(To read more on the debt and equity markets, click here.)

CHICAGO-Senior housing and healthcare facility borrowers that have remained committed to floating rate debt need to realize that time is no longer on their side, warns Jeffrey A. Davis, president and chairman of locally based Cambridge Realty Capital Co. Cambridge specializes in lending to these real estate sectors.

“We’ve had 16 Fed fund rate increases in the past 18 months or so,” he points out. “Prime has gone from 3% to 8% and Libor from 1% to about 5.5%.” Despite these hikes, “long-term rates have not been affected until recently, so people have been able to delay refinancing to fixed rates,” he tells GlobeSt.com. “Yet, there’s a saying, ‘you can’t fight the Fed.’ Although the signals have been clear, owners and borrowers have a tendency to delay.” He compares such delays to ignoring early warnings of a dotcom bubble and even to such everyday procrastinations as putting off a haircut. “Ultimately, time runs out,” he says.

“If you’re sitting on floating rate debt, your rates have likely gone from 4% to 8.5%.” Davis urges fixing at rates of between 5% and 6%. “Don’t wait until it’s too late,” he warns. “It’s not I who says it’s critical, (Federal Reserve chairman) Ben Bernanke, the most powerful banker in the world, is speaking, and every banker in the world will follow. Recent movement in long-term interest rates should provide all the incentives these borrowers need to reassess current funding strategies,” he concludes.

Cambridge has a regional office in New York, affiliate offices in Baltimore and Los Angeles, and correspondent relationships in other US cities. Since the 1990s, it has closed more than 275 senior housing and healthcare funding transactions for an aggregate of approximately $2 billion.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.



Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.