Attachment_7_-_Exhibit_F-232_223f_Loan_Committee_Memo_Template.pdf

Exhibit F – 232/223f Loan Committee Memo Template

Page 1 of 16 Revised September 7, 2018

232/223f Refinance/Purchase HUD Loan Committee Memorandum

To: Loan Committee

From: ORCF Underwriter:

Workload Manager:

Loan Committee Date:

Subject: Firm Commitment for Project Name, FHA Number Recommendation: Firm Commitment Rejection

Name of Portfolio: Not applicable <Insert portfolio name and number used in Share Point here>

Address:

Transaction: Refinance Debt <2 yrs. Purchase

Lender:

Borrower:

Date of Initial Ownership: Non-Profit?

Operator:

Date of Initial Operations: Identity of Interest?

Parent of Operator:

Master Tenant:

Management Agent:

License Holder: Borrower Operator Management Agent

Type of Facility: Skilled Nursing: beds units SNFs only:

Fully sprinklered?

Yes No

Assisted Living: beds units Florida facilities:

Compliance with Generator Requirements?

Yes NoBoard & Care: beds units

Memory Care: beds units Independent: beds units

Total: 000 beds 000 units

[Note: If the loan amount is reduced from lender’s original application amount, note the final presented amount in red for Loan Amount, Underwritten Value, LTV and Lender’s DSCR. Include the original proposed figures in italics.]

Loan Amount: $ LTV: % Underwritten Value: $ Principal & Interest: $ Cap Rate: % Underwritten Value/Bed: $

Interest Rate: % Lender’s

DSCR:

Loan Amount/Bed: $ Term: years

Year Built:

T12 NOI

DSCR*: Remaining Economic Life: years

T-12 NOI ending

XX/XX/XX

Net Operating Income: $ Lender’s DSC NOI: $ Normalized Net Operating Income: $ Appraisal (Market) NOI: $

Page 2 of 16 Revised September 7, 2018

*Use actual T12 NOI, subtract existing annual reserve for replacement expense from the historical expense table and add underwritten annual reserve for replacement deposit amount.

Page 3 of 16 Revised September 7, 2018

Repairs Replacement Reserves Critical*: $ Initial Deposit: $

Non-Critical: $ Annual Deposit: $ Borrower Proposed: $ Annual Deposit per Bed: $

Total: $ Repairs per Bed: $ Other Escrow/Reserves

Non-Critical Repairs: $ Debt Service Reserve: $

Other: $

ORCF Underwriter Comments/Adjustments (as applicable): *Florida facilities not meeting the State’s emergency rule requiring generators must include the improvements as a critical repair.

CMS Rating N/A Overall Health Nursing Quality

# of stars:

Risk Management Program Profile (note both Tier and Internal/External) Tier 1 Baseline Internal Tier 2 Elevated Risk External 3rd Party

ORCF Underwriter Comments/Adjustments (An overall CMS rating of 1 or 2 stars and/or a Risk Level of High in either the Current or Historical category must be further discussed here, including mitigation):

Yes No Comments:

Allocated Debt:

A/R Financing:

Portfolio: If Yes, 1 of Master Lease:

Waivers:

(list, as applicable)

State Risk Monitoring Tool

Any Key Point Analysis or Discussion provided by the Lender prompted by completion of the State Risk Monitoring Tool can be included here. (If none, state None). UW should cite the state risk factor prompting action (i.e. Medicaid Waivers, Medicaid Reimbursement Delays, State Fiscal Health, Money Follows the Person or the Olmstead Decision) and discuss the Lenders comments, whether or not they were accepted and if any risk mitigation was requested and/or provided.

Identify Proposed Revisions:

Any substantive revisions to lender’s proposed application can be cited here. (If none, state None). UW should always consult with lender to discuss revisions prior to Loan Committee. If the lender does not agree with the proposed changes, clearly identify so and present each position.

Page 4 of 16 Revised September 7, 2018

PROJECT ANALYSIS

Loan Determinants table from Lender Narrative:

Requested amount: $

Amount based on loan-to-value: $

Amount based on debt service coverage: $

Amount based on cost to refinance: $

Amount based on deduction of loans, grants, gifts for mortgageable items:

ORCF Underwriter Comments/Adjustments (as applicable):

Sources and Uses from MILC:

Page 5 of 16 Revised September 7, 2018

Schedule of Debt to Refinance

Lender Pay-off Amount

Total: $

ORCF Underwriter Comments/Adjustments (as applicable):

[Note: Include the below table when the project is utilizing the limited debt seasoning expection per 4232.1, Section II, Production, Chapter 3.13].

