Commercial Real Estate Division

Commercial Real Estate - HUD FHA 242

FHA 242 Construction, Rehab, Modernization or Expansion for Hospital and Acute Care Facilities:

Purpose:

  • The Section 242 program is administered by the Office of Hospital Facilities (OHF) within the Office of Healthcare Programs. Section 242 of the National Housing Act provides insured mortgages for  construction, rehabilitation, expansion or modernization of acute care hospital facilities ranging from large teaching institutions to small rural critical access hospitals.

Maximum Loan Amount:

  • ​​90% of the lesser of the appraised value or costs of development.

Maximum CLTV:

  • 100% is possible with Joint Venture

Eligible Locations:

  • All 50 states, Puerto Rico, U.S. Virgin Islands, and Guam.

Fixed Rate Term:

  • Up to 25 years.

Minimum DSCR:

  • 1.25.

Prepayment Penalty:

  • Negotiable - typically a two-year lock out followed by a step down premium (e.g. 8,7,6,5,4,3,2,1).

Guarantee:

  • Non-recourse for most loans subject to standard carve-outs.

Assumable:

  • Yes, subject to lender approval.

Escrows:

  • Replacement reserves required in accordance with HUD guidelines;

  • Taxes and Insurance escrowed monthly (post construction);

  • Working Capital Reserve equal to 4% of loan amount (post in cash or LOC);

  • Operating Deficit Reserve equal to 3% of loan amount, or greater as determined by HUD at commitment (post in cash or LOC).

Third Party Reports:

  • Appraisal, Market Study, Complete Project Construction Cost Breakdown, and Plans and Specs Review are required.

Sponsor Requirements:

  • Experienced owner operators.

  • Minimum credit and financial capacity requirements.

 

 Synergy Capital Markets

9453 De Soto Avenue

Suite M

Chatsworth, California 91311
 

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Synergy Capital Markets, is an institutional alternative real estate finance investment adviser, investor and underwriter. Synergy Capital Markets does not offer, and does not offer to provide any broker dealer or market maker services. Synergy Capital Markets operates this website at www.SynergyCapitalMarkets.com (referred to as the “Website”). By accessing this Website and any pages thereof, you agree to be bound by its Terms of Use and Privacy Policy. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. We do not provide financial planning services to individual investors. Synergy Capital Markets does not provide tax advice and does not represent in any manner that the outcomes described herein will result in any particular tax consequence. Prospective investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed on this Website, and are encouraged to consult with their own financial advisor, attorney, accountant, and any other professional that can help you / them to understand and assess the risks associated with any real estate investment opportunity. Full Disclosure

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