

ENVIRONMENTAL ISSUES:
Special rules apply for properties which are located in Flood Hazard Zones as designated by FEMA.

Lead-based paint and asbestos must be abated in accordance with HUD requirements.

APPLICATION FEE:
A non-refundable fee of 0.3% of the requested mortgage amount is payable to HUD at the time of application, plus estimated underwriting costs for market study, appraisal, architectural/engineering report, cost analysis, environmental assessment and other loan processing costs.

FINANCING AND PLACEMENT FEES:
Negotiable.

CLOSING EXPENSES:
Standard transaction costs, including legal fees, title insurance and survey.

PROFESSIONAL LIABILITY INSURANCE:
Required by HUD for all loans. The minimum requirement is $1 million per occurrence and $3 million aggregate. Further information regarding this requirement is available upon request.

STATE LICENSURE:
All loans must be licensed by the state or other governmental entity who has oversight responsibilities.

OTHER HUD REQUIREMENTS:

Cash escrows or letters of credit are required for the following:

1. 20% of repair costs as a completion guarantee.
2. 2.5% of repair costs as a latent defects guarantee, due at completion of repairs.
3. Forecasted operating deficits, (maximum of 18 months) to be released upon achievement of breakeven operations for 90 days.

HUD PROCESSING TIME: 
One stage for HUD Multifamily Accelerated Processing (MAP) procedures:

1. Firm Commitment Stage: 60 days for review.

PRELIMINARY SUBMISSION PACKAGE:
Include the following in your request for a loan quote:

1. Property description and location map.
2. Number of beds with breakdown of proposed rents by payor source.
3. Current bed roll and year-to-date operating statement.
4. Operating history – prior 3 years, if available.
5. Current year operating budget.
6. Existing debt or purchase price.
7. Sponsor resume.

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