What’s a Borrower to Do? A Conversation with Tony Marino, Cambridge Realty Capital

Capital is available, but solving the financing puzzle nowadays takes some out-of-the-box thinking. Tony Marino has seen the market’s ups and downs over time and knows how to get deals done.  

Marino is managing director at Cambridge Realty Capital, an FHA/HUD approved lender. Marino recently talked about the firm’s approach with NIC Senior Principal Bill Kauffman. Here is a recap of their conversation with key insights on how to get to “yes” by creating win-win transactions for all parties.  

Kauffman: Can you give us some background on your professional career and your current focus? 

Marino: I’ve been with Cambridge for 26 years. I started here as an intern in college. Cambridge is one of the nation’s oldest and most trusted healthcare capital providers for senior housing and healthcare facilities. We are an FHA/HUD-approved lender and service our loans in-house. 

I’ve worked on every segment of the loan process from origination, underwriting, closing and asset management. I’m a HUD approved underwriter. I focus on origination and underwriting. I mainly work on new business and with borrowers as the liaison between the borrower and the underwriting team. I also do some asset management work to make sure borrowers are getting their needs met. We build long-term relationships with our borrowers. They are our focus.  

Kauffman: Can you give us an overview of Cambridge Realty? 

Marino: We are a privately-owned firm that was co-founded 40 years ago by the President, Andy Erkes, and Jeff Davis. Cambridge has been involved in virtually every type of financing available to the healthcare industry including agency (HUD), conventional bank and unconventional, non-bank, CMBS, life insurance and sale-leasebacks with both public and private REITs. We have closed more than $6.7 billion in HUD transactions and have a sizeable servicing portfolio. Cambridge has enjoyed a 99% HUD closing rate in the last five years and has consistently been ranked among the top HUD senior housing lenders for many years.  

Kauffman: How big is your team? 

Marino: Cambridge has a team of five originators on the front line. We have four team members in underwriting, two in loan servicing and a support staff. Our staff averages about 15 years of experience with the company. We’re a tight knit group and work closely together. We don’t put people in boxes. Our team understands each lending program’s requirements and underwriting guidelines to properly assess loan options and discuss them with borrowers. I’m the team’s one-stop shop for questions and answers.  

Kauffman: Is it important in today’s market to lock down interest rates? 

Marino: It’s the borrower’s decision. We like to say our crystal ball is in the shop. The decision depends on the borrower’s goals. Some borrowers want the best rate available at that time and want to take risk out of the mix. Other borrowers are willing to ride the ebbs and flows of the interest rate market. 

Some deals are more sensitive to interest rates, which can affect the purchase price. The borrower may need the highest amount of proceeds to fund the acquisition or necessary repairs. It’s a matter of what the borrower wants. We try to meet their needs and let them decide.  

For certain borrowers and deals that qualify, we offer an early rate lock option. We recently had several borrowers take advantage of this option to get significantly lower rates than what the current market is offering. 

If they ask for our opinion, we tell them what we’ve seen in the past. Like I said, we don’t have a crystal ball to predict the future. But we work with the borrower to develop a sensitivity analysis to make sure they are informed and educated. The more comfortable and knowledgeable borrowers are, the more likely they are to work with us again. We encourage borrowers to call and consult with us, we’re happy to be a sounding board and source of information.   

Kauffman: What other options do you offer in place of a bridge loan? 

Marino: We see a lot of owners who are ready to cash in and move on, and we work with many bridge lenders. But a bridge loan is not always the best fit. Bridge loans are a lot tighter now in terms of coverage restrictions and underwriting. So, we look at ways to get deals done.  

We’ve had success working with the seller in a purchase situation by creating a unique structure such as assuming existing debt from the ownership. It’s a win-win situation. The seller gets the best price because the buyer may not be able to finance as much with a traditional lender. We can underwrite that kind of deal, so the borrower gets more proceeds. It works out for all parties. 

The bigger regional companies may have access to financing, but loan terms may be too punitive for small companies. That puts a lot of pressure on the borrower. We’ve also found that it’s best to work with those who understand the industry. There are a lot of nuances between states and markets, such as differing reimbursement rates. Senior living is a unique business. 

Kauffman: Do you concentrate on a certain segment of senior living? 

Marino: We finance all types of healthcare properties: assisted and independent living, memory care, skilled nursing, if it’s financeable, we can find a home for it. 

Kauffman: What is your outlook for the rest of the year and the capital markets?  

Marino: We’re seeing rates go up lately, but my experience leads me to believe we’re coming to a peak. We may see a dip in rates after the Federal Reserve’s late October/November meeting. In an election year, the Federal Reserve tries to take a hands-off approach unless a serious event causes a policy change. They don’t want to be accused of meddling in politics. Next year, I think rates will be flat from where they land in December.  

Kauffman: Are deals coming off the table? 

Marino: The healthcare industry is recession proof. There’s always a need and we’re always doing deals. But deals are taking a different shape today. We are creative to get the maximum proceeds for the borrower. Our experience and knowledge allow us to delve deep into the numbers and optimize them to achieve the borrower’s goals and objectives. You have to get into the details to understand the market and the operator. We find unique ways to underwrite deals. 

Kauffman: Any other closing thoughts? 

Marino: The industry is going through some changes post-Covid. This is a time to adapt and explore new opportunities—not only in financing but also in operations. Over the last 40 years we’ve seen many different iterations of the industry, operators are resilient, and Cambridge’s ability to adapt and change with the times is one of our biggest assets.