$8,000,000 Assisted-Living Acquisition & Reposition Loan

Transaction Description: Shahin Yazdi successfully placed the 65% loan to cost for the acquisition and reposition of an un-stabilized assisted living facility. With occupancy at 70%, this West Coast asset operated below break-even coverage, requiring an interest reserve to cover the debt service short. The loan has a 10 Year term and is fixed for the first two years at 6.25% before floating at 2.25% over Prime. The Borrower may elect to choose a fixed option of the 5 year CMT + 4.25% in place of the Prime floater after the second year.

Challenge: Physical occupancy was 70% at application with a 68% economic T-12 (trailing-12 month cash flow). Net income covered operating costs but was significantly below break-even at close. The Borrower required a limited recourse guarantee with a burn-down upon stabilization.

Solution: Borrower experience with assisted living facilities was highlighted with a business plan from a sponsor who has repositioned similar products in the past. Market occupancy was considerably higher than historical operations. An interest reserve was structured to obtain a 1.0 dcr until stabilization. Market occupancy and Sponsor experienced gave comfort to the credit officer, allowing for a limited repayment guarantee (top 50%) to burn-down as various cash flow hurtles are obtained on a T-6 basis.