CHICAGO—The number of owners refinancing their healthcare properties with loans from the Federal Housing Administration has, after setting record highs in 2012, fallen due to the recent uptick in interest rates, but it hasn't stopped them entirely.

“It's still a pretty popular program,” says Joshua Rosen, the Chicago-based executive vice president and team leader for healthcare at Beech Street Capital, LLC. The Maryland-based firm recently closed $55.3 million in FHA 232/223 (a)(7) loans to refinance a portfolio of eight skilled nursing facilities located throughout Indiana.

The portfolio has a total of 808 beds and includes The Waters of Indianapolis, The Waters of Greencastle, The Waters of Covington and five others in the towns of Batesville, Madison, Dillsboro, Martinsville and Rising Sun.

A year ago, with interest rates hovering in the two percent range, almost any refinance was worthwhile. “At the end of the day, you would be saving a lot of money,” says Rosen.

Today, however, with rates hovering around four percent, “some of the a7 loans don't make much sense anymore.” This has resulted in what Rosen calls a reduction in the number of owners seeking these refinances.

Still, in this case, due to the cost of the original loans, the borrower, Infinity Healthcare Management, LLC, was still “able to lock in long-term financing at very attractive rates, thereby positioning themselves for future growth and development within their core markets.”

Instant Insights /

Beech Street Closes $55M in FHA Loans

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