Preview
iD: YORK OUN PK 06 DM INDEX NO. 451549/2023
NYSCEF BOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
BUDIMIR EXHIBIT 41A
INDEX NO. 451549/2023
FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Lender Narrative
Section 232, Pursuant to Section 223(f)
Firm Commitment Application
(April 25, 2010 - supersedes previous versions)
ro
\.
\
Reese | iat
ie
nae Hh
++
A ee
\)
eT
ee €
es N)
Ny
ioctl
Ne
en
OUT birt ents)
Nr Ait
i NS
| SsOy N \
. | (| NY)
byas
| Oil NAY =)
Ss \
eo
Helis ye
Ca
1]
|
)
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023
Instructions:
The narrative is a critical document to the Lean Underwriting process. Each section of the narrative and
all questions need to be completed and answered. If the lender’s underwriter disagrees and modifies any
third party report conclusions, provide sufficient detail to justify. The narrative should identify the
strengths and weaknesses of the transactions and demonstrate how the weaknesses are mitigated by the
underwriting.
CHARTS: The charts contained in this document have been created with versatility in mind;
however they will not be able to accommodate all situations. For this reason, you are allowed to alter
the charts as the situation demands. Be sure to state how you have altered the charts along with your
justification. Try to include all the information the form calls for. Charts that include blue text
indicate fields that should be modified by the lender as the situation dictates.
HUD-92264 - HCF: The conclusions made here in the Lender Narrative should flow into the
92264. Per the Email Blast dated March 5, 2010, the only exception to this is Sections J, K, L and M
of the 92264, which should contain the appraiser’s conclusions. One of the biggest challenges
Lenders may face is filling out the expense portion. The expense categories in the Lender
Narrative do not match those in Section F of the 92264. For example, the Lender Narrative
does not require a breakdown of salaries. For this reason, lenders are not required to
complete Section D of the 92264. The new categories of the Lender Narrative were an
attempt to show the data in a format that is more conventional in today’s market. We do not
expect Lenders to spend a great deal of time transposing the expenses, but the totals should
correspond to their conclusions. On Section 232/223f's, if the third party appraiser did not
utilize the cost approach, you are not required to complete Section H. The 92264 form
should be signed by the lender underwriter, not the appraiser
Not Applicable: If a section is not applicable, state so in that section and provide a reason. Do not
delete sections that are not applicable. HUD checks the narrative to make sure that all sections are
provided. Ifa major section is not applicable, add “— Not Applicable” to the header and provide a
narrative section giving the reason. For instance,
Parent of the Operator — Not Applicable
This section is not applicable because there is no operator.
The rest of the subsections under the inapplicable section can then be deleted.
In addition to submitting the pdf version of the Lender Narrative to HUD, please submit an electronic
Word version as well.
It is helpful if the Lender references the page # from third party reports when referencing additional
information or tables, as applicable, in lieu of reiterating or copying the identical information into the
narrative.
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Table of Contents
Executive Summary (Lender’s Conclusions)
Transaction Overview...
Sensitivity Analysi:
Program Eligibility ..
Lender Loan Committee
3-year Rule.
Substantial Rehabilitation .
Commercial Space / Income
Independent Units
Licensing / Certificate of Need / Keys Amendment
Identities-of-Interest ...
Risk Factors
Strengths .
Underwriting Teat
Lender...
Needs Assessor
Environmental Consultant
Appraiser.
Project Descriptio
Site.
Neighborhood .
