Dealmaker: Pillar Originates $36M HUD Refinancing Loans

Pillar Financial, New York, originated $35.6 million to refinance a portfolio of five southern California senior care facilities.

Joshua Hausfeld, managing director of Pillar’s Bethesda, Md., office, and Evan Hom, director in Pillar’s New York office, originated the HUD loans, which refinanced existing HUD debt from 2011. The transactions significantly lowered the borrower’s annual interest payments, maximized debt service savings and paid off existing debt.

Pillar originated four HUD 232/223(a)(7) fixed-rate, fully amortizing 25-year loans each with a 3.65 percent interest rate, including $5.5 million for Brighton Place Spring Valley, $6.8 million for Brighton Place East (also known as Presidio Health Care Center), $8.7 million for Brighton Place San Diego and $6 million for Vernon Healthcare Center. Hausfeld and Hom also originated an $8.5 million HUD 232/223(f) fixed-rate fully amortizing 35-year loan at 3.45 percent to refinance the California Nursing and Rehab Center.  

“We had to work through a number of challenges that went well beyond refinancing nursing facilities with typical HUD (a)(7) debt,” Hausfeld said. “Issues such as bifurcating an existing master lease that was part of a larger portfolio with another facility, creating a new master lease structure and a cross default guarantee agreement [and] a new accounts receivable line of credit.” 

Both Brighton Place Spring Valley, a 75-bed skilled nursing and rehabilitation facility, and 50-bed skilled nursing and rehabilitation facility Presidio Health Care Center are in Spring Valley. Brighton Place San Diego houses 99 beds in San Diego while Vernon Healthcare Center has 99 skilled nursing and rehabilitation beds in Los Angeles. California Nursing and Rehab Center hosts 80 skilled nursing and rehabilitation beds in Palm Springs.