Tips from a Banker: An Interview with CMAC’s Director of Finance

As CMAC is responsible for placing more than half billion dollars a year in medical real estate debt, we’ve had vast opportunity to determine what works best to obtain favorable loan terms.  It comes down to three key items outlined below. These assume that we start with a good credit healthcare client.  While an individual borrower may not have the same resources as does CMAC, everyone has some degree of these resources to apply. 

1. Cast a Wide Net

In today’s lending environment, we never know which lender is going to be most competitive. In one instance, it may be a small local lender that wants to make a big splash in the market, and the next may be a large national lender looking for inroads into a new territory. We typically issue an RFP to over a dozen banks, because we have the staff to handle communications and negotiations with all bidders simultaneously. A single borrower should put out an RFP to a minimum of 8 potential lenders.

2. Employ Leverage

A half billion dollars in annual placements carries significant weight.  While a single borrower can’t manage that kind of leverage, they can ensure that they are using all they have at their disposal. The greatest leverage a single borrower has is the related depository business of the practice and the personal banking of the partners. By invoking that potential, the borrower has meaningful leverage to improve the real estate loan terms.

3. Utilize Data

By having access to hundreds of proposals from across the United States, CMAC knows what the best deal terms look like and can direct the banks toward those benchmarks.  A proposal in Alabama helped impact a proposal from the same bank in Fort Worth, Texas to the substantial benefit of the Texas borrower.  Prior to that, the Alabama borrower’s loan was improved using leverage from a previous deal with the same bank in Colorado, which was influenced by a previous proposal from that bank on a deal in Idaho.  While a single borrower won’t have the availability of that amount of data, they can exchange information with other groups which have recently financed to get a sense of what they have accomplished. The more data a borrower has from similar borrowers both in their market and around the country, the better positioned a borrower is to negotiate meaningfully. 

By focusing on these three items, we have seen some remarkable outcomes that far exceeded initial expectations. Using this “Three Key” approach on an individual basis will, without question, give single borrowers better results than they could otherwise expect.