Zoning... 10
The subject located in an R-5 residential zoning district. Residential districts account for about 75% of the New
York City. According to the New York City Department of City Planning, a nursing home is considered a legally
conforming use in the R-5 district 10
Utilities 10
Improvement Description . 11
Building: 11
Parking . 12
Unit Mix and Features. 12
Service: 12
Appraisal. 13
Lender Modifications. 13
Hypothetical Conditions and Extraordinary Assumptions 13
Obsolescence/Depreciation and Remaining Economic Life 13
Market Analysis 14
Overview. 14
Primary Market Area (PMA) . 14
Demand... 14
Competitive Environment 15
Conclusion . 15
Income Capitalization Approach 16
Financial Statements 16
Occupancy. 16
Revenue. 17
Expense: 23
Net Operating Incom 27
Capitalization Rate... 27
Sales Comparison Approach. 29
1969 30
1992 30
1974 30
1930 30
1993 30
Aug-12 30
Apr-1 30
Jan-12 30
Lender Narrative Page i Template version ~ March 5, 2010
3
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Table of Contents
May-11. 30
Mar- 30
Price per Unit . 30
Effective Gross Income Multiplier (EGIM) 30
Subject’s Purchase Price... 31
Cost Approach 31
Overview. 31
Development Co: 32
The subject property was constructed in 1974 and per HUD guidelines; a cost approach analysis is not
required for properties of this age. However, an analy: of land value was performed by the Appraiser and is
discussed below 32
Depreciation... 32
The Appraiser did not estimate a depreciation amount for the subject as the cost approach to value was
deemed non-applicable for the subject... 32
Major Movable Equipment 32
Land Value. 32
Reconciliation . 33
ALTA/ACSM Land Title Survey 33
Title .... 33
Title Searel 33
Pro-forma Policy... 34
Environmental .. 34
Phase I Environmental Site As: ment 34
Lender Modifications. 37
Other Potential Environmental Concern: 37
State Historic Preservation Office (SHPO) Clearance 38
Flood Plain 39
Project Capital Needs Assessment (PCNA. 40
Lender Modifications. 42
Fire / Building Codes and HUD Standards 42
Handicapped Accessibility 42
Seismic Evaluation .... 43
Repairs... 43
Critical Repair: 43
Non-Critical Repairs 43
Borrower Proposed Repairs .... 44
Completion and Inspection of Repairs 44
Replacement Reserves . . 44
Mortgagor 45
Organization 46
Hollis Real Estate Co., LLC
(A New York Limited Liability Company)
Daryl Hagler Jonathan Hagler
Managing Member Member
99% 1%
46
Experience / Qualifications... 46
Credit History 46
Financial Statement: AT
Conclusion 48
Principal of the Mortgagor Daryl Hagler. 48
Experience / Qualifications... 48
Lender Narrative Page ii Template version — March 5, 2010
4
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Table of Contents
Credit History . 48
Other Business Concerns/232 Applications. 49
Financial Statement: 50
Operator. 50
Organization 51
Experience / Qualification: 51
Other Business Concerns/232 Applications.. 52
Other Facilities Owned, Operated or Managed. 52
Financial Statement: 52
Net Income Analysi: 53
Conclusion... 53
Parent of the Operator Not Applicable . 53
Management Agent —Not Applicable 53
Operation of the Facility 54
Administrator 54
State Surveys 54
Subject. 54
Staffing .. 55
The appraiser and underwriter have reviewed the current and proposed staffing to be charged to the facility and
found it to be acceptable and within reason 55
Operating Leas: 55
Responsibilities .. 57
HUD Lease Provisions 57
Accounts Receivable (A/R) Financing . 58
Terms and Conditions 59
Collateral / Security 60
Permitted Uses and Payment Prioritie: 60
Interest Rate. 61
The greater of (i) the Base Rate plus 2.00% per year or (ii) 5.25% per year. “Base Rate” is defined as “the
Bank’s stated Base Rate as reflected in its books and records as such Base Rate may change from time to time.
The Bank’s determination of its Base Rate shall be conclusive and final. The Base Rate is a reference rate and
not necessarily the lowest rate charged by the Ban! 61
Costs .. 61
Recommendation 61
Insurance 62
Profe: ional Liabi ty Coverage (PLI) 62
Lawsuits . 63
Recommendation . 63
Property Insurance... 63
Fidelity Bond / Employee Dishonesty Coverage 63
Mortgage Determinants 63
Overview 64
Mortgage Term 64
Type of Financing... 64
Fair Market Value Limit 64
Debt Service Limit. 64
Transaction Costs 64
Existing Indebtednes 65
Legal and Organizational Co: 68
Title and Recording Fees .. 68
Other Fees 68
HUD Fees. 68
Financing Fees 69
Deduction of Grants, Loans, and Gifts (Criterion 11) — Not Applicable 69
Sources & Uses... 69
Secondary Source: 70
Surviving Debt. 72
Lender Narrative Page iii Template version ~ March 5, 2010
5
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Table of Contents
Other Uses 72
Special Commitment Conditions 72
Conclusion 72
Signature: 72
Lender Narrative Page iv Template version ~ March 5, 2010
6
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023
Executive Summary (Lender’s Conclusions)
FHA Number: 012-22299
Project Name: Holliswood Center for Rehabilitation and Healthcare
Project Address: 195-44 Woodhull Avenue
City / State / Zip Hollis, NY 11423
Section of the Act: 232/223(f) X_| Refinance
Part of a Small,
Medium, or Large xX
Portfolio: Yes No
Unit Breakdown:
Room Type Care Type Beds
Private Pay - Private Skilled Nursing
Medicare Skilled Nursing 23
Medicaid Skilled Nursing 277
Other Skilled Nursing 1
Totals: 314
DSCR
with
Mortgage Amount: $36,696,000 LTV: 78.2% MIP): 2.12
Term: 360 months Interest Rate:
Medicare.Gov Star
Rating (# of stars): #5 Principal & Interest: $214,148
Value per
bed(SNF)/Unit
Underwritten Value: $46,900,000 Cap Rate: 12.75% (ALF):
Effective Gross Income: $29,470,013 Occupancy Rate: 94.5%
Expenses & Repl. Res.: $23,492,175 Expense Ratio: 79.72%
Net Operating Income: $5,977,837 __ Expense per bed(SNF)/Unit (ALF):
Repair Amount: $1,078,825 X | Critical | x ] Non-critical
Replacement
Reserve: $173,000 Initial deposit $125,600
Other Escrows/ Res.: $0
Mortgagor: Hollis Real Estate Co., LLC
Operator: Hollis Operating Co., LLC
Does the operating lease cover multiple properties or tenants (master lease)? Yes X | No
Parent of Operator: None
Lender Narrative Page 1 Template version — March 5, 2010
7
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Management Agent: None
License held by: Holliswood Care Center Inc.
