What the $105M Portopiccolo Financing from Northwind, CareTrust Signals About Nursing Home Sector Stabilization

Northwind Group, a real estate private equity firm and debt fund manager, announced multiple significant investments in the skilled nursing sector earlier this month in a move that underlines a favorable environment for deal making for large players.

A portfolio of nursing homes owned by The Portopiccolo Group benefited from the provision of credit facilities from Northwind and other organizations, which included two mezzanine loans.

The mezzanine loans from Northwind and CareTrust REIT totaled $105 million, and went towards financing two portfolios encompassing 25 properties. The properties consisted of 2,920 skilled nursing beds and 186 assisted living units located across Virginia and Missouri.


In all, Northwind’s debt and equity investments in health care now cover a portfolio of over 200 properties totaling 20,000 skilled nursing beds and 3,500 seniors housing units in 20 states across the US.

For Northwind’s recent Portopiccolo transaction, CareTrust REIT (NYSE: CTRE) contributed $44.8 million towards the mezzanine loans. And, Deutsche Bank led the senior care financing with a total of $310 million for the transactions with CIBC Bank. CIBC Bank provided The Portopiccolo Group with another $220 million senior secured credit facility.

For CareTrust, solidifying relationships is a motivating factor for moving ahead with deals as leaders with the REIT see – like leaders at Northwind – encouraging signs of recovery in the sector.


The California-based real estate investment trust’s (REIT) CEO David Sedgwick said lending will continue to be relationship-driven for the REIT. 

“With respect to our appetite for lending, it really is relationship-driven and not our core investment activity,” Sedgwick told SNN in an email. 

And during their latest earnings call, CareTrust executives also shared that they saw a lucrative landscape for deals in the nursing home sector.

“Pricing on distressed skilled nursing products has softened slightly as we continue to see more offerings entering the market for SNF portfolios facing variable interest rate and maturity date risk on bridge-to-HUD and other, similar loans,” James Callister, chief investment officer at CareTrust, said during the company’s most recent earnings call.

Meanwhile, Jonathan Slusher, Partner and Head of Senior Living and Healthcare at Northwind, told SNN that Northwind’s large holdings in debt and equity investments in health care are reflective of stability in the sector.

“We’re seeing a lot more refinancings and portfolio [deals] as performance has begun to kind of be on the way to stabilization,” he said. “That’s been driving a lot of our financing activities in the past several months.”

Slusher and Ran Eliasaf, founder and managing partner of Northwind, shared further insights with SNN regarding their investment strategies and outlook for the skilled nursing sector.

Stabilization and refinancing opportunities

Slusher said he is seeing an increasing trend towards stabilization within the skilled nursing industry. He noted that performance indicators such as Medicaid rate progression, improving occupancy rates, and a return to normalized hospital discharges have contributed to this trend.

As a result, he said, there has been a surge in refinancing activities as portfolios begin to generate stronger margins, creating value for investors.

“We’re going back to more somewhat normalized hospital discharges, staffing environments, starting to get much cleaner,” he said. “Portfolios are getting back to where they traditionally were pre-Covid, and starting to generate fairly strong margins, which is creating value.” 

Eliasaf further emphasized that the current environment has led to a shift in transaction dynamics, with more owner operators directly approaching investors like Northwind Group for financing solutions. 

He said this shift is partly attributed to senior lenders being on the sidelines, providing an opportunity for alternative financing sources to step in and support operators in their growth and stabilization efforts.

“In general, we see it across the real estate and healthcare verticals,” Eliasaf said. “So, I would say in the last year, we’ve been more and more on the front of the origination with the sponsor with the owner operators, originating and bringing the entire capital stack solution for the financing.”

Mezzanine debt as a financing tool

Mezzanine debt has emerged as a crucial financing tool for skilled nursing operators, providing bridge financing to facilitate transactions until portfolios stabilize, Eliasaf said.

He said that Northwind Group’s approach involves providing bridge loans in coordination with senior lenders, ultimately positioning operators for long-term success.

“Typically, you know, our loans are again a bridge to a HUD loan,” he said. “So, HUD would come in when the portfolio stabilizes … So, typically in a lot of transactions, even before Covid, you’d have a senior in a mezzanine and then the equity in the deal.”

Northwind’s first mezzanine loan to The Portopiccolo Group, totaling $85 million, was secured by 15 properties, incorporating 1,675 skilled nursing beds and 34 assisted living units across various markets in Virginia. Meanwhile, the second, $20 million mezzanine loan, was secured by 10 properties, encompassing 1,245 skilled nursing beds and 152 assisted living units in the metropolitan areas of Kansas City and St Louis, Missouri.

Slusher emphasized the importance of understanding the unique needs of private owner-operators and tailoring financing solutions to support their growth objectives.

“It’s really the private owner-operator who’s been the most active in the past couple of years acquiring and integrating new assets into the enterprise,” he said. “When they capitalize those transactions, they have access to the bank market, access to their personal balance sheets, institutional REITs, mezzanine funds like us, and the coordination of that capital to bring good execution to a transaction that ensures the capital stack can survive and works to ensure that the HUD financing is properly structured.”

Investment philosophy and portfolio selection

Eliasaf said Northwind seeks out local and regional operators operating in states with favorable demographic and regulatory environments. This approach is designed to mitigate operational and regulatory risks while supporting operators in navigating market dynamics, he said.

“Our investment thesis revolves around state selection and operator selection,” he said. “We prefer local and regional operators in states where we believe both the demographic and regulatory environment are supportive.”

He noted that since Northwind works as a lender in about 20 states in the United States, investing in healthcare poses significant challenges in two main risks: operational and regulatory. 

“We believe that local regional operators are better equipped to withstand market headwinds,” he said. “Smaller-scale operators may struggle when market shifts occur, while very large operators face their own challenges, such as increased scrutiny and higher operational costs.”

He said that understanding the operator and the keys to their success are paramount. 

“We focus on portfolios with positive cash flow, although they may not be fully stabilized,” he said. “These portfolios are on the path towards stabilization and improvement of EBITDA. Once stabilized, they typically transition to HUD loans, which is our typical approach.”

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