Page 6 of 16 Revised September 7, 2018

Existing Debt

Project-Related

Debt

Date of Project-

Related Debt

Non-Project-

Related Debt

Date of Non-

Project-Related

Debt

% of existing debt used for project purposes

#DIV/0!

Normalized NOI

XXXX XXXX XXXX T12 CAGR

#DIV/0!

Market Value Summary:

Approach Appraisal Underwriter Income Capitalization Sales Comparison Cost Approach (if utilized)

Conclusion:

Market Value Summary

History by Revenue Source:

Page 7 of 16 Revised September 7, 2018

Period

Income Source S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it

S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it

S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it e.g. Independent Living #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Assisted Living #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Private Pay #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Ins./Mngd Care Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Medicaid Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Medicare Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. VA #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Therapy #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Residential Revenue Achieved $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0!

Other Income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Effective Gross Income $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0!

Period

Income Source S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it

S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it

S o u rc e T o ta l o f E

G I

D ay s

O R

U n it s

P er

D a y O

R U n it e.g. Independent Living #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Assisted Living #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Private Pay #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Ins./Mngd Care Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Medicaid Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Medicare Nursing #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. VA #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

e.g. Therapy #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Actual Residential Revenue $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0!

Other Income #DIV/0! 0 #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Effective Gross Income $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0! $0 #DIV/0! 0 #DIV/0!

YTD Annlzd or T-12 (specify dates) Appraisal (Market) Lender (for DSCR)

Actual

Actual Forecast

Year Ending XX/XX/XX Year Ending XX/XX/XX Year Ending XX/XX/XX

Expense Analysis –Subject:

Page 8 of 16 Revised September 7, 2018

Expense Categories Year Ending

XX/XX/XX

Year Ending

XX/XX/XX

Year Ending

XX/XX/XX

T12 Ending

XX/XX/XX

Appraisal

(Market)

Lender's

(Market)

Lender's

DSC

e.g. General & Administrative e.g. Payroll Taxes and Benefits e.g. Resident Care e.g. Food Services e.g. Activities e.g. Housekeeping & Laundry e.g. Maintenance e.g. Utilities e.g. Marketing and Promotion e.g. Insurance (property & liability) e.g. Bad Debt

Sub-total $0 $0 $0 $0 $0 $0 $0

Real Estate (Property) Taxes

Management Fees

Replacement Reserves

Total Expenses $0 $0 $0 $0 $0 $0 $0

Expense Percentage #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Normalization Calculations

Deduct Actual Taxes $0 $0 $0 $0

Add Market Rate Taxes $0 $0 $0 $0

Deduct Actual Management Fee $0 $0 $0 $0

Add Market Management Fee @ enter % #VALUE! #VALUE! #VALUE! #VALUE!

Deduct Actual Reserves for Replacement $0 $0 $0 $0

Add Market Reserves by Appraiser $0 $0 $0 $0

Normalized Expenses #VALUE! #VALUE! #VALUE! #VALUE!

Normalized Expense Percentage #VALUE! #VALUE! #VALUE! #VALUE!

Normalized Expense per Res Day OR Occ. Unit #VALUE! #VALUE! #VALUE! #VALUE!

Key Data Year Ending

XX/XX/XX

Year Ending

XX/XX/XX

Year Ending

XX/XX/XX

T12 Ending

XX/XX/XX

Appraisal

(Market)

Lender's

(Market)

Lender's

DSC

Effective Gross Income

Net Operating Income $0 $0 $0 $0 $0 $0 $0

Normalized Net Operating Income #VALUE! #VALUE! #VALUE! #VALUE!

Occupancy #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Potential # Res Days (beds x 365) OR Units Annually (units x 12)

ORCF Underwriter Comments/Adjustments (as applicable):

“Key Data” section of the Expense Analysis (Subject) chart from Lender Narrative, under the Historic Comparison of Expenses section

Page 9 of 16 Revised September 7, 2018

[If operations include IGT or UPL income, include the IGT_UPL_chart.] ORCF Underwriter Comments/Adjustments (as applicable):

Capitalization Rate – Comparable Sales chart from Lender Narrative:

ORCF Underwriter Comments/Adjustments (as applicable) – Underwriter must explain material variations:

Unit Mix Chart of Subject from Lender Narrative:

Unit Bed Unit Care

Line Qty Qty Bdrms Baths Sqft Type

A

B

C

D

Totals: - -

ORCF Underwriter Comments/Adjustments (as applicable):

Hope

Healthcare

Anywhere, XX

Hope

Healthcare

Anywhere, XX

Hope

Healthcare

Anywhere, XX

Hope

Healthcare

Anywhere, XX

Hope

Healthcare

Anywhere, XX

Comp 1 Comp 1 Comp 3 Comp 4 Comp 5

Capitalization Rate

Identify Source of Income Data

Uses Retro or Prospective NOI

Date of Sale

Year Built

Capitalization Rate Summary Comp.

