LOS ANGELES-Skilled-nursing facility owners and operators will now have a new financing option for upgrading their facilities since locally based commercial lender CapitalSource has launched a new healthcare construction finance program intended for just that purpose. The program is designed to provide funding for the replacement or substantial renovation of skilled-nursing facilities, which will allow them to be transformed, repositioned in local markets and better equipped to deliver quality care.
Under the new program, CapitalSource will provide loans to skilled-nursing owners and operators with market-based pricing depending on leverage and credit. The structure includes up to two years for the construction period with rollover to a four- to five-year mini-permanent loan. The loan-to-cost will be up to 75%, and terms will include a 25-year amortization schedule on the principal balance after the construction phase has ended.
“Our new healthcare construction finance program enables us to leverage our extensive experience in the senior housing and skilled-nursing industry,” said Laird Boulden, president of CapitalSource and chief lending officer of CapitalSource Bank, in a prepared statement. “The need for substantial renovation or replacement of skilled-nursing properties is currently very strong, and we expect this trend will continue to increase for the foreseeable future. The timing was perfect to launch this new program to utilize our historic expertise to help investors and operators meet current market demands and deliver quality care.”
Boulden tells GlobeSt.com that the program is a “national product that we truly hope operators will take advantage of on a nationwide basis. We have seen more concentrated pockets of activity in the Southeast, Southwest and Northeast regions.”
He adds that the average cost to renovate a skilled-nursing facility varies widely depending on what type of resident or patient the operator is targeting, i.e., the acuity level of care. “A general ballpark of costs could range from $2 million to $4 million.”
As GlobeSt.com previously reported, Beech Street Capital LLC recently closed on a $9.6-million loan to refinance the Lake Park Center, a 210-bed skilled-nursing facility in Waukegan, IL. The loan is an example of a HUD-insured mortgage being refinanced under Section HUD 223(a)(7).
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