Resident contracts with: Hollis Operating Co., LLC
Third Party Reports provided:
X | Appraisal Conclusion is: Accepted as is. Modified by lender.
X_| PCNA Conclusion is: Accepted Modified by lender.
X _| Phase I Environmental Conclusion is: Accepted as Modified by lender.
Other -N/A Conclusion is: Accepted as is. Modified by lender.
Transaction Overview
Key Questions — Transaction Overview
Yes No
Is any of the current project debt FHA-insured or HUD-held?
Is the Mortgagor a nonprofit or public entity AND are the nonprofit mortgage criteria
utilized in the underwriting? (If yes, Operator must also be a nonprofit entity)
Does the underwriting include income from Adult Day Care?
Is there a ground lease?
Is any real estate tax abatement or exemption included in the underwriting assumptions?
Is the property subject to any special assessments?
Is an operating deficit required for this transaction?
Are there any special escrows or reserves proposed for this transaction?
Is the transaction being processed as a Purchase? If yes, answer questions a-f below.
a. Will the purchased facility have negative working capital (current assets minus N/
current liabilities) at the date of purchase?
Are any of the work write-up repairs or replacement reserves included in the N/
purchase agreement (If yes, these are not allowable and should be deducted
from the price)?
Is a non-identity of interest operator purchasing the facility and including the N/
costs of debt-financed improvements in the purchase price (If yes, these are not
allowable and should be deducted from the price)?
N/
Does the value exceed the purchase price (less seller financing)?
N/
Is state regulatory approval needed for license transfer?
If there are critical repairs, is there a plan for the buyer to gain access to the N/
property to complete critical repairs prior to closing?
10. Is a REIT involved? —_——
x
11. Are there any waivers proposed for this transaction? —_
(Identify any waivers required for proposed financing. Identify specific provisions to be waived and
justification for the waiver. With the exception of regulatory waivers, Lender must provide a form HUD-
Lender Narrative Page 2 Template version — March 5, 2010
8
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
2, for each waiver with the application.)
<>
Question #11- Greystone requests a waiver of the expiration date of the Appraisal report for this
transaction. As of the application submission date, this report is only one day past its expiration
date. Recent financial statements support the overall appraisal conclusions. A completed form
HUD-2 for this request has been included in the application.
Purpose of Transaction
The purpose of this transaction is to refinance the existing bridge loan debt into a long term,
fixed rate HUD loan.
Sensitivity Analysis
If everything else under consideration remains the same (ceteris paribus), then
(a) The average rental rate can drop by $868 per month and still provide 1.0 debt cover. This
assumes all expenses other than management fees were not reduced as a result of the lower rental
rates. It also assumes that the percentage reduction is for all revenue, not just room rates;
otherwise the percentage reduction could be higher.
(b) Occupancy rate could decrease by 14.9% and still provide a 1.0 debt cover.
(c) Operating expenses could increase 13.40% per year and still provide a 1.0 debt cover.
(d) The NOI could drop by $3,148,139 (52.9%) and still provide a 1.0 debt cover.
Program Eligibility
Key Program Eligibility Questions
Yes No
Does the facility charge ‘founder’s fees’, ‘life care fees’, or other similar charges
associated with ‘buy-in’ facilities?
Does the facility require more than four residents share a full bathroom (see 24 CFR
232.3)?
Are any residents required to access a qualifying bathroom by moving through a public
corridor or area (see 24 CFR 232.3)?