Average

Underwriter

Conclusion

Appraiser

Conclusion

Page 10 of 16 Revised September 7, 2018

Census Mix – Subject History table from Lender Narrative:

(% of beds)

Accounts Receivable Aging—Projects Located in Illinois Only:

(Dollar Amounts)

Payor 30 Days 60 Days 90 Days 120 Days 150 Days 180 Days > 180 Days

Medicare Medicaid Other Other

Census Mix & Occupancy Market Comparables table:

ORCF Underwriter Comments/Adjustments (as applicable):

Historical Occupancy Analysis from Lender Narrative:

Source

Year ending xx/xx/xx

Year ending xx/xx/xx

Year ending xx/xx/xx

YTD or T-

12 (specify dates) Appraisal UW

Private-pay 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Medicare 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Welfare (Medicaid) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% e.g. V.A. 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% e.g. HMO (Insurance) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% e.g. Other 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Total 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Local Market Census Mix

P riv a te-p a y

M ed ica re

M ed ica id e.g . V

.A e.g . H

M O

(In su ra n ce) e.g . O th er

T o ta l

Comp 1 - (Name) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Comp 2 - (Name) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Comp 3 - (Name) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Comp 4 - (Name) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Comp 5 - (Name) add rows as needed 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Subject - Actual 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Market Average 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Page 11 of 16 Revised September 7, 2018

ORCF Underwriter Comments/Adjustments (as applicable) – Underwriter must explain material variations:

Sensitivity Analysis from Lender Narrative: (to maintain a DSC of 1.0)

[Note: Use format from Decision Circuit.] ORCF Underwriter Comments/Adjustments (as applicable):

PROJECT DESCRIPTION

Avoid allowing one chart to be separated on multiple pages – if required, ensure headers are copied to next page.

(Delete this language in final LCM)

Market Analysis Accept

Issues Noted N/A

Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along with mitigants. Do not leave blank unless N/A!

Supply and Demand:

Location/Proximity to

Hospital & Services:

Site:

Neighborhood:

Zoning:

(if non-conforming, a variance is needed)

Building Description (note any unusual building characteristics):

Living Unit Description:

Unique Services:

Resident Type: Elderly Developmentally Disabled Other (describe)

Historical Occupancy Year ending xx/xx/xx

Year ending xx/xx/xx

Year ending xx/xx/xx

YT D

annlzd. or T-

12 (specify dates)

Potential Resident Days OR units (specify) 0 0 0 0

Actual Resident Days OR Occ. Units (specify) 0 0 0 0

Occupancy #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Sensitivity Analysis - If everything else under consideration remains the same then:

The average bed rate can drop #VALUE! #VALUE! #VALUE! #VALUE!

## Occupancy could drop #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Operating Exp. could increase #VALUE! #VALUE! #VALUE! #VALUE!

The NOI could drop #VALUE! #VALUE! #VALUE! #VALUE!

Based on Recent NOIBased on Lender DSCR Figures

Page 12 of 16 Revised September 7, 2018

Owner/Operations/Management

General – Strength of Project (per punchlist and Lender Narrative)

Accept Issues Noted N/A

Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along with mitigants. Do not leave blank unless N/A!

PLI:

ORCF UW concluded: PLI was analyzed by Lender; coverage meets standards & covers past & potential claims; carrier licensed correctly & rating is acceptable

Carrier:

AM Best or Demotech Rating:

Other Comments:

Claim History:

ORCF UW analyzed: claims history for patterns or significant claims

Facility Claims per Bed: $ Parent Claims per Bed: $

Other Comments:

Survey Issues:

ORCF UW has reviewed: 3 most recent years of surveys, concerns with instances of actual harm or immediate jeopardy

(discuss any G or higher tags), patterns of repeat Findings, plans of correction, open

Findings, close-out letters

Owner/Operations/Management - (per punchlist and Lender Narrative)

Experience Strength of Principals [ORCF UW has concluded: Previous Participation cleared; 3+ years of acceptable experience developing, marketing, & operating senior/healthcare facilities]

Accept Issues Noted N/A

Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along with mitigants. Do not leave blank unless N/A!

[Include name of key principal(s) for each entity in bold.]

Borrower:

Principals:

Operator:

Principals:

Parent of Operator:

Principals:

Management Agent:

Principals:

Administrator:

[Note: Insert Turnaround Experience examples here. Examples should be provided in situations where there is a stark contrast in NOI over the 3+ year historical, the HUD loan is taking out 100% of the purchase price within 2 year and the appraisal operating margin is higher than what has been achieved in the short time that they have operated the project. Link to Turnaround Template Example.]

