Seniors Housing Business

AUG-SEP 2015

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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Contact Leumi to start the conversation. The Perks of Seniority With over 35 years experience in the senior housing industry we understand it's no ordinary business. And fortunately, we're no ordinary bank. As the population ages, so does the growth and demand for senior housing and specialized care facilities. At Leumi, we understand the complexities of your business and the challenges you face in your industry. We can provide the resources, tools, and services you need to make a difference in the senior housing communities you serve. Our Healthcare Relationship Managers provide the guidance and support you need to navigate complex financial waters. commercial banking | healthcare California | Thomas Belli 555 W. Fifth Street | Los Angeles, CA 90013 Tel: 323.966.4714 | Thomas.Belli@leumiusa.com Illinois | Marty Koutsky One N. LaSalle Street | Chicago, IL 60602 Tel: 312.419.4108 | Marty.Koutsky@leumiusa.com Florida | Hely Santeliz 19495 Biscayne Boulevard | Aventura, FL 33180 Tel: 305.918.6320 | Hely.Santeliz@leumiusa.com leumiusa.com New York | Eric Halpern 579 Fifth Avenue | New York, NY 10017 Tel: 212.626.1372 | Eric.Halpern@leumiusa.com Bank Leumi USA® is an FDIC insured, New York State chartered bank. Leumi Full disclosure is best advice for borrowers Borrowers need to be as transpar- ent as possible when applying for a bridge loan or any other type of fnancing to avoid surprises that could protract the loan approval process or completely nix the deal, say seasoned lenders. The best course of action is to be upfront about any issues or potential red fags. For example, if a borrower previously had to give a property back to a lender or fle for bankruptcy, that infor- mation would most likely be uncovered in the due diligence process or at some later point. "It's a lot easier to deal with issues upfront rather than later because lenders don't like sur- prises," says Keith Kodrin, senior director of healthcare real estate at Capital One Bank headquar- tered in McLean, Va. Not being forthcoming creates doubt in the minds of lenders, he adds. Borrower transparency also helps the lender be as cre- ative as possible in structuring the deal, says Erik Howard, managing director of real estate fnance at Baltimore-based Capital Funding LLC. "There may be some- thing that a borrower isn't talking with you about that really could open up a door for another avenue of fnanc- ing, or a way to structure something," emphasizes Howard. Recognizing that the bridge loan is a partnership between borrower and lender will yield the best results. A borrower's thesis matters The best approach is to present the lender with a well-thought-out transaction as early as possible to determine if it meets the lender's criteria, explains Howard, "so you can move expeditiously to closing, which is what many sellers want in these transactions." Kodrin wants to know a bor- rower's thesis. "What is it about the portfolio or property that they really think are strong selling points and the rationale for them to do the deal? What risks have they identifed, and how do they mitigate those risks?" The three most impor- tant components to expe- diting the loan approval process are timely data, completeness of data and the overall consistency of the information provided to the lender, says Douglas Korey, president of Colum- bus, Ohio-based Lancaster Pollard Finance Co. "Issues with any of these three things will cause delays not only in the lender's ability to go to credit committee, but will also hamper efforts to obtain third-party reports such as appraisals," says Korey. Michael Gehl, chief investment offcer at Housing & Healthcare Finance, urges frst-time borrow- ers in the bridge-to-HUD lend- ing arena to provide a substan- tial loan package that clearly explains what they are trying to accomplish. "Provide very detailed fnan- cial statements that we can review so that we can get com- fortable with what's in place and what you think can happen at the given property," says Gehl. P&L statement under a microscope Gehl seeks as much granu- lar detail as possible when it comes to reviewing the line items in a nursing home's proft and loss (P&L) statement. He'll dig into nursing, therapy and dietary costs as well as general and administrative expenses. He wants to see the census mix broken out by payer type such as Medicaid, Medicare, man- aged care or private pay as well as reimbursement rates. "I need to understand all of that to get comfortable with the credit." First-time borrowers should augment comprehensive fnan- cials with personal biographies that detail their level of expertise. "That's important because if you don't have a track record as a borrower, it's important to show us what about your background will make us comfortable with you as an owner and/or opera- tor of a healthcare asset (such as previous experience serving as an administrator or regional director) in order for us to move forward with the transaction." — Matt Valley "...lenders don't like surprises," says Keith Kodrin, senior director, healthcare real estate, Capital One Bank. www.seniorshousingbusiness.com 57 August-September 2015 n Seniors Housing Business

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