PulsePoints

March is a busy month for Cambridge.  Besides celebrating several team members’ birthdays (including both founders!), we are also gearing up to attend two very important senior housing/healthcare conferences.

First up is the tandem of NIC Regional Symposium/Skilled Nursing Investment Forum, taking place in Los Angeles from March 7^th through March 10^th.  We’ll be well-represented, with several Cambridge team members on hand, ready to meet with you on each day of the conference to discuss your senior housing/healthcare financing needs.  On Tuesday the 8^th and Wednesday the 9^th, we will be holding meetings in the Regent’s Boardroom, so please be sure to make an appointment to see us or stop by.  There’s a rumour that hot pretzels may be served…

Once we get back from NIC, there’s no time to unpack, because we’re off to New Orleans for the American Health Care Association’s Independent Owners Leadership Conference from March 16^th – 18^th.  We’re proud to be sponsoring this important event, and one of the highlights will surely be the presentation from our chairman and president, Jeffrey Davis, on Friday morning; he’ll be discussing the capital markets as they relate to senior housing and long-term debt and equity capital and investment in a presentation titled Blue Skies Ahead or a Storm Coming for LTC Capital?

As you can see, there are a lot of opportunities this month to meet with us in person and we look forward to seeing you.  Please contact Dana Crawford, our Communications Coordinator, to schedule a meeting with us during either the NIC or AHCA conferences. Even though she’s got birthday treats to buy, she’s always available to make sure your meeting gets on our schedules!

In an effort to escape the cold weather in Chicago, Cambridge’s founder Jeff Davis will be attending the annual meeting of the American Seniors Housing Association in Phoenix at the Arizona Biltmore Resort from January 16 – 18. He will be joined by our National Originations Manager, Hymie Barber from Los Angeles, California. More information on the conference can be found here.

Actually, Jeff’s not going to Phoenix just for the weather; Cambridge views ASHA’s annual meeting as a unique conference with terrific timing, because it provides excellent insight to the industry’s current pulse. It’s a great forum for senior housing and health care lenders, investors, owners and consultants, and we have been attending this conference for many years.

If you are an ASHA member and will be at the meeting, please look up Jeff and Hymie and take advantage of this great opportunity to visit with them!

There are signs everywhere that the economy is perking up; for Cambridge, one of these signs is a higher dollar volume for the senior housing/healthcare loan origination requests that we receive each month.

For October 2010, we processed 27 requests totaling $505.7 million.   Compare that to October 2009, when we received 30 requests totaling $242.1 million. That’s a smaller number of loan origination requests, but with a dollar volume that’s more than twice last year’s total.  October 2010 brought us more requests for new construction and multiple property portfolios, which explains the dramatic increase in the dollar volume.

We like these numbers, and we hope this trend continues as the credit markets move towards a full recovery.

In a recent PulsePoints post, Jeffrey Davis shared some thoughts on the numerous panels and presentations that he has participated in over the years.  He’s about to add another event to that long list—on Wednesday, December 1^st, Jeff will be speaking at the Chicago Real Estate Journal’s Senior Housing Conference at the University Club in Chicago.

Jeff will be participating as a member of the Capital Markets and Financing Strategies panel, which will examine how senior housing/healthcare deals are being made today and also in the future.  If you want to know how these deals are getting done, and hear about the 2011 outlook for lenders, buyers, sellers, developers, and investors, this would be a good opportunity to do so.  For more information, visit www.recg.com/conferences.

And speaking of good opportunities let me take this one to wish everyone a very Happy Thanksgiving!

In the past, working through the process to obtain HUD Section 232 senior housing/healthcare funding has been quite a balancing act between the interests of borrowers, lenders, and the government agency. Then the HUD Lean program was introduced as a way of streamlining the process and making it more uniform and user-friendly.  But even Lean requires borrowers and lenders to meet some demanding underwriting criteria.

However, for borrowers who have existing HUD 232 mortgage loans and are looking at refinancing to take advantage of today’s low rates, things have gotten a lot steadier.  HUD’s 223(a)(7) program is ideal for borrowers whose loans are beyond their lockout periods and are eligible for refinancing now.  Today’s lower rates equate to higher operating profits, and because the original loan amount can be fully refinanced under 223(a)(7), additional funds are available to be used for capital improvements.  Returning borrowers, considered to be at lower risk by HUD, can also move more quickly through the HUD pipeline if they meet the criteria to be put into the “Green Lane” for speedier processing.

