PulsePoints

While the economy and credit markets remain in flux, there is one thing that does stay constant – the Cambridge team of dedicated professionals.  Many members of our staff have been with Cambridge for almost 10 years, some have been here longer; this stability gives us a wealth of experience to draw upon.  Our loan professionals have seen the ups and downs of the marketplace and the growth of the senior housing healthcare sector over the years and know how to navigate the financing maze.

PulsePoints is a unique resource for the senior housing industry, staying current and featuring news and information created by Cambridge.  To maintain our original voice, we want you to hear more from our seasoned professionals, so they will begin contributing to PulsePoints on a regular basis, sharing their knowledge and expertise about senior housing finance with you.  Please stay tuned and don’t be shy:  let us know what you think, and what topics you’d like to see discussed in future PulsePoints posts.

The Chicago Blackhawks raised their Stanley Cup Championship Banner to the roof of the United Center on Saturday night.  It was a proud moment for every member of the Hawks’ organization and their fans.  That banner serves as a permanent reminder of a special season; everyone who visits the arena and sees it will know that the Hawks won hockey’s biggest prize in 2010.

We’re not exactly raising a banner, but we have just redesigned our website’s home page, turning it into our reminder to senior housing owners/operators that Cambridge is here to help them eliminate financial frustration and return their focus to what they do best—operating their facilities.  There’s no equivalent to the Stanley Cup in senior housing finance, but Cambridge has consistently ranked among the country’s top FHA-insured HUD lenders and we have conventional solutions available, too.  So think of our website as a kind of virtual banner; check it out and learn how Cambridge can help you do what you do best.

Surf’s up? Well, not quite; what is up is the 61^st Annual AHCA/NCAL Convention and Expo in Long Beach, California beginning Sunday, October 10.  Cambridge is a long-time supporter of the American Health Care Association and the National Center for Assisted Living, and we’ll have two representatives at the convention available to meet with you.  We probably won’t have a chance to visit the beach since we expect to be fully engaged in relevant discussions about your senior housing and healthcare financing needs.

The Convention will be held at the Long Beach Convention Center from Sunday, October 10 through Wednesday, October 13.  Cambridge’s main presence will be on Monday and Tuesday, and it’s not too late to set up a face-to-face meeting with us.  Get in touch so we don’t miss our chance to meet with you, even if it means we have to skip the surfing this time.

These days, everything happens so quickly; thanks to technology, we can get the news and information we seek in seconds, just by pushing a few buttons on our computers or smartphones.

Some things, however, just take time because they have to follow a specific process, and no Blackberry is going to change that. Loans, for example.  When you apply for one, you need to establish some realistic timing goals and have some respect for a process that requires the receipt of information in an orderly fashion.

In these tight credit markets, lenders are demanding even more detailed information than before, so it’s important for borrowers to be aware that missing data and failure to respond to a lender’s request for information is going to slow down that loan application.  Whether it’s a new loan or the refinance of an existing one, paying attention to what the lender needs is the best way to keep your application moving along towards closing.

So no matter what kind of loan you are applying for, take a deep breath, get organized, and don’t let the process frustrate you. If you’re prepared and responsive, everything will proceed smoothly and your loan will close without any delays.

In the business of financing senior housing/healthcare properties, when the going –and the credit market – gets tough, the tough get creative.

Imagine a scenario involving two under-performing nursing home properties in Southern Indiana. The owner wanted to sell, and the company brought in to manage the properties under a consulting agreement wanted to buy.  But conventional funding sources weren’t going to work for this deal, so that’s where Cambridge entered the story.

Cambridge was approached by a broker to see if we could make this transaction work, and we came up with an interesting strategy.  First, two investor-funded entities purchased the real estate and then entered into a lease agreement with the management company.

The management company operated both of the nursing homes and brought them back to clinical and financial health, and under the lease agreement was able to keep any profits they made from operations after the rent was paid.  By 2009, the performance of both properties had improved enough so that the management company was finally able to purchase the properties.  To sweeten the scenario, Cambridge also assisted the new owner in obtaining HUD-insured mortgages for both properties at very favorable terms.

So this story has a happy ending:  some inventive and long-term strategic planning enabled this management company to move from being a lessee to an owner without seeing its real estate costs rise.  And that’s one way to get creative in a tough credit market.

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?

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.