Healthcare Property Loans

Looking for a loan to purchase, develop, refinance, or substantially rehabilitate a residential healthcare facility?

Uptown Funding assists for-profit and non-profit clients through the process of obtaining FHA/HUD Section 232/223(f) financing, which can be used for a single project or a combination, such as refinancing of a nursing home coupled with new construction of an assisted living facility.

â–º Eligible Properties

Licensed Nursing Homes, Assisted Living, Intermediate Care, and Board and Care

  • Must provide continuous protective oversight
  • Must offer three meals per day
  • Facility must be licensed by state
  • Non-resident day care not to exceed 20% of gross area and 20% of gross income
  • May include up to 25% non-licensed independent living units
  • Three years must have passed since last certificate of occupancy was issued

â–º Commercial Space

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

â–º Borrower

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

â–º Loan Amount

Minimum Loan Size $5,000,000, No maximum (Limited by loan parameters and HUD does not allow for any equity take out for healthcare properties)

â–º Recourse

Non-recourse

â–º 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)

â–º Loan Parameters

Maximum loan amount will be the least of:

  • Recommended % of LTV
  • Recommended % of Purchase Price for loans that finance acquisition
  • Recommended Debt Service Coverage Ratio, or
  • Existing debt plus transaction costs and proposed repairs

Based on current economic and fiscal environment, HUD has recommended the following parameters:

  • For Profit Mortgagors: 80% LTV, 1.45 DSCR
  • For Non-Profit Mortgagors: 85% LTV, 1.45 DSCR

â–º Term and Amortization

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

â–º Prepayment and Assumption

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

â–º Escrows

  • Taxes and insurance are escrowed monthly
  • Replacement reserve required and the monthly deposit amount determined in accordance with HUD guidelines

â–º Professional Liability Insurance

HUD will require minimum coverage of $1 million per occurrence; $3 million aggregate with a max deductible of $25,000; Waivers may be granted in cases where premiums are high and claim history is clean

â–º Mortgage Insurance Premium

1% due to HUD at closing and 0.65% annually thereafter, escrowed monthly

â–º HUD Application Fee

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

â–º HUD Inspection Fee

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

â–º Third Party Reports

Appraisal, Phase I and Physical Needs Assessment are required

â–º Timeline

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

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