The talks fall within months of a five-property acquisition, representing an aggregate 695 beds, in Corpus Christi, Brownsville, San Antonio, Tyler and Ft. Stockton. The buyer, Governmental & Educational Assistance Corp., has sealed the deal with a tax-exempt premium bond transaction of slightly more than $28 million, marking a record for a single financing package of like properties by Dallas-based Malone Mortgage Co.
Seller Century Care Inc., headquartered in Houston, has negotiated a 10-year management contract, with extension options, with the sale, which had been finalized in fourth quarter 2000, Steve Mentesana, Malone's commercial loan originator, told GlobeSt.com. A second round of buys is in the works and could land a similar structuring for a $30-million to $35-million financing, he says. Tarrant County Health Facilities Development Corp. is the bond issuing authority for GEAC's inroad into Texas, Mentesana says.
The $28-million plus financing had covered all transaction costs. The 25-year loan carries a 7.55% interest rate with a 100% loan-to-value ratio. The financing had used HUD's 232/222F full-insurance, Multifamily Accelerated Processing program as a conduit.
The 183-bed Lynnhaven Nursing Center in Corpus Christi represents the largest part of the transaction. The center, built in 1977, has fetched about $8.5 million while the 13-year-old Ebony Lake Healthcare Center, a 122-bed facility in Brownsville, has brought in about $6.6 million. Mission Oaks Manor, a 150-bed facility built in 1968 in San Antonio, has been bought for slightly more than $5.8 million. Tyler's 120-bed Eastview Nursing Center, built in 1969, has sold for slightly less than $4 million, as did the 120-bed Ft. Stockton Nursing Center, built in 1993.
Mentesana says more such transactions might occur in Texas due to "the state of the industry. Nonprofits, he says, make ideal owners because they have ready cash to pump into the facilities. None of the centers sold to date, says Mentesana, are in need of extensive makeovers.
The financing had required "a great deal of planning and cooperation" on the parts of buyer, seller and HUD, explains Bernard P. "Bud" Malone, president of the mortgage firm.
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