As part of a larger portfolio acquisition, CaraDay Healthcare (“CaraDay” or the “Borrower”) acquired the fee simple interests in four skilled nursing communities located in Temple, Texas (the “Portfolio”). CaraDay is a newly formed healthcare company whose skilled nursing centers are advancing integrated and coordinated care that delivers superior outcomes, experience, and value. CaraDay’s executive team is largely comprised of former executives and senior personnel of Harden Healthcare, a Texas-based healthcare services company focused on post-acute services.
As a newly formed company with plans to grow in the future, CaraDay was looking for a high-leverage bridge-to-HUD financing solution. CaraDay sought capital that provided them time to implement multiple operational improvements to reduce expenses and improve financial performance. After implementing the planned operational improvements, their next steps included refinancing their first mortgage bridge loan with HUD insured debt.
Given the Borrower’s long-term capital plan to seek permanent financing from HUD, HJ Sims proposed a subordinate HUD Plus loan. The Sims HUD PlusTM loan provided additional leverage to fund the acquisition, limiting the out-of-pocket equity requirement from the Borrower which preserved capital to support the company during its beginning stages. The Sims HUD PlusTM loan was structured to meet HUD’s requirements in advance of a future HUD insured refinancing. At the same time, the structured provided the Borrower flexibility to repay the subordinate loan if supported by the valuation of the Portfolio after the implementation of the business plan.
Due to seller requirements, the acquisition needed to close by the end of 2019. HJ Sims was able to successfully underwrite the newly formed company, the Portfolio and the operational improvement plan and close within an expedited time frame to meet a tight deadline. The Sims HUD PlusTM financing also incorporated an interest-only period which allows CaraDay time to implement their business plan.
HJ Sims structured the subordinate Sims HUD PlusTM financing to meet the needs of the Borrower, as well as the requirements of the senior lender and a future FHA-insured refinancing. The Sims HUD PlusTM structure maximizes leverage and carries a fixed interest rate with a 10-year term while incorporating favorable prepayment provisions. Such a structure provides the bridge-to-HUD financing CaraDay is seeking while simultaneously ensuring a fixed capital structure upon a refinancing with HUD. Additionally, by structuring the loan to remain outstanding after a HUD insured refinancing, the Sims HUD PlusTM loan allows the Borrower to avoid potential transaction costs associated with raising new subordinate debt in the future.
For more information on how CaraDay Healthcare was Financed Right® by HJ Sims, please contact Jeff Sands at (203) 418-9002 or firstname.lastname@example.org or Curtis King at (512) 519-5003 or email@example.com.