CAMBRIDGE CHAIRMAN SAYS HEALTHCARE BORROWERS NOT UNDULY PESSIMISTIC AS CREDIT CRISIS WORSENS

Senior housing/healthcare borrowers have mentally adjusted to the reality of a credit crunch, and worry about deteriorating economic conditions like everyone else.

No one doubts that the months ahead will be challenging. But were not finding that healthcare providers are unduly pessimistic about the industrys short- or long-term prospects, says Cambridge Realty Capital Companies Chairman Jeffrey A. Davis.

Cambridge is one of the nations leading senior housing/healthcare lenders with more than 300 closed transactions totaling more than $2.75 billion since the mid-1990s. Davis says his observations are not scientifically based on survey data but on informal conversations with hundreds of participants attending industry trade shows in recent months.

I think its fair to say that innovation continues to take place in the industry and that the mood of healthcare providers is more upbeat than might be expected, he said.

Hymie I. Barber, Managing Director of Catalyst/Cambridge Healthcare Finance, the companys West Coast affiliate, points out that conferences on the West Coast have been well attended with high quality participants.

The market remains healthy with few defaults. But borrowers are more sensitive to the need to have certainty of loan execution, and are looking to government-insured financing options to achieve this end, he noted.

Davis points out that low borrowing costs have been a factor in helping borrowers maintain perspective in a tight credit market. If not ebullient, borrowers today have reason to be optimistic with rates possibly as low as theyre going to get in the current cycle.

The Fed has signaled that it doesnt intend any more rate cuts at this time. We continue to strongly urge our clients to take advantage of the opportunity to lock-in todays low rates, he said.

The Cambridge Chairman notes that its now been almost a year since the capital markets began to become aware of problems developing in the subprime mortgage segment. Since last summer, a number of capital sources have dried up, but interest in senior housing healthcare loans is not off substantially from levels posted during the previous year, when everyone was blissfully unaware of the gathering capital market storm clouds, he observes.

For a 12-month period ending in May 2007, Cambridge reviewed 409 loan origination requests totaling $5.2 billion. For the same period ending in May 2008, origination requests were down 12.2 percent, to 359 requests, and dollar volume was $4.78 billion.

Davis says lenders close a relatively small percentage of origination requests received, but the numbers are interesting to track as an indication of market directions and borrower interest. Given all the bad news the capital markets have absorbed, one might anticipate that enthusiasm would wane a lot more than it has, he said.

Privately owned since its founding in 1983 as a real estate investment banker specializing in commercial real estate properties, Cambridge emerged in the 1990s as one of the nations leading senior housing and healthcare debt and equity capital providers, closing more than 300 such transactions totaling more than $2.75 billion since then.

The company is one of the nation's leading HUD 232 FHA / MAP-approved lenders and also has an integrated debt / equity financing strategy that includes direct property acquisitions and joint ventures; sale / leasebacks for clients; conventional and mezzanine debt financing; and acquisition of distressed debt. Additionally, Cambridge offers a wide array of conventional lending options for senior housing / healthcare owners, including permanent construction and interim loans on either a floating or variable rate basis.

Cambridge is the creator of The Signature Experience, a four-step process designed to transform the traditional lender / borrower relationship and identify ideal capital solutions for worthy projects. The company has created four separate processes for customer groups that are designed to build and enhance long-term relationship potential and speed the way loans are processed and closed. Programs include The Key To Capital for senior housing owners, The Navigator Experience for senior housing brokers and mortgage bankers, The Principal Lender Network for lenders who refer loans to Cambridge, and The Relationship Building Experience for various industry-related consultants, including lawyers and accountants.

The company has a regional office in New York, affiliate office in Los Angeles, and correspondent relationships nationwide. The firm also has established key origination relationships and a dozen or more Internet-based strategies.

Cambridges award-winning Web site, www.cambridgecap.com, provides monthly rate updates for its debt and equity capital programs. The company also publishes the bi-monthly e-PULSE electronic newsletter, which delivers company news and feature stories via e-mail to corporate friends and clients. For additional information, contact Cambridge at (312) 357-1601 or via e-mail at info@cambridgecap.com.