Retirement
Housing Financing Consultants...
Most
retirement
housing financing consultants focus on the FHA/HUD Loan Insurance program
for senior housing development 
finance. In point of fact, the retirement
housing financing consultants who begin and end their capital funding cycle
analysis with HUD may be doing their clients a
grave disservice. While new entrants into the senior housing and
retirement living field are, for the most part, well-advised to undertake the
daunting FHA/HUD application process because the construction and permanent
financing is a statutory authority entitlement, many senior housing developers
are leaving money on the table.
In
the latter half of the 20th Century, the development financing for commercial
real estate projects (including senior living) was reduced to a two-step
process: raise the equity funds and then apply for the construction loan.
Issues such as cross-collateralization, personal recourse, balance sheet
maintenance covenants were never given further consideration.
The
reality is that the management of subjective investment risks and the market's
need to incorporate sophisticated risk management programs and concepts has
directly led to the structured finance approach to capital funding plans and the
rise of commercial real estate
syndications and syndicators.
In
today's market (the Information Age) the "new" approach is to conduct
investment incentive entitlement reviews when the market feasibility study is
being prepared because the outflow of the entitlements review can have a direct
impact on the capital funding plan proposal. This has resulted in the
demise of the, "one line for equity and one line for debt," approach
to funding senior housing.
And if
that isn't enough to convince you that a structured finance approach is the only
way to go, consider these points:
