Cambridge Realty Capital Companies Senior Vice President Brent Holman-Gomez notes that when a senior housing/healthcare property seems to be operating at its peak, owners often start casting about for new opportunities or ways to make money. This is still another variation on the “bird in the hand being worth two in the bush” theme.
“A reasonable conclusion is that it may be time to add a new construction project to their to-do list. But before arriving at this point, it may be a good idea to consider enhancing the potential of assets currently owned,” he suggests.
“For many operators, focusing on a currently owned property will be more rewarding than taking on the unknown challenges of a new property. Unless a property is at 100 percent occupancy and at the market’s highest rent level with a controlled expense ratio, the most profitability available is in the existing property,” he points out.
Holman-Gomez says any improvement in a senior housing business’ ability to produce a steady income will improve its value tenfold (when based on property valuations per dollar of income).
Cambridge is one of the nation’s leading senior housing/healthcare lenders and consistently ranks among the top five FHA-approved HUD lenders in the country. The company committed to specializing in senior care finance 20 years ago and has closed more than $5.5 billion in loans for more than 500 senior housing/healthcare clients.
Holman-Gomez says a Cambridge business entity, Cambridge Investment and Finance Co., is involved in property acquisitions, joint ventures, sale leasebacks and the acquisition of distressed debt. Over the years the company has acquired 16 facilities in three states with a combined value of $60 million.
At Cambridge, Holman-Gomez is responsible for originations, operations and asset management. He says operating improvements added to an existing facility can be much more lucrative as they generally cost much less, possess solid upside potential, and are a reinvestment in an existing business that lowers existing risk.
“Empty units are potential goldmines of profitability. Adding some new excitement and energy to the things that seem mundane about your business by retraining staff, marketing and making cosmetic improvements can be the map that leads to the pot of gold,” he said.