Cambridge Realty Capital Company offering new equity investment prgm

Real Estate Weekly, April 10, 2002

One of the nation's senior housing/ healthcare lenders has spelled out the details and identified responsibilities for a new equity investment program that is designed to assist owner/operators with their acquisition needs.

Jeffrey A. Davis, chairman of Cambridge Realty Capital Companies, says his company believes the new program has the potential to become very active over the next 24 months.

"The new Cambridge senior housing investors/equity investment program builds on the company's experience in creating ventures between Cambridge, the company's operating partners, and institutional investors," he said.

According to Davis, the typical equity transaction will be sourced by Cambridge's operating partners, but this arrangement is not cast in stone. Transactions may also be sourced by Cambridge and brought into the venture.

Transactions will be analyzed both by Cambridge and its operating partners with Cambridge responsible for providing a computerized cash flow analysis for institutional investment partners. Operating partners are responsible for a detailed analysis of operating statements, expenses and associated costs, and also provide input for the financial feasibility report that is prepared by Cambridge for the institutional partner.

Cambridge prepares the letter of intent and is responsible for all contract negotiations on behalf of the to-be-formed venture, Davis said.

Operating partners are expected to provide property management services for the venture with Cambridge providing asset management services. The majority of the negotiated property management fee will be paid to the operating partners. An asset management fee will inure 100% to Cambridge.

Davis said the institutional partner is expected to contribute the majority of the equity, typically 80% or more of whatever equity is required. Cambridge and its operating partner are responsible for the remaining equity. The respective ownership of Cambridge and the company's operating partner will be commensurate with their equity contributions and transaction negotiations.