Hebrew Home and Hospital

sims mortgage funding closes $20.2 million refinancing loan

Sims Mortgage Funding is pleased to announce the closing of a $20,242,000 FHA-insured loan on June 11, 2009 for the Hebrew Home and Hospital (the “Home”), a 332-bed nursing facility located in West Hartford, CT. The loan, insured under the Section 223 (a) (7) program and processed by the Hartford HUD Office, provided a source of funds to defease the Home’s 1999 tax-exempt bonds and to prepay approximately $7.1 million of the Home’s outstanding $8.5 million line of credit.

The line of credit was principally used to finance the implementation of a new 45-bed Behavioral Health Unit (“BHU”), a psychiatric care program specifically geared to the elderly. The Home developed the BHU in response to a changing health care market in the Hartford area, and in doing so, it was able to dually meet new market demand and maximize revenues in light of a decrease in demand for “traditional” skilled nursing care. The line of credit was collateralized with the Home’s private pay accounts receivable and a $5,250,000 guarantee by the Home’s foundation. In addition, the Home provided $3,000,000 in additional collateral in the form of a self-financed depreciation fund.

The transaction accomplished two goals for the home: (1) lowered the Home’s cost of capital and (2) eliminated collateral requirements and guarantees imposed by the line of credit. The Home will save approximately $180,000 in debt service through 2028. By prepaying approximately 85% of the line of credit with proceeds from the new FHA-insured loan, the Home and its foundation were able to free up $8,250,000 million in collateral and guarantees.