Earlier this year, HUD rolled out a series of abatement measures for HUD loan holders to help alleviate some of the stress that senior living operators are facing during the COVID-19 pandemic. “This was welcome news to us here at Cambridge Realty Capital, as well as to our operators,” Cambridge President Jeffrey Davis responded.
Senior living operators have been under extraordinary stress throughout the pandemic. Senior living facilities across the country, particularly skilled nursing homes, were hit disproportionately hard by the COVID-19 pandemic early on. Numerous facilities have been invaded by the virus, with an estimated 30 to 40 percent of total COVID deaths in the United States linked to nursing homes. “It’s a tragic situation,” Davis agrees, and noted that all care home operators have been working round-the-clock to mitigate exposure to COVID-19 in their facilities while also still striving to maintain normal levels of service.
Of course, trying to manage the financial end of operations was also a huge challenge and continues to be for a great number of operators. “Many new and unexpected costs have been incurred by operators during the last few months, and budgets have been stretched to the limit and beyond,” Davis stated.
Brian Haylor of Continuing Healthcare Solutions is one such operator who has felt the tremendous pressure over the course of the last few months. Continuing Healthcare Solutions, which is based in Ohio, operates over one hundred facilities in locations across the United States. It’s a challenging portfolio to manage on any given day. When the COVID-19 outbreak began, it required Haylor and CHS to shuffle, adjust and rethink outside of the box of “normal.” Financial worries lingered in the background as CHS dealt with all of the practical emergent issues that came with the pandemic.
So it came as refreshing and also surprising news when Cambridge proactively contacted Haylor, a long-time client of Cambridge Realty Capital, to let him know of the upcoming HUD abatements intended to provide some relief to concerned borrowers. The provisions available to qualified borrowers included the ability to suspend monthly deposits to be placed for replacement reserve through July 31, 2020 and potentially even beyond, to use operating deficit funds to make debt service payments, to use debt service reserves to meet debt service payments, and to use replacement reserves to meet debt service payments required.
The early notification by Cambridge allowed him the timely opportunity to begin sharing the details internally and preparing for it. Cambridge was quick to provide him with a succinct list of qualifications for HUD borrowers who wanted to take advantage of the program.
It was the first that Haylor, who also works with another HUD loan provider in addition to Cambridge, had heard of the abatement. Haylor told Cambridge that his other provider had not made him aware of this development yet. In fact, Haylor noted, he eventually reached out to his other provider himself to ask them if they were aware of the abatement and a request to provide him with the list of qualifications.
Haylor reported that the other provider was much slower to get back to him with the qualifications. When they did, the list was much longer and not laid out very well. Haylor was so impressed with the clear and simple list that Cambridge had provided him that he sent it to his other HUD provider in an effort to help them clarify their own list. “They came back with a more simplified list that was still more complicated to manage than the one provided by Cambridge,” Haylor attested.
Haylor believes that his experience with Cambridge was proof that Cambridge sets the bar high and that other providers have a much higher standard to aspire to. “Cambridge was on top of it and we made it much easier to renew each month,” said Haylor, describing the overall process with Cambridge as “painless.”