PulsePoints

How well do you know your business?  This may seem like a silly question, but when you have to explain your operations to someone else (like, say, your lender), can you articulate the particulars?

The more you know and the better you are able to describe your business in detail, the better your chances are of making a favorable impression and letting others understand exactly what it is you do and how you do it.

When you are working with a lender, you may often find you are faced with perplexing questions about your operations; for nursing home/healthcare owners, these may deal with occupancy or lease-up projections, expense management and costs, or timing issues.  Your lender needs to ask these questions in order to assess your financing needs correctly and make more intelligent lending decisions.  If you’re worried about divulging certain kinds of financial information, rest assured that lenders always treat your information in the strictest confidence. 

To make sure you are prepared for such information requests, it’s important to stay organized.  If your lender provides checklists for you, use them; they are tools to help you provide the right details about your operations.  Missing information can affect the kinds of financing solutions lenders can offer you.  But armed with the right details about your business and operations, your lender can provide you with the best possible solution to your financing needs.

The pretzels are long gone and the Colorado Room is empty; the 2010 NIC Conference concludes today. It’s been a great week; we had lots of meetings with many colleagues and clients, both old and new.  If you weren’t able to meet with us, we’re sorry that we missed you.  Please contact us via e-mail or phone for more information on how we can help you with your senior housing/healthcare transaction. 

If we did meet with you, thanks for taking the time to do so.  We trust that we were able to provide a clear dialogue about your financing needs, and we will be following up with you soon on that discussion we had over coffee and those pretzels!

Thanks to everyone on the Cambridge team for their hard work which resulted in another successful NIC Conference experience for us.

If you are a senior housing/healthcare property investor, you’re focused on ensuring that your investment continues to perform even in today’s rough economic climate.  Investment risk and reward in a senior housing/healthcare transaction is very dependent on the owner/operator’s management skills and business sense, so a hands-on asset management program is crucial to maintaining performance levels.

Property investors in senior housing like to work with experienced ownership groups that fully understand the nuances of the industry and the property type they are working with.  And communication is essential; owners/investors need to know what management is up to, and management needs to know that their actions are being interpreted correctly, so that they can maintain performance and occupancy levels at the property.  Analysis of financial statements and reviews of clinical inspection reports are just some of the important things that owners and investors can do to understand how their property is performing.  It’s also a good idea for investors to inspect the property themselves, too, on a regular basis. “Hands-on” means hands-on!

One of the biggest events of the year for the senior housing and healthcare industry happens next week in Chicago.  The 20^th Annual National Investment Center (NIC) conference is the place to be for anyone who’s involved with senior housing – owners, operators, developers, brokers, lenders, institutional investors, and service providers are all going to gather at the Sheraton Chicago beginning Tuesday, September 21, for several days of networking.

NIC is known for being the largest and best dealmaking forum in the industry, so it’s a good idea to get some meetings in place before arriving – all that activity in the hotel can be overwhelming! Cambridge’s experienced team will be gathered in our private meeting room, waiting with coffee, tea and snacks for you, and ready to talk about how we can help with your senior housing and healthcare financing projects.  Get in touch with us today to schedule a time to meet and greet us.

And did I mention there will be soft pretzels?

Astute senior housing/healthcare borrowers seeking to maximize their funding options may find the best route has them walking a few miles in their lender’s shoes.

To get the best results, borrowers should be aware of the things that are important to the person who is processing their loan. It just makes good business sense.

Within any lending organization, loan officers are motivated to make good loans that will be paid back. But they also want to work with borrowers they can introduce to the boss, and they prize working relationships that have repeat business potential

Ideally, borrowers have already decided upon the type of loan they want before talking with the lender. Motivated lenders want to fully understand the borrower’s objectives and what, specifically, the funding is for. This isn’t always apparent.

Lenders are always hopeful that borrowers will communicate their needs and describe their specific situation in a clear, concise manner using specific examples as appropriate.
The expectation is that borrowers will provide meaningful exhibits, professional photos and readable maps. The numbers presented need to be accurate and are expected to add up.

