KeyBank Real Estate Capital secured $127 million in Federal Housing Administration (FHA) 232/223(f) financing for a Manhattan skilled nursing facility.
It was the largest single-asset financing ever insured by the U.S. Department of Housing and Urban Development (HUD) in the FHA 232 program, which helps finance nursing homes, assisted living facilities and board and care facilities.
The loan proceeds were used to pay off an interim acquisition bridge loan provided by KeyBank and a syndicate of lenders, as well as to fund more than $7 million in capital expenditure improvements to the 499-bed Upper East Side Rehabilitation and Nursing Center.
The acquisition financing was completed in July 2015 and was followed by a syndication process in which the client made improvements to operations and made renovations, Henry Alonso, senior vice president and senior banker at KeyBank’s Healthcare Group, told Skilled Nursing News. After the renovations, “it was in a position to be taken to HUD,” and the loan was finalized on May 17, he said.
The capital improvements were mostly in patient rooms, but they also included expanding and improving the rehabilitation therapy gym and enhancements to the common areas, John Randolph, senior mortgage banker at KeyBank’s Commercial Mortgage Group, told SNN.
The New York location was a notable factor in the deal’s rank as the largest single-asset loan insured by HUD in the 232 program, Alonso explained.
“Whenever one of these buildings become available for purchase, its highest and best use is not always as a skilled nursing facility… but in multifamily use,” he noted. As a result, the price tag on a single Manhattan property can be the same as a 10-building portfolio elsewhere in the country.
Randolph, Alonso, and Brandon Taseff from KeyBank’s Healthcare Group comprised the financing team.
Upper East Side Rehabilitation and Nursing Center was represented by the law firm Michelman & Robinson, LLP.
Written by Maggie Flynn