Lancaster Pollard on Wednesday announced the completion of a $420 million portfolio refinancing for 26 skilled nursing facilities operated by Plum Healthcare Group.
The transaction marked the first Department of Housing and Urban Development-backed loan transaction for the Carlsbad, Calif.-based Plum, according to a release announcing the deal.
In 2018, the Columbus, Ohio-based Lancaster Pollard announced served as syndication agent for the $400 million refinance of a credit facility for Plum, with Credit Suisse serving as lender for the transaction — and working with Lancaster Pollard to design the interim credit facility.
The property-based bridge loan credit facility was intended to provide the structure needed to effectively refinance into individual HUD mortgages, according to the Wednesday release, and Lancaster Pollard began the HUD underwriting process alongside partnering with Credit Suisse.
“Redesigning our capital structure is a key component of our strategy, which is focused on further enhancing our industry-leading clinical outcomes and positioning our business to capitalize on the emerging long-term growth opportunities in the health care market,” Naveed Hakim, Plum’s chief financial officer, said in a statement.
Hakim described his company’s strategy, which includes a focus on higher-acuity residents, in conversation with SNN last January; at the time, the company was in the process of a $22.5 million ground-up skilled nursing development in the San Francisco Bay Area.
‘“What we were seeing was patients coming in who were not there for long-term care,” Hakim said. “They were there for short-term rehab. They were more medically complex, they had multiple co-morbidities. The need to have a facility that was aligned to take appropriate care of those patients became an important factor for us.”
The closing of the $420 million deal allows Plum to move from a short-term, corporate-level capital structure to fixed-rate, non-recourse debt with an all-in rate of 3.8%, Grant Goodman, managing director with Lancaster Pollard Mortgage Company — a division of ORIX Real Estate Capital — noted in the press release.
The process from inception to bridge financing to HUD closing took about 15 months, according to Lancaster Pollard. The 26 loans were funded in three different tranches in the last five months of 2019 to deal with the work required by HUD for a deal of that size, the company noted in the statement.
Goodman, Jason Dopoulos, and Elliot Kaple led the transaction for Lancaster Pollard.