Cambridge Realty Capital Ltd. of Illinois was a young startup when seasoned financier and now-President of this unit, Andrew Erkes, joined its staff in the late 1980s. Prior to his time with Cambridge, Erkes had served as Vice President and Loan Officer with Percy Wilson Mortgage and Finance Group. Erkes was also a HUD-insured lender in the area of multifamily and healthcare funding.

Cambridge President and founder Jeffrey Davis was also an experienced financier, having previously served as the youngest Senior Vice President in the 150-year history of Chicago’s Baird and Warner before striking out on his own in 1985. Initially, Cambridge served a broad range of commercial real estate borrowers and continues to do so today.

However, new doors opened for Cambridge over time after Erkes came on board, making it opportunistic for Cambridge to develop a new specialty: long-term care and senior living lending. Having a HUD-insured lender on staff meant being able to provide an entirely new loan product. Within a few years, Cambridge developed a reputation as one of Chicago’s, and later, America’s, premier HUD 232 lenders. In fact, Cambridge has ranked in the top ten US HUD lenders consistently for the past decade.

“HUD 232 is an excellent product, with terms that can’t be matched anywhere else,” Erkes asserted. “It is an ideal vehicle for skilled nursing operators to remain competitive and relevant in a challenging market, as well as to provide much-needed housing and healthcare for America’s seniors at affordable prices.”

Erkes goes on to explain that HUD 232 essentially “mirrors” the HUD 221 loan program. “Both 221 and 232 service multifamily properties and offer similar rates and terms.” Both 221 and 223 are fully amortizing, have terms of approximately 30 to 40 years, and have interest rates that are typically between 3.0 and 5.5 percent and which are locked in for the duration of the loan term.

However, here is where HUD 221 and 232 loans diverge:

  • The structure of HUD 232 takes into account the involvement of a variety of third-party payers in a HUD-funded property, particularly Medicaid and Medicare.
  • It also takes into account that healthcare services are factored into monthly rent payments.

“It is both its similarities to and its differences with HUD 221 that make it an ideal loan product for senior living and skilled care operators,” stated Erkes.

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