Behind the Skilled Nursing Deal: Walker & Dunlop’s Quick $28.3M Loan on Cape Cod

Walker & Dunlop provided a $28.3 million bridge loan for a buyer to purchase Pleasant Bay Campus, a 194-bed facility in Brewster, Mass., which offers both skilled nursing and assisted living services from operator Pointe Group Care. 

With plans to renovate the property during the 24-month bridge loan term and later move to permanent Housing Department of Housing and Urban Development (HUD) financing in 2021, the new owner hopes to find long-term financial security through The Woodlands at Pleasant Bay, a 59-bed assisted living facility, and Pleasant Bay Nursing and Rehabilitation Center with 135-beds.

Bridge loans are sometimes associated with turnaround properties that require an immediate ownership change, but Walker & Dunlop managing director Joshua Rosen said that wasn’t the case with this Cape Cod campus.

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“The facilities are new and well-maintained,” Rosen said. “It was a timing issue because the sellers didn’t want to wait, and HUD loans can take up to six months to close.”

The financing covered about 90% of acquisition costs, with a high loan-to-value ratio based on previous experience and trust with operator Pointe Group. The two-year financing involves interest-only payments for the total life of the loan with without principal payments. Without disclosing the interest amount, Rosen confirmed the interest is being offered at “market rate.”

Rosen pointed to Pointe’s experience in this sector in the state of Massachusetts; as a result, Walker & Dunlop could go to a “90 loan-to-value, because we have faith that the borrower will improve their overall NOI,” said Rosen.

Walker & Dunlop opted to give the owner the “benefit of the doubt” with this loan because of its experience with the local operator — and the fact that the newer properties were in good physical shape.

When their two years are up, it can then be taken to HUD, Rosen said, adding that this approach doesn’t work with every deal — but in this case they can “stretch our balance sheet to allow the borrower” to close on their loan.

“The buyer wanted to execute the deal with speed, and this clearly highlighted our bridge model and abilities to get deals done,” Rosen said.

The property is situated on a 25-acre plot near several hospitals with the two standalone facilities: a 135-bed skilled nursing facility and a 59-unit assisted living facility, which contains a wellness center and a heated lap pool.

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