Low rates and low risk mean that HUD’s 223(a)(7) program is quite popular, so if you are contemplating the refinance of your existing HUD 232 loan, know that Cambridge is here to help keep the process on an even keel!

In today’s restrictive credit market, making an effort to get inside their lender’s head might be a good idea for senior housing/healthcare borrowers who are seeking to either acquire or refinance an existing property.

Lenders want to understand what their borrowers’ objectives are and what, specifically, their loans are trying to accomplish. Sometimes this is not always apparent, so lenders love it when borrowers communicate their situation and specific needs in a clear, concise manner.  And they love it even more when borrowers are responsive and decisive; a speedy “yes” or “no” reply can not only impact the way that a borrower/lender relationship develops, but also affects the speed at which the loan can reach a successful closing.

These points may seem obvious, but deals can unravel because borrowers sometimes fail to respect the process and the effort it takes to get projects funded in today’s investment climate.  It’s important to get into a lender’s head and see things through their eyes.

We look at a lot of deals every month, but unfortunately, not all of them can close.  Yet it’s still important for us to keep track of the number of deals we see and their total dollar volume, since these monthly numbers give us a good indicator of the direction that the market is going.

During the first nine months of 2010, we have processed 207 loans totaling $2.5 billion, compared to the 231 loans totaling $3.3 billion that were processed during this same period in 2009.  This overall decrease in origination requests occurred because funding for more expensive new construction projects has been difficult to find in today’s tight credit market.

There are some bright spots, however. Origination requests for September this year were higher than September 2009, and the number of requests to refinance existing loans remains strong, thanks to low interest rates and the appeal of HUD financing.  We are optimistic that this trend will continue, but we’ll still keep a close eye on the loan requests we receive each month and also continue to find the best solutions to the financing needs of senior housing/healthcare owners and operators.

As we see it, bond prices and the economy behave a lot like entangled particles in quantum physics.  When the economy weakens and loses its forward momentum, bond yields move lower.  This causes bond prices to spin higher, in the opposite direction.  But the lower bond yields also lead to lower borrowing rates, which is what’s happening right now.

 Even though credit markets are still tight for anyone looking for a new construction or acquisition loan, these low rates should motivate senior housing/healthcare borrowers to refinance existing loans now.  There’s no telling how long this cycle might last or how long interest rates will remain at these historically low levels; September brought some gently encouraging reports on the economy and we remain optimistic that things are continuing to improve. So it doesn’t take physics–or rocket science—to see that refinancing your senior housing loan now is a “capital” idea!

Autumn in the Midwest means many things: wearing jackets instead of shorts, watching the leaves change color, getting ready for some football, and enjoying a harvest festival or two.  There’s a good one coming up tomorrow in Green Bay, Wisconsin – Cottage Living at Marla Vista invites everyone to enjoy a fun-filled afternoon at their Home Harvest Festival from 11 am to 4 pm.

Cottage Living at Marla Vista is an assisted living alternative for mature adults who find that their safety, comfort or well-being is compromised by living alone. The Home Harvest Festival is just one way for Cottage Living and its dedicated staff of care-givers to express their continued commitment to the residents, their families, and the community. And this will be quite a Festival: You can’t miss Big Jake, the world’s largest living horse—he weighs 2600 pounds, is in the Guinness Book of World Records, and you have to see him to believe him!  There will also be live music from The Bees Knees, a pie-eating contest, and all sorts of games and activities for the kids.  Sounds like it’s going to be a great Saturday afternoon in Green Bay!

As you can probably tell from our website, our ePULSE! Newsletter, and our presence on Twitter, Facebook, and other sites, Cambridge loves the Internet.  Communicating electronically is fast, easy, and reaches a large audience.

But sometimes, there is nothing like receiving information in person—from a live panel of experts, for example. Cambridge’s Chairman, Jeffrey Davis, will be participating in such a panel on Friday, so if you are in the senior housing/healthcare industry and you happen to be in the Minneapolis area, you may want to check out the Minnesota Real Estate Journal’s Senior Housing Summit 2010.  Jeff will be a member of the Capital Market Strategies and Financing Solutions for Senior Housing Projects panel, discussing the 2011 outlook for lenders, buyers, sellers, developers and investors, as well as other topics, including how to get your HUD deal done.

So if you enjoy listening to a live exchange of information and ideas from industry leaders and you do find yourself in Minneapolis on Friday morning, put the laptop away, grab some coffee and head over to the Senior Housing Summit!