section 232

ASSISTED LIVING, CONGREGATE CARE AND NURSING HOME PERMANENT FINANCING NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION

The purpose of the program is to provide attractive long term financing for the construction or substantial rehabilitation of assisted living, congregate care or nursing home facilities. The program provides for competitive interest rates without restriction on rental rates, cash flow or income levels of residents.

BASIC FEATURES:

A. Personal Liability: Loans are non-recourse to the owner and secured solely by the property.

B. Amortization: 40-year schedule.

C. Term: 40-year term.

D. Loan Amount:The maximum insurable mortgage is the lesser of:
New Construction:

  • The amount of debt supported by 90% of the projected net operating income or
  • 90% of HUD-appraised value including major movable equipment.

Substantial Rehabilitation Projects:
Purchase:

90% of the rehab cost plus the lesser of:
(a) 90% of purchase price.
(b) 90% of “as is” value.

Refinance:
100% of the rehab cost plus the lesser of:
(a) existing debt.
(b) 90% of “as is” value.

E. Substantial Rehabilitation: The program allows for financing of apartments in need of rehabilitation if:

1. The cost of repairs, replacements and improvements exceeds the greater of:
a. 15% of the property’s value after completion of repairs, replacements and improvements
b. $6,500 per dwelling unit (adjusted by the applicable high cost factor), or

2. Two or more major building component are being replaced; such as, roof, ceiling, walls, floor structures, foundation, plumbing, HVAC or electrical system.

F. Units: The property must contain five or more dwelling units with each unit providing a complete living facility.

G. Commercial Areas & Income: Commercial areas may not exceed 10% of gross floor area and maximum 15% of gross potential income. (Daycare space is not considered commercial).

H. Interest Rates: Fixed rate during construction and the permanent phase of the loan determined by market rates at the time of rate lock.

I. Assumability: Fully assumable.

J. Pre-Payment Provisions: Negotiable, but typically closed for five years then open to pre-payment at 5% of the outstanding loan balance in year 6, declining 1% per year.