Has the facility, Mortgagor, Operator, or any of their affiliates, renamed, or
reformulated companies, filed for or emerged from bankruptcy within the last five (5)
years?
Is the facility, Mortgagor, Operator, or any of their affiliates, renamed, or reformulated
companies, currently in bankruptcy?
Is less than continuous protective oversight provided at the facility?
Is there any minimum assistance requirements necessary to qualify under the Section
232 mortgage insurance program that the facility does not plan to offer?
Lender Narrative Page 3 Template version March 5, 2010
9
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Lender Loan Committee
Date held: July 10, 2013
Greystone’s LEAN healthcare loan committee met on July 10, 2013 to review the Firm
Application for the subject property. Prior to the meeting, Greystone’s draft Underwriting
Narrative and Numbers, the final Appraisal Report, final PCNA Report and the final Phase I
Environmental Report were made available to the Loan Committee Members for review. After a
lengthy discussion, the Members unanimously approved the submission as presented herein.
3-year Rule
Year(s) project was constructed:
Select one of the following:
The entire facility was constructed over three years ago and has not undergone any substantial
rehabilitation in the last three years.
L_] An addition to the facility was constructed LESS than three years ago; however, the addition was
not larger than project in size (gross floor area) and number of beds.
a. Gross Floor Area: d. Total Beds:
b. Sqft added last 3 yrs: e. Beds added last 3 yrs:
c. % of GFA added: <> f. % of Beds Added:
Substantial Rehabilitation
Select all applicable statements:
[X ] The estimated cost of the repairs represents less than 15% of the project’s value after completion.
a. Underwritten Value: $46,900,000
b. Total Estimated Cost of Repairs: $1,078,825
c. Repairs as % of Value: 2.3%
The repairs do not include the substantial replacement of two or more major building components.
Commercial Space / Income
Select one of the following:
There is NO commercial space at the subject.
L_] There is commercial space at the subject; however, it does not exceed the program limitations of
20% of the total net rentable area of the project and 20% of the effective gross income.
a. Total Net Rentable Area: MISSING d. EGI: $29,470,013
gross bldg
sf
b. Net Rentable Commercial area: e. Eff. Commercial Income:
c. % of commercial area: f. % of Commercial Inc.:
Independent Units
Select one of the following:
Lender Narrative Page 4 Template version — March 5, 2010
10
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023
There are NO unlicensed/independent units at the subject.
L_] There are unlicensed/independent units at the subject; however, the total does not exceed 25%
of the total beds at the facility.
a. Total Beds:
b. Unlicensed Independent Beds:
c. Independent as % of Total:
LE] A waiver is requested to exceed 25% of the total beds at the facility.
Licensing / Certificate of Need / Keys Amendment
The facility is licensed by the State of New York’s Department of Health as a Skilled Nursing Facility for
314 beds. The license is issued to Hollis Operating Co., LLC. It is effective as of 05/07/2013, and has no
expiration date. The license covers 314 skilled nursing beds.
Identities-of-Interest
Yes No
Have you, as the Lender, identified any identities of interest on your certification?
Does the Mortgagor’s certification indicate any identities of interest?
Do any of the certifications provided by Principals of the Mortgagor identify any
identities of interest?
Does the Operator’s certification indicate any identities of interest? (if applicable)
N/
Does the Management Agent’s certification indicate any identities of interest? (it A
applicable)
N/
6. Is there any identity of interest issues involving the Underwriting Lender, mortgage
A
broker, or seller?
<< Insert “N/A in the No column if not applicable. For each “YES” answer above, provide a narrative discussion
regarding the topic. As applicable, describe the risk and how it will be mitigated. >>
Additional Identity of Interest Comments: While Greystone does not feel that it constitutes
any identity of interest for this transaction, we do wish to disclose the following:
Greystone Servicing Corporation, Inc., an entity affiliated with Greystone Funding Corporation,
made a bridge loan in the amount of $30,000,000 to fund the May 7, 2013 acquisition of the
subject facility. This loan will be paid in full with the proceeds of the subject transaction.
Additionally, Greystone Servicing Corporation underwrote and closed a HUD insured loan,
Wartburg Nursing Home, #012-22238, which has individual principals in common with the
subject transaction. Lastly, Greystone Funding Corporation has closed the following LEAN
232/223(a)(7) transactions that share individual principals (Daryl Hagler and Kenny Rozenberg)
in common with the subject transaction: Stonehedge Rome #014-22086 Stonehedge Chittenango
#014-22085 and Bronx Center #012-22260.
