Obtaining financing for the purchase of a senior care facility is complicated even when all contributing factors are straightforward. However, not all circumstances can fit into a nice, neat box. Sometimes owners/operators come to Cambridge Realty Capital Companies on a second or third try because their situation has so many variables and complexities that conventional lenders refuse to work with them. By the time they reach our offices, they are discouraged and somewhat dejected, but unwilling to throw in the towel just yet.
Cambridge recently worked with a client whose portfolio fell outside of the parameters of “the box.” The borrower was a relative newcomer to the senior care industry, having only been operating for less than one year. The company wished to purchase the facility which it was leasing, but found that lenders were skittish about working with them because they had such a short operating history.
The company, which was hoping to jump on the opportunity to purchase its leased facility at less than its market value, came to Cambridge to see if a deal could be made. In spite of the borrower’s history and minimal equity, Cambridge was able to facilitate a $20,000,000 term loan and a $1,000,000 ABL to make the transaction happen.
Why is Cambridge able to facilitate such complex deals when other institutions are unable, or unwilling, to do so? “It all comes down to our experience,” declares Jeffrey Davis, Cambridge Chairman. “We understand that every client is different. We are very thorough in our research and background checks. Although some potential borrowers may appear on paper as being too risky to work with, we are able to find ways to broker deals and arrange terms that both borrower and lender can work within.”
Another example comes from a client that Cambridge worked with in years past, an operator with ten properties and seven outstanding loans from six different lenders. The company wanted to simplify its books and reduce the overall interest rate it was paying on the loans separately by consolidating them into one sum. Additionally, the operator wanted to borrow another $10 million to upgrade two of its facilities and $3 million to pay off collateral notes held by other lenders. Other factors included a complicated ownership and operating structure and a desire to access $6.5 million in equity for miscellaneous use.
In spite of the intricacies, Cambridge was able to coordinate all of the details so that all of the company’s loans could be consolidated, reduce the interest rates on an aggregate basis, pay off the company’s collateral debt and get them the extra funding they wanted. According to Cambridge Vice President Zachary Scardina, the deal totaled $65 million and was the largest multi-facility conventional loan transaction arranged by Cambridge in company history. “Cambridge is especially well-qualified to bring transactions with lots of moving parts to a successful conclusion,” Scardina added, thanks to more than three decades of experience, a strong and respected reputation, and highly-trained staff with diverse areas of expertise.