In a future that is rife with uncertainty, it’s nice to find something you can count on to remain unchanged for a while. “With a HUD loan, you’re getting not only a highly-competitive interest rate, but you also get the confidence that comes with knowing that rate will not change over the course of the loan,” stated Jeffrey Davis, Cambridge Realty Capital founder, and President.
Financial challenges abound when it comes to operating a senior living or skilled nursing facility. Operating costs fluctuate, sometimes wildly, from year to year. Changes in payment structure for Medicaid and Medicare can happen with little warning, shaking an operating budget and creating uncertainty and sometimes requiring radical changes in spending. Even a small amount of budget certitude can make a big difference in an operator’s ability to roll with the other changes that are all but inevitable.
One of the most attractive features of a HUD loan is its fixed interest rate. Knowing that your interest rate will not change every few years allows for SNF and ALF operators to calculate precisely how much interest they will pay over the course of the loan, as well as how much of the annual budget to devote to loan interest charges. “Being able to count on this much of the annual operating budget makes it easier to plan for the future,” Davis declared.
However, its fixed interest rate isn’t the only thing that makes a HUD loan attractive for senior living operators. Here’s what else you get with a HUD 232 loan:
- 30-year term and amortization
- Loan is non-recourse; no personal liability
- Competitive interest rates that average between 3 and 6 percent
Speaking of “unchanging,” here’s another thing that hasn’t changed since the 1990s: Cambridge’s experience, evidenced by its impressive record of closings. To date, Cambridge has closed more than 550 HUD loans, with total closings of over $6.5 billion. Cambridge also maintains a servicing portfolio of approximately 200 loans totaling $2 billion dollars; almost exclusively consisting of senior housing assets and skilled nursing facilities. “Throughout its years in business, Cambridge has seen and experienced almost every situation and structure from HUD in senior housing,” Davis noted. Cambridge has become extremely skilled at problem-solving, as testified by some of its past clients, like Gerald Nudo, Principal of Marc Realty of Chicago. When one of his properties suddenly lost its license. “Jeff and his team at Cambridge dug in, hired some people, and worked hard to get the license reinstated,” Nudo recounted, quickly getting things back on track for Nudo and his clients.
Skillful problem-solving comes from Cambridge’s years of experience as well as a staff of people who are not only good at what they do but genuinely care for their clients and their outcomes. “The Cambridge management team is extremely competitive, exceptionally creative and very detail-oriented. And the Cambridge staff is very patient with borrowers,” said Eric Rothner, CEO of Hunter Management of Evanston, Il. “If you provide Cambridge with timely and accurate information, the company will guide you through the process and stand by you. Which is something that others don’t do.” According to Daniel Maguire, Vice President of Sandy River Company of Portland, Me., “Cambridge is widely regarded as an exceptionally knowledgeable industry leader. And the company’s professional staff has a remarkable understanding of what will and will not fit within HUD guidelines. In working with the firm, we never encountered a servicing problem.”