Lender Narrative Page 5 Template version — March 5, 2010
11
INDEX NO. 451549/2023
NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023
Risk Factors
Key Questions
Yes No
1 Is the proposed mortgage higher than 80 (85% on Non-Profit) percent of the lender’s
concluded value?
Is the debt service c
Preview
iD: YORK OUN PK 06 DM INDEX NO. 451549/2023 NYSCEF BOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 BUDIMIR EXHIBIT 41A INDEX NO. 451549/2023 FILED: NEW YORK COUNTY CLERK 06/28/2023 02:27 PM NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Lender Narrative Section 232, Pursuant to Section 223(f) Firm Commitment Application (April 25, 2010 - supersedes previous versions) ro \. \ Reese | iat ie nae Hh ++ A ee \) eT ee € es N) Ny ioctl Ne en OUT birt ents) Nr Ait i NS | SsOy N \ . | (| NY) byas | Oil NAY =) Ss \ eo Helis ye Ca 1] | ) INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023 Instructions: The narrative is a critical document to the Lean Underwriting process. Each section of the narrative and all questions need to be completed and answered. If the lender’s underwriter disagrees and modifies any third party report conclusions, provide sufficient detail to justify. The narrative should identify the strengths and weaknesses of the transactions and demonstrate how the weaknesses are mitigated by the underwriting. CHARTS: The charts contained in this document have been created with versatility in mind; however they will not be able to accommodate all situations. For this reason, you are allowed to alter the charts as the situation demands. Be sure to state how you have altered the charts along with your justification. Try to include all the information the form calls for. Charts that include blue text indicate fields that should be modified by the lender as the situation dictates. HUD-92264 - HCF: The conclusions made here in the Lender Narrative should flow into the 92264. Per the Email Blast dated March 5, 2010, the only exception to this is Sections J, K, L and M of the 92264, which should contain the appraiser’s conclusions. One of the biggest challenges Lenders may face is filling out the expense portion. The expense categories in the Lender Narrative do not match those in Section F of the 92264. For example, the Lender Narrative does not require a breakdown of salaries. For this reason, lenders are not required to complete Section D of the 92264. The new categories of the Lender Narrative were an attempt to show the data in a format that is more conventional in today’s market. We do not expect Lenders to spend a great deal of time transposing the expenses, but the totals should correspond to their conclusions. On Section 232/223f's, if the third party appraiser did not utilize the cost approach, you are not required to complete Section H. The 92264 form should be signed by the lender underwriter, not the appraiser Not Applicable: If a section is not applicable, state so in that section and provide a reason. Do not delete sections that are not applicable. HUD checks the narrative to make sure that all sections are provided. Ifa major section is not applicable, add “— Not Applicable” to the header and provide a narrative section giving the reason. For instance, Parent of the Operator — Not Applicable This section is not applicable because there is no operator. The rest of the subsections under the inapplicable section can then be deleted. In addition to submitting the pdf version of the Lender Narrative to HUD, please submit an electronic Word version as well. It is helpful if the Lender references the page # from third party reports when referencing additional information or tables, as applicable, in lieu of reiterating or copying the identical information into the narrative. INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Table of Contents Executive Summary (Lender’s Conclusions) Transaction Overview... Sensitivity Analysi: Program Eligibility .. Lender Loan Committee 3-year Rule. Substantial Rehabilitation . Commercial Space / Income Independent Units Licensing / Certificate of Need / Keys Amendment Identities-of-Interest ... Risk Factors Strengths . Underwriting Teat Lender... Needs Assessor Environmental Consultant Appraiser. Project Descriptio Site. Neighborhood . Zoning... 10 The subject located in an R-5 residential zoning district. Residential districts account for about 75% of the New York City. According to the New York City Department of City Planning, a nursing home is considered a legally conforming use in the R-5 district 10 Utilities 10 Improvement Description . 11 Building: 11 Parking . 12 Unit Mix and Features. 12 Service: 12 Appraisal. 13 Lender Modifications. 13 Hypothetical Conditions and Extraordinary Assumptions 13 Obsolescence/Depreciation and Remaining Economic Life 13 Market Analysis 14 Overview. 14 Primary Market Area (PMA) . 14 Demand... 14 Competitive Environment 15 Conclusion . 