Walker & Dunlop structured the financing on behalf of Senior Opportunity Funds Holding Company (SOF), whose affiliated entities are experienced senior housing developers who have historically developed Class A, independent living, assisted living and memory care communities in the Southeast. As part of their growth strategy, SOF identified Wisconsin as a region that is underserved in seniors housing options and began working with Walker & Dunlop on acquisition financing strategies.
Walker & Dunlop Managing Director, Kevin Giusti, led the origination team, which has extensive experience with senior housing and skilled nursing facilities across the country. With the spread of COVID-19 and corresponding changes to lending parameters, Walker & Dunlop’s team determined that a HUD acquisition financing strategy was optimal as it removed the majority of execution risk. Walker & Dunlop and SOF worked closely with the seller to achieve the desired financing under the compressed acquisition timeline.
Leveraging their knowledge of the U.S. Department of Housing and Urban Development (HUD) lending platform, the Walker & Dunlop team utilized HUD’s LEAN 232/233(f) refinance program, which provides long-term and reduced-rate financing for specialty healthcare facilities. In addition to achieving financing cost savings, Walker & Dunlop was able to obtain a $9,089,800 HUD loan for the $10,100,000 acquisition, which represents a 90 percent loan-to-cost ratio. The financing structure also included a $800,000 seller note, bringing the combined loan-to-cost to an extremely attractive 98 percent. In addition, the existing cash flow at the property was sufficient to cover future debt service payments given the low interest rate and 35-year amortization period.
Greg Almquist, SOF Managing Member, commented, “It was a pleasure working with the Walker & Dunlop team once again. As we encountered the inevitable challenges that arise in every deal, in addition to the new challenges that COVID-19 brought in 2020, Walker & Dunlop was proactive and creative in finding the quickest and most economically efficient solution to get to closing with permanent financing. Their expertise helped avoid timely and costly bridge financing that is more typical for acquisition loans.”
Said Mr. Giusti, “HUD acquisition deals are rare, but HUD’s LEAN program stepped up to provide attractive acquisition financing while many lenders were out of the market or drastically changed their lending parameters due to COVID-19. Our best-in-class underwriting team was able to work through the issues of COVID-19 and close to achieve the seller’s timing goals and exceed our clients financing goals.”
Walker & Dunlop is the 5th largest HUD multifamily lender1, and in 2020 alone, the firm originated nearly $600 million of seniors housing, skilled nursing, and healthcare transactions through various capital sources. For information about Walker & Dunlop’s view on the housing market, including expert perspectives on markets, leadership, and the road ahead, visit our Driven by Insight information center.
About Walker & Dunlop
Walker & Dunlop (NYSE: WD), headquartered in Bethesda, Maryland, is one of the largest commercial real estate finance companies in the United States. The company provides a comprehensive range of capital solutions for all commercial real estate asset classes, as well as investment sales brokerage services to owners of multifamily properties. Walker & Dunlop is included on the S&P SmallCap 600 Index and was ranked as one of FORTUNE Magazine’s Fastest Growing Companies in 2014, 2017, and 2018. Walker & Dunlop’s 1000+ professionals in 41 offices across the nation have an unyielding commitment to client satisfaction.
1 HUD.gov, based on origination volume for the agency’s 2020 fiscal year
SOURCE Walker & Dunlop, Inc.