Lenders are especially appreciative when borrowers are responsive and decisive. A borrower’s willingness and/or ability to deliver a speedy yes-or-no response when a decision is needed can profoundly impact the way the relationship unfolds.
While these points may seem fundamental, a surprising number of deals unravel because potential borrowers fail to respect the process and what is required to get a project funded in today’s tight credit markets. If you don’t want your deal to unravel, you need to understand your lender.

Many people look at today’s historically low interest rates and think “refinance!” And single-family homeowners are not the only ones who can take advantage of this opportunity. Existing HUD healthcare loans can be refinanced, too, and the process is surprisingly more uniform and user-friendly than it used to be, thanks to HUD Lean.

The HUD 223(a)7 program provides a way to get these existing loans that are beyond the lockout period into the refinance queue so borrowers to take advantage of the low rates now.   Healthcare property owners can refinance the full, original loan amount, which makes additional funds available to use for capital improvements to the property.

HUD loans still require borrowers and lenders to provide the right documents and meet all the required loan criteria.  But for borrowers who have been through the process once already, things are a lot easier.  So it makes sense for healthcare owners to talk to an FHA-approved HUD lender (like Cambridge!) to learn how refinancing their existing loans can put more money back into their properties–and their pockets.

Lenders usually get accurate data, but it’s almost always incomplete. Borrowers need to carefully review all statements, census data, and legal documentation. If the borrower will be paying off the debt, it’s important to make certain that the debt is open to prepayment.

It’s never a good idea to fudge even a little bit when presenting information to lenders. However, lenders routinely deal with projections and projections can get very aggressive.

A pragmatic approach is most desirable. It’s important to spend the necessary time and energy needed to generate and project the most accurate information possible.”

There are many ways to organize census data, none better than others. The key when presenting a rent roll or similar document is for the borrower to generate as much detail as possible. More information is generally better than less.

When lenders ask for current debt information, the important items are outstanding debt amount, term, interest rate, amortization, prepayment option, and personal recourse. Ideally, the lender will get a copy of the mortgage and note.

There are many reasons why it’s important for borrowers to be diligent and careful when presenting information to lenders.

Productive, long-term relationships are built on the expectation that the information provided by borrowers will be accurate and reliable. Long-term relationships are important because they enable borrowers to gain greater understanding of the capital markets but also because they make the outcome of any loan application more predictable.

Shake a hand, make a deal with Cambridge.

The arrival of Labor Day weekend means that summer is waning, that it’s back-to-school time, and for Cambridge, it also means that “NIC” is just around the corner.

The Sheraton Chicago Hotel and Towers will be buzzing with activity from September 22^nd through the 24^th – with movers and shakers from the entire senior housing/healthcare industry on hand for the 20^th Annual National Investment Center Conference, or “NIC,” as we call it.  There will be seminars, keynote speakers, strategies for providing value and revenue growth in this tough economic climate, and meetings – lots of meetings – for everyone in the industry, whether you are an owner, lender, or broker.  The NIC Conference provides a valuable networking opportunity for face-to-face conversations and developing new business relationships.

We’ve participated in nearly every NIC Conference over the past 20 years, and are again proud to be a Sustaining Research Sponsor of this top deal-making event. We are gearing up and getting ready for this important chance to meet with our industry partners, clients and friends. We hope to see you there.

Don’t worry about having all the answers. In fact, nothing turns lenders off faster than a borrower who thinks they already know everything. Keep an open mind when searching for the funding solution that will best fit your particular needs.

Trust your lender’s expertise. If you can’t, then the best option for you is to find another lender.

Lenders generally welcome questions. When checking out a lender, take the same sort of approach a personnel director might take when interviewing and hiring new employees.

Don’t be afraid to ask questions, and don’t be afraid to seem like you’re prying. A lender should be an open book. Ask about the number and type of deals the lender has closed, and about the amount of time various funding options might take to process in the current economic cycle. Also, ask your potential lender to explain the differences between quotes and final commitments, and they should be ready to candidly field questions related to timing or execution. Remember, keep an open mind, but expect your lender to be open with you.