Healthcare Acquisition/ Refinance 232/223(f)

Acquisition and Refinancing of Healthcare Properties

Eligible Properties

Licensed Nursing Homes, Assisted Living, Intermediate Care, and Board and Care
a) Must provide continuous protective oversight;
b) Must offer three meals per day;
c) Facility must be licensed by the state;
d) Non-resident day care not to exceed 20% of gross area and 20% of gross income;
e) May include up to 25% non-licensed independent living units; and
f) Three years must pass since last certificate of occupancy has been issued

Commercial Space Limitation

Limited to 20% of net rentable area and 20% of effective gross income


Single asset, special purpose entity, either for profit or non-profit

Loan Amount

No maximum (Limited by loan parameters and HUD does not allow for any equity take out for healthcare properties)



Interest Rate

Fixed for term of loan, determined by market conditions at time of rate lock (Rate lock deposit is 1% and refunded at closing)

Loan Parameters

Maximum loan amount will be the lesser of:
a) Recommended % of LTV;
b) Recommended % of Purchase Price;
c) Recommended Debt Service Coverage Ratio; or
d) Existing debt plus transaction costs and proposed repairs.
Based on current economic and fiscal environment, HUD has recommended the Following parameters:
• For Skilled Nursing and Assisted Living: 80% LTV, 1.45 DSCR
• For Board and Car and Independent Living: 80% LTV, 1.45 DSCR
• For Non-Profit Mortgagors: 85% LTV, 1.45 DSCR

Term and Amortization

A maximum of 35 years or 75% of the remaining economic life, fully amortizing

Prepayment and Assumption

Negotiable with best pricing for 10 years of call protection (can be combination of lockout and/or penalty); Loan is fully assumable subject to HUD approval


a) Taxes and insurance are escrowed monthly;
b) Replacement reserve required and the monthly deposit amount determined in accordance with HUD guidelines

Professional Liability Insurance

HUD will require minimum coverage of $1 million per occurrence; $3 million aggregate with a max deductible of $100,000; Waivers may be granted in cases where premiums are high and claim history is clean

Mortgage Insurance Premium

1% due to HUD at closing and 0.50% annually thereafter, escrowed monthly

HUD Application Fee

30 basis points ($3 per $1,000) on requested loan amount (due with submission of firm application to HUD)

HUD Inspection Fee

Maximum of $30 per unit/bed or 1% repairs

Third Party Reports

Appraisal, Phase I and Physical Needs Assessment are required


Typical firm application is submitted within 45-60 days of engagement; LEAN processing time varies based on OHP (Office of Healthcare Programs) volume

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