Throughout its thirty-plus years in business, Cambridge Realty Capital has amassed a wealth of knowledge in the field of senior living. Our advice and insight, like the ideas you will find in "Experience Matters in Complex Senior Care Deals", is based on on-the-job experience plus the unique skills and talents of Cambridge’s staff and their individual specialties. This quick read from Cambridge’s archives is filled with timely advice that is as relevant today as ever and will inspire you as you weigh your capital market options.
EXPERIENCE MATTERS IN COMPLEX SENIOR CARE DEALS
This isn’t disputed: some senior housing/healthcare property loans are easier to make happen than others. Experience matters.
Cambridge Realty Capital Companies Vice President Zachary Scardina reports that decades of experience as senior housing/healthcare lending specialists were skillfully focused on the job at hand when the company was asked to conventionally refinance a $65 million portfolio of 10 skilled nursing facilities with a combined 914 beds in central Ohio.
Mr. Scardina says the owner wanted to consolidate all of the outstanding notes into a single conventional bank loan for the 10 properties. And he wanted to borrow $10 million to rehab and expand two of the skilled nursing facilities in the portfolio ($5 million for each property).
Here’s where things get complicated: the 10-propety portfolio was capitalized by seven different outstanding loans from six different lenders. In addition to consolidating the loans and providing funds to rehab two of the buildings, the owner wanted an additional $3 million to pay off cash collateral notes he had with various institutional lenders. And he was looking for an additional $6.5 million equity earn-out he could use for unspecified purposes.
Mr. Scardina points out that the borrower owned and operated seven of the properties in the 10- property portfolio. In two of the three remaining properties, the borrower owned the real estate and leased operations to a third party. It was the other way around for the final property, with the owner leasing real estate from a third party.
The plot thickens. The portfolio owner was in the process of changing the company that managed operations for the two leased properties. In part, this change was necessitated because one of these properties found its way onto a special Center for Medicare and Medicaid Services (CMS) list for special scrutiny, which is never a good thing.
“To Cambridge fell the job of justifying and demonstrating the new management team’s bona fides to the lender,” Mr. Scardina noted.
“We were able to consolidate the loans, fund the renovations, reduce interest on an aggregate basis, pay off the collateral notes, and obtain additional proceeds for the borrower. On a very tight schedule that demanded a high level of coordination on our part,” he said.
Mr. Scardina says the $65 million deal was the largest multi-facility conventional loan transaction arranged by Cambridge in company history.
“The company is especially well qualified to bring transactions with lots of moving parts to a successful conclusion,” he added.
With more than $5.5 billion in closed senior housing capital transactions, Cambridge Realty Capital has a proven track record of getting the deal done. Whether it is conventional. an equity transaction, a bridge loan, or a HUD loan, Cambridge works closely with senior living operators to structure a customized financial package that meets their individual needs.
Of course, it’s only a great deal if it actually closes. Cambridge Realty Capital is committed to walking with its clients every step of the way, from initial inquiry to the receipt of funds. One of the things Cambridge’s clients have consistently attested to throughout its years in business is that they are never abandoned during the process. You won’t be left hanging with unanswered phone calls or unreturned emails. If it’s a concern to you, it’s a concern to Cambridge.