Relative Stability of Seniors Sector Helps Borrower Bring in $90M in Loans

As is the case with the multi-family industry, seniors housing is faring better than such real estate sectors as office and retail, and can still rely on the government for financing assistance in the midst of the credit crunch. In both cases, it is market fundamentals that are buoying the sectors. A case in point is Cambridge Realty Capital Cos.’ recent closing of $90.6 million of HUD-insured Section 232 loans on behalf of an Illinois-based borrower for the refinancing of a group of 10 skilled nursing facilities, referred to as the Granite Portfolio. “Right now, taking out a HUD-insured loan is what a lot of senior housing owners and operators seek to do if they have an asset that’s stabilized and performing well,” Rob Reis, associate with Marcus & Millichap Real Estate Investment Services’ national seniors housing group, told CPN. The Granite Portfolio loans, underwritten by Cambridge Realty Capital Ltd. of Illinois–the Cambridge subsidiary that underwrites HUD-insured loans for healthcare facilities–involve assets accounting for an aggregate 1,488 intermediate-care beds and 65 skilled-care beds in Illinois. Seven of the properties are in metropolitan Chicago, while the remaining three are located downstate in Bourbonnais, Kankakee and Quincy. Ranging in size from $3.1 million to $14.8 million, the 10 loans carry amortization schedules between from 27 and 35 years. The borrower plans to use the proceeds from the loan to payoff a credit facility. No sector of the commercial real estate market has proven impervious to the credit crunch or the severe downturn in the economy, but seniors housing has not been impacted with as much force as most other property types.”The key element regarding investing in senior housing is that the demand is need-based and aging in place has no concern regarding the financial condition of the economy,” Jeffrey Davis, Cambridge chairman & CEO, told CPN. “The stability of senior housing plays a great role regarding financing. But regarding the Granite Portfolio, the key was the government’s HUD 232 program, which is similar to Fannie Mae and Freddie Mac regarding multi-family. [It] serves as a backstop for different forms of housing, and as it relates to senior housing, skilled nursing home provides a large percentage of housing in that area, especially for the indigent and financially needy.” Headquartered in Chicago, Cambridge is one of the nation’s leading senior housing and healthcare financiers. The 26-year-old company has closed more than 300 senior housing and healthcare debt and equity transactions totaling more than $2.75 billion since the mid-1990s