Owner/Operations/Management - (per punchlist and Lender Narrative)

Credit Worthiness

Accept Issues Noted N/A

Comments: If acceptable, briefly state why. If issues noted, briefly summarize, along with mitigants. Do not leave blank unless N/A!

Page 13 of 16 Revised September 7, 2018

Borrower:

ORCF UW has concluded: credit report is acceptable; no delinquent federal debt, judgments, legal actions, liens; no AP over

90 days; no AR over 120 days, unless noted

Operator:

ORCF UW has concluded: acceptable credit report; no delinquent federal debt, judgments, legal actions, liens; no neg. or declining cash flow; no AP over 90 days; no AR over 120 days, unless noted

Parent of Operator:

ORCF UW has concluded: acceptable credit report; no neg. or declining cash flow; no AP over 90 days, unless noted

Management Agent:

ORCF UW has concluded: acceptable

Management Agreement and HUD forms

ORCF UNDERWRITER CONCLUSIONS & RECOMMENDATIONS

The below Strengths and Risks categories should include any additional notes to further explain and/or summarize items indicated in the Loan Committee charts and check boxes above. For those items not brought out within the designated choices, please provide additional information in a succinct narrative.

Strengths

Yes N/A Summarize briefly:

High Debt Coverage: DSCR:

Low LTV (under 70): LTV:

Experienced Owner/Operator:

Substantial Equity Contribution:

Market:

Additional ORCF Underwriter (or Lender) identified strengths – insert more rows if necessary:

1.

2.

3.

4.

Risks

Yes N/A Summarize briefly, including mitigations:

Delinquent debt:

Star/TSI rating:

3 or 4 bed wards:

Page 14 of 16 Revised September 7, 2018

Prospective NOI:

Market:

Functional Obsolescence:

Additional ORCF Underwriter (or Lender) identified risks – insert more rows if necessary:

1.

2.

3.

4.

Page 15 of 16 Revised September 7, 2018

Technical Reviewer Comments

Review Type Name of Reviewer Comments:

Appraisal Passed DC

OGC N/A

Environmental

(HEROS)

Conditions noted as requirements in the HEROS Environmental review are noted in the Special Conditions listed below.

Asset Management Status (if currently insured)

N/A

Comment if there are open HUD or State compliance issues and any concerns raised from Account Executive input. Cite latest REAC PASS score and date. If REAC score less than 60, summarize repairs and consider special condition to evidence correction. Any additional/corrective actions (e.g. APPS processing, BPRS registration, DEC coordination/resolution) can be cited here.

Special Conditions – insert more rows if necessary:

1.

Lender Performance: No Significant Issues with Lender’s Performance, OR:

There were lender performance issues impacting underwriting in the following area(s):

Calculations Quality Control Responsiveness Due Diligence Program/Legal 3rd Party Reports/Lender

Assessment

Comments: Cite brief comments to describe nature of problems in areas noted above. If lender performance was outstanding in a particular aspect, note that as well.

Lender’s UW:

Lender’s UW Trainee:

Recommended “Troubled Status” field entry in iREMS

I recommend the following “Troubled Status” field entry in iREMS:

Not Troubled Potentially Troubled Troubled Review Time: <<Note # of days in review from Firm Review Began date to LC presentation date.

Comment on timing greater than 60 days, noting reasons for significant delays (include internal and external reasons).>>

Results of Loan Committee Recommendations (Completed by UW at Loan Committee):

Name (UW) Accept As Is Accept With Revisions Reject Name (WLM) Accept As Is Accept With Revisions Reject Roger Lewis Accept As Is Accept With Revisions Reject Tim Gruenes Accept As Is Accept With Revisions Reject Patrick Berry Accept As Is Accept With Revisions Reject John Hartung Accept As Is Accept With Revisions Reject

Page 16 of 16 Revised September 7, 2018

Jen Buhlman Accept As Is Accept With Revisions Reject Rita Dockery Accept As Is Accept With Revisions Reject Other (Name) Accept As Is Accept With Revisions Reject

Additional Recommendations or Requirements noted by Loan Committee members (as applicable):

[Include any comments, recommendations, requirements or other notes made by LC members regarding additional items that need adjustments prior to their approval – or overall notes that should be kept with the file regarding LC decisions. Completed by ORCF Underwriter or ORCF GTM at Loan Committee]

LC Member: Comments:

Supporting Documents are available in the project’s application folders on SharePoint.

Addendum 1 Other Facilities Owned, Operated and/or Managed

[Note: Data to populate this table can be found on sharepoint.]

Facility FHA# Troubled

Status

Active

DEC

Status

CMS

Rating

Latest

REAC

Score

Average Star Rating #DIV/0!