Identifying good, high-quality sources of capital has never been more important as skilled nursing facilities join other sectors now bracing for uncertain times ahead.
“Quality capital sources often see themselves as their operator’s partner and not simply a check writer,” said Laurie Tomko, senior director of corporate communication and marketing for the National Investment Center for Seniors Housing & Care. “They work hand-in-hand … to help create strategies for success.”
NIC’s spring conference offered sessions on the relationship between capital-seeking developers and operators and capital providers, including equity and debt providers.
“Value beyond capital” promised to reveal what operators should look for in a lender source, and how capital providers can work with partners to drive efficiencies. A second session explored how lenders are contending with a tighter money supply, rising capital costs, and an uneven economic recovery.
“The long-term care space is unique to other types of real estate given its higher dependence on operations, which requires a capital source that appreciates and understands the operating side as much as the real estate component,” said Jeff Binder, managing director for Senior Living Investment Brokerage. “In uncertain times like we are facing currently, this is the definition of a capital source I want walking alongside me.”
Mark Myers, managing director of investment sales for Walker & Dunlop, has a vision of an ideal partner: one “who understands the nuance of operations and the impact certain revenue and expense levers can have on overall margin. One who may learn and share best operating practices across borrowers, joint-venture partners, and operators within their portfolios.”
Why be more discerning?
“The ups and downs of an operation are real and often unpredictable,” added Myers. “A capital source, either debt or equity, needs to take a long view of their investment and give their owner-operators the space and time to perform. There is no magic formula that can combat, for example, occupancy loss or heightened expenses. Identifying a capital source who understands this is vital.”