With many HUD 232 lenders to choose from, including both conventional and boutique lenders, what makes Cambridge stand out as a senior living operator’s formula for success? Back in 2019 Cambridge Realty Capital President Jeffrey Davis addressed that question: “It always comes down to experience and results.”
Not just any financial institution can become a HUD lender, even large national banks. The requirements for HUD-approved lender status are stringent, exacting, and exclusive. To become a HUD-approved lender, an institution must meet a minimum net worth threshold, have a history of maintaining good credit, and, perhaps most importantly, have demonstrated experience in underwriting residential healthcare facilities within the five years previous to applying. “Experience is central,” Davis stated, “so important that you can’t even be considered as a HUD 232 lender without extensive experience.”
Experience is like fine wine: it only gets better with age. Cambridge has been in commercial real estate and healthcare facility lending since the early 1980s and has been an approved HUD 232 lender since 1985. Since that time, Cambridge has closed more than 550 HUD loans totaling over $5.5 billion. It has a servicing portfolio of approximately 200 loans totaling $2 billion dollars; almost exclusively consisting of senior housing assets and skilled nursing facilities. As for the brass tacks of Cambridge’s experience, “Cambridge has seen almost every situation and structure from HUD in senior housing,” Davis declared. “There is little we haven’t encountered, and we have always managed to find ways to make things work for our HUD applicants.”
Davis, whose early experience was in general commercial real estate, became turned on to the mission and the benefits of the HUD 232 loan program when current Cambridge President Andrew Erkes came on staff in 1985. Erkes’ professional experience in FHA-insured loans and multifamily and healthcare loans gave Cambridge the edge it needed to obtain HUD 232 lender status.
Erkes was particularly passionate about FHA-insured loans, and the HUD 232 loan in particular because its long-term rates are unlike any other loan product on the market. “When we’re in the middle of a strong economic cycle, people like to say, ‘this time it’s different.’ But history has taught us that it’s never different,” Erkes asserted. “A great interest rate today is going to change at some point, whether it’s 2, 5, or 20 years down the road.” The HUD 232 loan eliminates any need to speculate about what the economy will be like in the future. With interest rates that last for up to 30 years for refinances or longer on new construction, borrowers can calculate exactly what they will be paying for the duration of their loan term.
In fact, HUD brings several time-tested advantages that are unique to the program besides low, fixed interest rates. They do not have any escalations, CPI adjustments, rate changes after 5 years, or any other adjustments. Additionally, HUD 232 loans are non-recourse. “It’s a win-win situation for all stakeholders,” Erkes declared.
Cambridge has even more than experience to offer borrowers, though. When Cambridge works with clients, Cambridge becomes the consultant, advisor, interpreter, problem solver, and roadblock eliminator, all in one. From start to finish, the owner has no direct conversation with the government and has the primary responsibility of just sharing the punch list of documentation to begin the process. Cambridge addresses and solves all roadblocks before they occur. This all-inclusive service that Cambridge provides, including its exclusive Signature Experience, is especially unique in a specialized world.