Greystone, a New York-based commercial mortgage banker, has originated a $150 million Freddie Mac senior housing sector revolving credit facility. The company says the line of credit is the first ever of its type from Freddie Mac.
The borrower is Oakmont Senior Living of Chino Hills, Calif., and the first transaction of $29 million from has been funded from the facility.
With this line, Oakmont is able to remove assets from its construction loans sooner than it could before. “We can increase the leverage of the facility as assets stabilize and then again on the exit refinancing,” says chief financial officer Joe Lin.
An advantage of this kind of facility is that the mortgagor can borrow against the increasing property value and income up to the maximum amount. There is no minimum occupancy requirement because the facility is underwritten on income in place and to help with transitional assets.
It is indexed to Libor, allows for up to 75% leverage and has an interest-only debt service coverage ratio of 1.5 times for independent living properties and 1.6 times for assisted living properties.
Generally the minimum size for a revolving credit facility is $50 million, but it can be closed with as little as one as asset of $10 million or more.
Freddie Mac worked with Greystone to close this facility in just 45 days from the initial concept meeting, says Scott Kavel, head of Greystone’s senior housing finance group.