15 Income Capitalization Approach 16 Financial Statements 16 Occupancy. 16 Revenue. 17 Expense: 23 Net Operating Incom 27 Capitalization Rate... 27 Sales Comparison Approach. 29 1969 30 1992 30 1974 30 1930 30 1993 30 Aug-12 30 Apr-1 30 Jan-12 30 Lender Narrative Page i Template version ~ March 5, 2010 3 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Table of Contents May-11. 30 Mar- 30 Price per Unit . 30 Effective Gross Income Multiplier (EGIM) 30 Subject’s Purchase Price... 31 Cost Approach 31 Overview. 31 Development Co: 32 The subject property was constructed in 1974 and per HUD guidelines; a cost approach analysis is not required for properties of this age. However, an analy: of land value was performed by the Appraiser and is discussed below 32 Depreciation... 32 The Appraiser did not estimate a depreciation amount for the subject as the cost approach to value was deemed non-applicable for the subject... 32 Major Movable Equipment 32 Land Value. 32 Reconciliation . 33 ALTA/ACSM Land Title Survey 33 Title .... 33 Title Searel 33 Pro-forma Policy... 34 Environmental .. 34 Phase I Environmental Site As: ment 34 Lender Modifications. 37 Other Potential Environmental Concern: 37 State Historic Preservation Office (SHPO) Clearance 38 Flood Plain 39 Project Capital Needs Assessment (PCNA. 40 Lender Modifications. 42 Fire / Building Codes and HUD Standards 42 Handicapped Accessibility 42 Seismic Evaluation .... 43 Repairs... 43 Critical Repair: 43 Non-Critical Repairs 43 Borrower Proposed Repairs .... 44 Completion and Inspection of Repairs 44 Replacement Reserves . . 44 Mortgagor 45 Organization 46 Hollis Real Estate Co., LLC (A New York Limited Liability Company) Daryl Hagler Jonathan Hagler Managing Member Member 99% 1% 46 Experience / Qualifications... 46 Credit History 46 Financial Statement: AT Conclusion 48 Principal of the Mortgagor Daryl Hagler. 48 Experience / Qualifications... 48 Lender Narrative Page ii Template version — March 5, 2010 4 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Table of Contents Credit History . 48 Other Business Concerns/232 Applications. 49 Financial Statement: 50 Operator. 50 Organization 51 Experience / Qualification: 51 Other Business Concerns/232 Applications.. 52 Other Facilities Owned, Operated or Managed. 52 Financial Statement: 52 Net Income Analysi: 53 Conclusion... 53 Parent of the Operator Not Applicable . 53 Management Agent —Not Applicable 53 Operation of the Facility 54 Administrator 54 State Surveys 54 Subject. 54 Staffing .. 55 The appraiser and underwriter have reviewed the current and proposed staffing to be charged to the facility and found it to be acceptable and within reason 55 Operating Leas: 55 Responsibilities .. 57 HUD Lease Provisions 57 Accounts Receivable (A/R) Financing . 58 Terms and Conditions 59 Collateral / Security 60 Permitted Uses and Payment Prioritie: 60 Interest Rate. 61 The greater of (i) the Base Rate plus 2.00% per year or (ii) 5.25% per year. “Base Rate” is defined as “the Bank’s stated Base Rate as reflected in its books and records as such Base Rate may change from time to time. The Bank’s determination of its Base Rate shall be conclusive and final. The Base Rate is a reference rate and not necessarily the lowest rate charged by the Ban! 61 Costs .. 61 Recommendation 61 Insurance 62 Profe: ional Liabi ty Coverage (PLI) 62 Lawsuits . 63 Recommendation . 63 Property Insurance... 63 Fidelity Bond / Employee Dishonesty Coverage 63 Mortgage Determinants 63 Overview 64 Mortgage Term 64 Type of Financing... 64 Fair Market Value Limit 64 Debt Service Limit. 64 Transaction Costs 64 Existing Indebtednes 65 Legal and Organizational Co: 68 Title and Recording Fees .. 68 Other Fees 68 HUD Fees. 68 Financing Fees 69 Deduction of Grants, Loans, and Gifts (Criterion 11) — Not Applicable 69 Sources & Uses... 69 Secondary Source: 70 Surviving Debt. 72 Lender Narrative Page iii Template version ~ March 5, 2010 5 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Table of Contents Other Uses 72 Special Commitment Conditions 72 Conclusion 72 Signature: 72 Lender Narrative Page iv Template version ~ March 5, 2010 6 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023 Executive Summary (Lender’s Conclusions) FHA Number: 012-22299 Project Name: Holliswood Center for Rehabilitation and Healthcare Project Address: 195-44 Woodhull Avenue City / State / Zip Hollis, NY 11423 Section of the Act: 232/223(f) X_| Refinance Part of a Small, Medium, or Large xX Portfolio: Yes No Unit Breakdown: Room Type Care Type Beds Private Pay - Private Skilled Nursing Medicare Skilled Nursing 23 Medicaid Skilled Nursing 277 Other Skilled Nursing 1 Totals: 314 DSCR with Mortgage Amount: $36,696,000 LTV: 78.2% MIP): 2.12 Term: 360 months Interest Rate: Medicare.Gov Star Rating (# of stars): #5 Principal & Interest: $214,148 Value per bed(SNF)/Unit Underwritten Value: $46,900,000 Cap Rate: 12.75% (ALF): Effective Gross Income: $29,470,013 Occupancy Rate: 94.5% Expenses & Repl. Res.: $23,492,175 Expense Ratio: 79.72% Net Operating Income: $5,977,837 __ Expense per bed(SNF)/Unit (ALF): Repair Amount: $1,078,825 X | Critical | x ] Non-critical Replacement Reserve: $173,000 Initial deposit $125,600 Other Escrows/ Res.: $0 Mortgagor: Hollis Real Estate Co., LLC Operator: Hollis Operating Co., LLC Does the operating lease cover multiple properties or tenants (master lease)? Yes X | No Parent of Operator: None Lender Narrative Page 1 Template version — March 5, 2010 7 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Management Agent: None License held by: Holliswood Care Center Inc. Resident contracts with: Hollis Operating Co., LLC Third Party Reports provided: X | Appraisal Conclusion is: Accepted as is. Modified by lender. X_| PCNA Conclusion is: Accepted Modified by lender. X _| Phase I Environmental Conclusion is: Accepted as Modified by lender. Other -N/A Conclusion is: Accepted as is. Modified by lender. Transaction Overview Key Questions — Transaction Overview Yes No Is any of the current project debt FHA-insured or HUD-held? Is the Mortgagor a nonprofit or public entity AND are the nonprofit mortgage criteria utilized in the underwriting? (If yes, Operator must also be a nonprofit entity) Does the underwriting include income from Adult Day Care? Is there a ground lease? Is any real estate tax abatement or exemption included in the underwriting assumptions? Is the property subject to any special assessments? Is an operating deficit required for this transaction? Are there any special escrows or reserves proposed for this transaction? Is the transaction being processed as a Purchase? If yes, answer questions a-f below. a. Will the purchased facility have negative working capital (current assets minus N/ current liabilities) at the date of purchase? Are any of the work write-up repairs or replacement reserves included in the N/ purchase agreement (If yes, these are not allowable and should be deducted from the price)? Is a non-identity of interest operator purchasing the facility and including the N/ costs of debt-financed improvements in the purchase price (If yes, these are not allowable and should be deducted from the price)? N/ Does the value exceed the purchase price (less seller financing)? N/ Is state regulatory approval needed for license transfer? If there are critical repairs, is there a plan for the buyer to gain access to the N/ property to complete critical repairs prior to closing? 10. Is a REIT involved? —_—— x 11. Are there any waivers proposed for this transaction? —_ (Identify any waivers required for proposed financing. Identify specific provisions to be waived and justification for the waiver. With the exception of regulatory waivers, Lender must provide a form HUD- Lender Narrative Page 2 Template version — March 5, 2010 8 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 2, for each waiver with the application.) <> Question #11- Greystone requests a waiver of the expiration date of the Appraisal report for this transaction. As of the application submission date, this report is only one day past its expiration date. Recent financial statements support the overall appraisal conclusions. A completed form HUD-2 for this request has been included in the application. Purpose of Transaction The purpose of this transaction is to refinance the existing bridge loan debt into a long term, fixed rate HUD loan. Sensitivity Analysis If everything else under consideration remains the same (ceteris paribus), then (a) The average rental rate can drop by $868 per month and still provide 1.0 debt cover. This assumes all expenses other than management fees were not reduced as a result of the lower rental rates. It also assumes that the percentage reduction is for all revenue, not just room rates; otherwise the percentage reduction could be higher. (b) Occupancy rate could decrease by 14.9% and still provide a 1.0 debt cover. (c) Operating expenses could increase 13.40% per year and still provide a 1.0 debt cover. (d) The NOI could drop by $3,148,139 (52.9%) and still provide a 1.0 debt cover. Program Eligibility Key Program Eligibility Questions Yes No Does the facility charge ‘founder’s fees’, ‘life care fees’, or other similar charges associated with ‘buy-in’ facilities? Does the facility require more than four residents share a full bathroom (see 24 CFR 232.3)? Are any residents required to access a qualifying bathroom by moving through a public corridor or area (see 24 CFR 232.3)? Has the facility, Mortgagor, Operator, or any of their affiliates, renamed, or reformulated companies, filed for or emerged from bankruptcy within the last five (5) years? Is the facility, Mortgagor, Operator, or any of their affiliates, renamed, or reformulated companies, currently in bankruptcy? Is less than continuous protective oversight provided at the facility? Is there any minimum assistance requirements necessary to qualify under the Section 232 mortgage insurance program that the facility does not plan to offer? Lender Narrative Page 3 Template version March 5, 2010 9 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Lender Loan Committee Date held: July 10, 2013 Greystone’s LEAN healthcare loan committee met on July 10, 2013 to review the Firm Application for the subject property. Prior to the meeting, Greystone’s draft Underwriting Narrative and Numbers, the final Appraisal Report, final PCNA Report and the final Phase I Environmental Report were made available to the Loan Committee Members for review. After a lengthy discussion, the Members unanimously approved the submission as presented herein. 