bridge healthcare - acquisition/refinance

Platform Overview:

The bridge-to-HUD platform is an interim financing option when quick executions are

required or HUD regulations dictate the need for interim financing.

Borrower

• Single purpose entity, bankruptcy remote entity

Purpose

• Acquisition or refinance (including cash-out) because of timing challenges associated with
   going directly to HUD, including ineligibility due to 3-year rule and debt seasoning that  may be required by HUD.

Property Type

• Skilled nursing, assisted living, memory care or any combination. Independent living units
   are permitted so long as the total number of IL units does not exceed 30% of the total  number of units for the project.

Loan Amount

• $12,500,000 (can go higher with lender approved participants)

Underwriting

• Underwritten NOI should be supported by Trailing-12 operations and three (3) years of
   operating history. Exceptions are made on a case by case basis for newly constructed or renovated assets that have stabilized and have at least four (4) months of stabilized operating history at application and six (6) months of stabilized operating history at closing.

Timing

• Typically 60 to 90 days from term sheet issuance by Midland States Bank (MSB) to closing.
   It is anticipated that the bridge loan will fund expeditiously upon completion of MSB due
   diligence, which may be prior to the date Love Funding (LFC) files the application with HUD.

Term

• Six (6) months to three (3) years

Amortization

• Typically 20 years (up to 25 years on a case-by-case basis)

Maximum LTV

• 75%. Based on appraisal engaged by and acceptable to lender

Minimum DSC

• 1.30x

Extension Options

• Negotiable with performance covenants

Interest Rate

• Based on current market conditions

Original Fee

• Negotiable

Exit Strategy / Exit Fee

• This program is designed to facilitate a take-out using FHA insured financing. As such, a sizing illustrating the take-out through HUD must be provided and should not be based on prospective NOI (exceptions apply to newly constructed or renovated assets that are utilizing this program to bridge the 3-year rule). Exit fee is typically 3.00% to be paid to LFC. Such fee is waived if LFC provides take-out financing through HUD.

Payments

• Typically, principal and interest payable monthly on stabilized projects. Interest only option
   available on a case by case basis

Cash Out

• Permitted, but cash-out proceeds will typically be held by lender as additional collateral
   until LFC has loan committee approval for the HUD take-out, at which time the cash-out
   proceeds will be released to the borrower in full so that the full amount is eligible to be
   refinanced through HUD.

Recourse

• Full recourse to borrower. Joint and several unlimited personal guarantees from all key principals, with a 20% or greater ownership interest..

Security

• First mortgage or deed of trust, and assignment of rents and leases on the property.

• Additional collateral may be required, depending on specific transaction.

Prepayment

• Negotiated on a case by case basis

Standard Escrows

• Typically borrower to contribute monthly to tax, insurance and replacement reserve escrows as required.

Additional Escrows

• To be determined on a per deal basis

Expenses

• Borrower will reimburse lender for all of lender’s out-of-pocket expenses associated with the transaction including but not limited to appraisal, legal, travel, environmental, closing, etc.