There are a number of compelling reasons why senior housing/healthcare borrowers look to popular FHA-approved HUD funding to address their long-term financing needs. In Cedar Rapids, Iowa, Board President John Baumhoefener of The Views Holdings, LLC, describes the main features, advantages and benefits he believes made HUD the obvious choice when it was time for his 110-member investment group to refinance two award-winning senior care properties in the Iowa community.
Chicago-based Cambridge Realty Capital Companies, an FHA- approved HUD lender, provided The Views a $10.4 million HUD 232/223(f) funding package to refinance The Meadow View Memory Care and Ridge View Assisted Living facilities. HUD’s 232/223(f) program refinances properties that have an existing conventional mortgage loan.
Mr. Baumhoefener believes the 44-bed Ridge View property is one of the few facilities in the state that offers both independent and assisted living units under the same roof. The larger 56-bed Meadow View Memory Care property is located next door and provides “a caring, warm and secure environment for residents with memory loss,” he says.
The buildings were designed by the Cedar Rapids architectural firm of Change-Environmental Architecture to provide “an environment that stimulates creativity.” The interior design was provided by Huelat Davis: Healing Design, specializing in experiential design.
Many of the ideas for improvements at the properties were put forward by The Views’ four-member executive board, which is comprised of Iowa-based investors from a variety of different backgrounds. The executive board has largely been guided by “a desire to create a great place the owners could recommend to their own loved ones,” Mr. Baumhoefener said.
The effort appears to be succeeding. The National Centers for Assisted Living (NCAL) presented Meadow View Memory Care with its Bronze National Quality Award, which is presented annually to the to top 500 (out of 12,000) assisted living properties that provide memory care programs in the U.S. The Ridge View property was the sole recipient of the Quality Program for Life Enrichment Award presented annually by the Iowa Center for Assisted Living (ICAL) and Iowa Health Association (IHCA).
Currently, both the Ridge View and Meadow View properties are managed by Assisted Living Partners (ALP), a property management company that manages other properties in the state. The management company was originally brought in as a consultant but assumed a larger role when it became apparent to the The Views board that forming the partnership would enable the investment group to realize some important economies of scale on the purchasing and operational side, Mr. Baumhoefener said.
The existing mortgage holder at the time introduced the owners to Ames, Iowa broker Dennis Howell of Howell Investment Finance to explore long-term financing options. In turn, Mr. Howell introduced the ownership to Cambridge, one of the nation’s leading senior housing/healthcare lenders and a top-ranked FHA-approved HUD 232 lender.
Mr. Baumhoefener says a major selling point was the lender’s near-perfect record of closing loan applications submitted to the government agency. In the current century, Cambridge is batting 1,000 on this score.
“We looked at several offers, but Cambridge emerged as the clear winner. The company was very professional, thorough and detail-oriented and was able to effectively deal with our concerns. And believe me, our board had many but none that proved to be insurmountable by the Cambridge team,” he noted.
“The executive board was particularly pleased that HUD’s longer amortization term, 35 years vs. 25 for conventional loans, saved about $22,000 in monthly debt service for The Views. The loan was closed before the Fed started raising short-term rates higher, which means we locked in a very low interest rate for the 35-year life of the assumable loan.
“No one on the executive board believed that rates would be lower five years from now when a conventional mortgage loan would come due,” he said.
Mr. Baumhoefener says his primary contacts at Cambridge are Loan Officer Zach Scardina and Vice President Tony Marino.
“Cambridge knows how details need to be presented to HUD and created a comprehensive check list for us to follow in chronological order as the loan advanced through the application process. Organizationally we adopted a divide-and-conquer approach to take advantage of the various skills, strengths and experience of our individual board members and management team.
“The lender’s ability to break down the HUD process made it possible for us to reach our goal,” he added.