3-year Rule Year(s) project was constructed: Select one of the following: The entire facility was constructed over three years ago and has not undergone any substantial rehabilitation in the last three years. L_] An addition to the facility was constructed LESS than three years ago; however, the addition was not larger than project in size (gross floor area) and number of beds. a. Gross Floor Area: d. Total Beds: b. Sqft added last 3 yrs: e. Beds added last 3 yrs: c. % of GFA added: <> f. % of Beds Added: Substantial Rehabilitation Select all applicable statements: [X ] The estimated cost of the repairs represents less than 15% of the project’s value after completion. a. Underwritten Value: $46,900,000 b. Total Estimated Cost of Repairs: $1,078,825 c. Repairs as % of Value: 2.3% The repairs do not include the substantial replacement of two or more major building components. Commercial Space / Income Select one of the following: There is NO commercial space at the subject. L_] There is commercial space at the subject; however, it does not exceed the program limitations of 20% of the total net rentable area of the project and 20% of the effective gross income. a. Total Net Rentable Area: MISSING d. EGI: $29,470,013 gross bldg sf b. Net Rentable Commercial area: e. Eff. Commercial Income: c. % of commercial area: f. % of Commercial Inc.: Independent Units Select one of the following: Lender Narrative Page 4 Template version — March 5, 2010 10 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF 06/28/2023 There are NO unlicensed/independent units at the subject. L_] There are unlicensed/independent units at the subject; however, the total does not exceed 25% of the total beds at the facility. a. Total Beds: b. Unlicensed Independent Beds: c. Independent as % of Total: LE] A waiver is requested to exceed 25% of the total beds at the facility. Licensing / Certificate of Need / Keys Amendment The facility is licensed by the State of New York’s Department of Health as a Skilled Nursing Facility for 314 beds. The license is issued to Hollis Operating Co., LLC. It is effective as of 05/07/2013, and has no expiration date. The license covers 314 skilled nursing beds. Identities-of-Interest Yes No Have you, as the Lender, identified any identities of interest on your certification? Does the Mortgagor’s certification indicate any identities of interest? Do any of the certifications provided by Principals of the Mortgagor identify any identities of interest? Does the Operator’s certification indicate any identities of interest? (if applicable) N/ Does the Management Agent’s certification indicate any identities of interest? (it A applicable) N/ 6. Is there any identity of interest issues involving the Underwriting Lender, mortgage A broker, or seller? << Insert “N/A in the No column if not applicable. For each “YES” answer above, provide a narrative discussion regarding the topic. As applicable, describe the risk and how it will be mitigated. >> Additional Identity of Interest Comments: While Greystone does not feel that it constitutes any identity of interest for this transaction, we do wish to disclose the following: Greystone Servicing Corporation, Inc., an entity affiliated with Greystone Funding Corporation, made a bridge loan in the amount of $30,000,000 to fund the May 7, 2013 acquisition of the subject facility. This loan will be paid in full with the proceeds of the subject transaction. Additionally, Greystone Servicing Corporation underwrote and closed a HUD insured loan, Wartburg Nursing Home, #012-22238, which has individual principals in common with the subject transaction. Lastly, Greystone Funding Corporation has closed the following LEAN 232/223(a)(7) transactions that share individual principals (Daryl Hagler and Kenny Rozenberg) in common with the subject transaction: Stonehedge Rome #014-22086 Stonehedge Chittenango #014-22085 and Bronx Center #012-22260. Lender Narrative Page 5 Template version — March 5, 2010 11 INDEX NO. 451549/2023 NYSCEF DOC. NO. 108 RECEIVED NYSCEF: 06/28/2023 Risk Factors Key Questions Yes No 1 Is the proposed mortgage higher than 80 (85% on Non-Profit) percent of the lender’s concluded value? Is the debt service c