The COVID-19 pandemic hit senior living operators like a punch in the gut. Not only were they scrambling to keep the virus from invading their facilities, they were also facing major supply chain disruptions and trying to replace sick staff members, all while trying to stay healthy themselves, and they were feeling the financial fallout. “It was rough in the beginning,” said Cambridge Realty Capital President Jeffrey Davis. “There was a lot of uncertainty in the early days of the pandemic.”
Senior living facilities were affected disproportionately hard. Little was known in the early stages of COVID-19 about how the illness was spread, although medical officials knew that it was highly contagious and much easier to spread than other viruses. Consequently, COVID-19 ran rampant throughout senior living facilities, taking the lives of more than 65,000 nursing home and long-term care facility residents in the US. It has been estimated that 30 to 40 percent of the total number of COVID-19 deaths in the United States were seniors living in care facilities. “It’s a tragic situation,” Davis commented.
Facility operators worked around the clock to ensure that residents were getting the best possible care, while also scrambling to find supplies and staff to maintain proper levels of service. While things have slowly started to return to normal throughout the last couple of months, senior living operators were still left with extraordinary mounting financial challenges and the stress that comes with such a blow.
To help mitigate this, HUD recently rolled out a series of abatement measures intended to help HUD borrowers access some financial relief during this time. The provisions 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. Qualified HUD borrowers could apply for these abatements on a month-by-month basis as needed.
As soon as the announcement was made, Cambridge Realty Capital contacted its own HUD borrowers to let them know what was coming. “Many were relieved to hear that some relief would be available and that they could begin planning and adjusting their budgets moving forward, so that they would be ready when the provisions became available,” Davis reported.
Joe Vince, a long-time Cambridge client and senior living operator, was one such borrower who welcomed the news. Vince was surprised at how easy the process was to apply for the abatement program, especially considering that government-backed programs are often fraught with red tape and bureaucracy. Vince worked closely with Cambridge’s Senior Loan Administration Officer Abby Althoff, who Vince found knowledgeable and efficient.
Vince was especially appreciative of the fact that Cambridge was so quick to contact him when they first became aware of the abatement measures. It allowed him plenty of time to collaborate with stakeholders and track down all of the necessary information and paperwork that would be required to apply for the abatement program. Vince says that he continues to be “happy with Cambridge and thankful that Cambridge is keeping him up to date on changes that are going on due to the pandemic.”