Steering a Rebounding Senior Living Industry

COVID-19 will have long-term impacts on the senior living industry, from safety and protocols to locations, facility construction, and staffing needs. While some operators and owners struggled with these challenges, others saw it as an opportunity to align their long-term approaches and create stronger performing assets to meet the continued demand from the growing number of aging Americans. As 2021 stabilized, there was a lot of movement in the senior living industry as groups merged or partnered up in some cases consolidating portfolios and in others to swoop in and acquire large portfolios from players exiting the market. Moreover, with COVID and staffing shortages impacting profits, and the looming threat of rising interest rates, many borrowers were eager to take advantage of low interest rates and refinance their portfolios through Bridge-to-HUD financings or HUD insured financings.

Solution

The demand for senior living assets resulted in a highly competitive environment, with tighter deal timeframes and larger, more complex portfolio transactions. The approach to deals was also more intricate, many via joint ventures or through funds, and involving multitiered financing structures including mortgage, mezzanine, accounts receivable, intercompany, and seller financing layers.

Seyfarth delivered a deep bench of real estate, finance, and health care attorneys to support these deals, as well as corporate attorneys to create tax-efficient structures and advise on the corporate financing aspects of these transactions. Since many of the deals involved multiple properties, borrowers, and states, we also leveraged our Due Diligence Hub and technology platform to deliver cost-effective solutions for clients.

In an environment in constant flux due to COVID-19, clients also relied heavily on our Labor & Employment team to address concerns related to staffing shortages, vaccine rollouts, and other issues.

Result

We represented a leading provider of full-service financing solutions for multifamily properties and health care facilities in various transactions aggregating more than $2.5 billion during the past year, including a complex $655 million senior loan and a $45 million mezzanine loan secured by 39 skilled nursing facilities, and a $317.5 million loan transaction consisting of two loans, secured by both an 18 skilled nursing facility portfolio and a two skilled nursing facility portfolio.

Seyfarth closed more than $100 million for borrowers who refinanced their existing mortgage loan with a HUD-insured loan and another $100 million in modifications on existing HUD debt, for skilled nursing facilities across the US including Kentucky, Maryland, Ohio, and Pennsylvania.

Seyfarth represented a real estate private equity firm in various mezzanine financing transactions, including a $255 million senior loan and a $69 million mezzanine loan secured by 21 skilled nursing facilities and a $34 million senior loan, and a $9 million mezzanine loan secured by three skilled nursing facilities.