CHICAGO, IL--Nursing home owners wishing to expand and tap into profits from sub-acute nursing business are not without funding options.“FHA-insured HUD loans can be an ideal vehicle for funding these projects, but conventional lenders with healthcare specializations are also interested in this profitable facet of the business,” says Cambridge Realty Capital Companies Senior Vice President Brent Holman-Gomez. (top right photo)
Cambridge is one of the nation’s leading senior housing/healthcare lenders, with more than 300 closed transactions totaling more than $2.75 billion since the mid 1990s. The company has consistently ranked among the leading HUD 232 lenders and offers conventional funding options as well.
Holman-Gomez points out that four years ago, sub-acute nursing was a new concept. Today, the business model is widely recognized as a proven bottom-line contributor and is projected to become an even more important profit center in the future.Most typically, sub-acute residents enter the nursing home following hospital stays of three or more days and hope to exit and return to their own homes following a short-term stay. Primarily, the concept is being marketed to individuals with financial resources and those with Medicare benefits, which cover costs for up to 90 days.
Holman-Gomez points out that serving this market segment is more capital-intensive, with owners investing more in both staff services and facilities.Significant investments are being made to improve older homes and create the sort of environment and ambience that appeals to sub-acute residents.
Some owners of existing homes are dedicating entire wings of their buildings to this more profitable sub-acute market segment, while others are completely retro-fitting their facilities to cater to these residents.
In what’s becoming a more competitive industry, owners hoping to attract this lucrative business are stepping up marketing efforts to doctors and hospitals. The trend has been for owners to offer improved services and more spacious private rooms and a “homey” ambience to attract residents.
Holman-Gomez believes HUD is an excellent choice to fund these improvements because the high loan-to-cost value on these loans minimizes the amount of additional investment that will be needed by the owner.
Owners can either underwrite existing business income with increased loan proceeds for minor to mid-sized improvements, or underwrite projected busin
ess income from a substantial new construction project.
While the capital markets are tight, some conventional lenders with healthcare specializations are providing funding to refinance with expansion and for accounts receivable financing to fund business growth, he said.
ess income from a substantial new construction project.While the capital markets are tight, some conventional lenders with healthcare specializations are providing funding to refinance with expansion and for accounts receivable financing to fund business growth, he said.
Contact: Evan Washington, Phone: (312) 521-7603. Fax: (312) 357-1611
E-Mail: ew@cambridgecap.com
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