Cleveland, Ohio–Real estate financing is still hard to come by, even for borrowers in the relatively stable seniors housing sector, but KeyBank Real Estate Capital recently stepped up to the plate for seven assisted living and age-restricted communities in New Jersey. The commercial real estate lender provided an aggregate $106.7 million in Freddie Mac funding for the group of properties.
A joint venture involving The Carlyle Group and Chelsea Senior Living secured a Key-originated $100 million Freddie Mac loan for six assisted living and memory care properties. The group of communities, carrying the names of the cities in which they are located, includes the Chelsea at East Brunswick; Chelsea at Fanwood; Chelsea at Manalapan; Chelsea at Montville; Chelsea at Tinton Falls; and Chelsea at Warren. Additionally, Key provided property owner Gary Kline with a $6.75 million Freddie Mac loan for the Metuchen Senior Apartments.
Several factors allowed Key to secure favorable loan terms for both the Carlyle/Chelsea partnership and Kline. “There are a couple of components that give a higher chance of getting favorable terms, and one is the sponsorship’s experience and expertise, “Carolyn Chamberlain Nazdin, Regional Program Manager for Seniors Housing with KeyBank Real Estate Capital, tells MHN. “Senior living requires more expertise than other multi-family properties. It is not something you can develop or take over and manage without some expertise. It’s not the kind of thing anyone can go out and do. It’s an operational business so it’s more complex. And the longevity of the owner and operator of these types of properties is important.
Not only did the sponsorship’s experience in seniors housing smooth the way for favorable financing terms, Key’s experience in the sector played a large role, too. “We believe that we understand how the government-sponsored enterprises will look at a transaction, where they’ll be more conservative; the proverbial hot button,” Nazdin says. “The amount of business we do gives us good insight on how to propose structuring for clients.”
In addition to sponsorship experience and the bank’s experiences, creditworthiness also eases the facilitation of beneficial loan terms. And finally, the quality of the assets and their location are of great importance.
Key, a Fannie Mae Designated Underwriting Servicer and Freddie Mac Program Plus Seller/Servicer, has been more than a little busy orchestrating GSE loans. “Fannie Mae and Freddie Mac pricing is still extremely favorable,” according to Nazdin. “The cost of their capital has actually even come down in the last few months. Also, with Fannie Mae and Freddie Mac, you can get a deal done relatively quickly, unlike with Housing and Urban Development loans, which take several months to complete. So, there’s been a real uptick with both agencies. They are swamped right now and they are looking at an extremely busy November and December and perhaps January because they just don’t have the manpower.”