Spreadsheet: c46b8612-c891-4aae-92d9-7630cbb90abd
Sheet: Operator & Mgmt. Agent-CH.10

[NAME] | ANSWER | Last Updated
Is debt service coverage of 1.1765 calculated in the Lease Payment Analysis actually required to be the minimum lease payment contained in the Lease agreement?  Is it necessary to have an existing lease amended to reflect this prior to submission of the loan application? | During the closing of Section 232 loans, OHP and OGC have encountered confusion on the minimum lease payment required for closing documents and operating leases.  For the actual leases, we are requiring that the annual lease payment be calculated using a minimum of a 1.05 coverage ratio - annual principal + annual interest + annual mortgage insurance premium + annual reserve for replacement deposit + annual property insurance + annual property taxes times a multiplier of 1.05.  This minimum coverage level required for executed leases is different than the test measurement used in the 223 F Lender’s Narrative, which remains unchanged - it will continue at the 1.17 coverage level.  Please note that this language does NOT apply to Section 223(a)(7)’s. | 2012-02-01 00:00:00
Would OHP consider for HUD mortgage insurance a deal with properties, management agents, operators and/or sister properties that have a recent history of G-Level deficiencies on state surveys? | A facility’s history with poor surveys may not necessarily preclude it from obtaining FHA mortgage insurance.  Each project would have to be reviewed individually.  HUD would want evidence to be confident that owners/operators/managers take the situation very seriously and actively take measures to improve quality and performance.  We would want to review the facility’s corrective action plan, and depending on the circumstances, the facility may be asked to hire an outside risk manager or implement additional training, etc. | 2012-02-01 00:00:00
Can you provide guidance on how best to complete the Management Section of the Lender Narrative, where it requests information on past and current performance of other facilities managed by the management company? | The “Past and Current Performance” section in the Lender Narrative does not specifically ask the lender to provide past and current information on all  projects managed by the Management Agent.  The Management Profile is an important exhibit for the Lender to review to help determine the agents qualifications.  The Lender is assessing the agent’s ability to manage the project submitted for mortgage insurance.   When doing that the Lender would need to consider the performance indicators, billing, vacancy rates, etc. which were identified in the Lender Narrative.  By also talking with the management agent (as suggested in the Narrative) and looking at the credit report, management profile, etc. (firm exhibits) the Lender can make an assessment on the agent’s ability to manage the project.  The agent would also have policies and procedures established which the Lender should be looking at as well. | 2012-02-01 00:00:00
Who needs to complete the "Schedule of Facilities Owned, Operated or Managed”? | The "Schedule of Facilities Owned, Operated or Managed" should be completed by the following:  Operator (lessee), the parent of the operator and the management agent.  Not required of the Mortgagor entity as it s a Single Asset Entity. | 2012-02-01 00:00:00
Is there a minimum lease term required for nursing homes?  Should we try to negotiate the longest lease term we can?  Or is the closing attorney responsible only for ensuring that a term is provided in the lease? | HUD does not prescribe a minimum or maximum term for operating leases.  We have considered various pros and cons for this and have not seen a compelling reason for taking this business decision from the parties. The term (and renewals) should indeed be specified in the lease.  If the remaining term is less than 5 years with no renewals, OHP will want to see a plan for the future operator. | 2013-03-01 00:00:00
Do the principals of the management agent (e.g. President/VP/Sect.) have to sign individual management agent certifications? | No.  We only require 1 certification from an individual with signatory authority for the management agent. | 2012-02-01 00:00:00
is minimal experience of owner/operator (less than 3 years) allowed if the development team has an experienced management agent? | No.  Experience is required of both the owner and operator/management agent.  Appropriate experience is 3 to 5 years successful practice in developing, owning and/or operating board and care facilities, assisted living facilities and/or skilled nursing facilities.  Evidence of appropriate experience should be provided which includes specific project examples including project name, type of care provided, location, unit/bed count, year opened and key operating metrics (fill pace, occupancy, net operating income margins) and specific responsibilities for the management and operation of the example health care facility.  The Office of Healthcare Programs (OHP) is seeking assurance that the developers and other participants are committed to the long-term success of their project and have the requisite experience to operate and manage the project. | 2013-03-01 00:00:00
If I were to run Mortgage Credit on the Management Agent entity, what certification would I use? | You would be use the Consolidated Certification for the Operator. | 2012-02-01 00:00:00
Does HUD have a process for companies to become "HUD approved"? | ORCF does not process advanced approvals of Management Agents that are not requesting to become immediately associated with a HUD project.  Each review and approval is done in association with the formal request for a management entity to become involved with the subject project.  This review for approval would be conducted by the assigned OHP Account Executive for the specific project (if being done outside of a refinance) or by the assigned OHP Underwriter (if being done at the same time as a refinance).     Should the Owner decide to change Management Agents during a time separate from an application for refinance, they would need to contact their assigned OHP Account Executive for a review; but this review would be similar to that conducted during a refinance and would entail submission of similar documents and information. | 2013-03-01 00:00:00