The latest Cambridge “Message from Our Founders” addresses the issue of whether it is better for Senior Housing Operators to own or lease their communities. Jeffrey A. Davis, Chairman and CEO of Cambridge Realty Capital answers clients’ questions in the latest YouTube video installment.
Whether Owning or Leasing Is Right for Your Community Depends on Objectives
Davis mentions in the video that in order to determine whether owning or leasing your community is the right path depends upon your objectives as a senior housing operator. For example, if you are an operator looking to expand quickly, then it is probably best to lease multiple properties for a period of time, since leasing comes with fewer financial constraints than ownership. Leasing will allow an operator to grow a lot more quickly, as someone else handles all real estate issues, leaving your company to focus on the day-to-day operations of running a senior living community. If your operation is smaller (i.e. an independently owned community), or your company would like to be more hands on in every aspect of the community, owning your building could be the best way to go. Cambridge Realty Capital works with clients to determine what the best path would be, and realizes that the decision to own or lease is not a one size fits all proposition. Cambridge will tailor its services to each individual client.
How Cambridge Helps Its Clients Determine Whether to Own or Lease
Cambridge will explain to the client the requirements of being a building owner – not just financially, but all the requirements of building ownership. As a lessee, your company is able to focus on the day-to-day operations, and capital improvement costs are usually covered by the landlord. However, if you own, you must handle everything – the capital improvement costs and operations included. Cambridge will lay out the variables and consequences of ownership vs. leasing and help our clients make an informed, educated decision.
Why Have We Seen So Many Operators Monetize Their Portfolio In Recent Years?
Lately it has been a great environment to monetize assets. Other reasons a senior housing operator might look to consolidation or selling is that they may want to leave a certain regional market. Another possible reason for selling off assets is that sometimes operators have performers in their portfolio that are not doing as well as the rest, or no longer fit the strategy of the company.
How Many Times Has Cambridge Helped Clients Make These Decisions?
Cambridge helps clients make decisions on ownership, leasing, or selling off assets every day. When clients come to us wanting to sell, we will walk through the numbers and make sure that it makes sense. Often, refinancing is the best answer. The earlier in the process that a client engages us, the better we are able to assist in their decisions. This is all Cambridge has done for the past 20 years, and we have learned the best ways to help our various clients through experience and proven results. Contact Cambridge Realty Capital today to speak with one of our senior housing finance experts.