The relationship between lender and owner/operator is a complex one. Both have similar goals but different interests. “Each owner has a unique personality and agenda,” Cambridge Realty Capital President Andrew L. Erkes acknowledged. “It is important to understand their motives in order to develop an accurate picture of their individual needs.” Furthermore, asserted Erkes, if one must sum up the formula for a successful lender/operator relationship, it is ‘Listening and Communication,’ adding, “It’s impossible to over-communicate.”
The first factor in the communication equation is to set out all the information upfront. “Just like any situation, you need all of the information upfront to create a meaningful assessment. This includes helping the owner understand what type of market they are going into, either good or bad, and how it will impact the deal,” Erkes explained. It also means helping the owner/borrower see how lenders look at deals. “Are the borrower’s expectations realistic? Can we make changes so that a deal becomes more feasible? Going forward, regular ‘check-ins’ need to occur to ensure that all parties understand the deal, both the owner and Cambridge. “Cambridge is very adept at identifying potential problems early so that no surprises occur midstream that delay the closing,” Erkes said. “However, now and then the unpredictable happens, and these issues get communicated quickly in order to keep the process moving along as efficiently and on-schedule as possible.” Cambridge takes a collaborative approach to and proactive role in problem-solving, with the borrower always being kept in the loop.
“This is setting the stage for both the relationship and how the lender will work and view the deal,” Erkes said. “It’s important to help owners understand how lenders view their deal, timing, and a variety of other deal points that create a good relationship. This is the time that owners need to step up and share data.”
Transparency throughout, from the initial inquiry to closing the deal, is a crucial component of the communication formula. “We don’t want to make the process any longer than it needs to be. Sharing information and providing an honest picture of the likelihood that a deal can be done, even if it’s bad news, demonstrates that we value a borrower’s time.” Proof of Cambridge’s communication success is validated by Cambridge’s statistics. Cambridge has completed $6.5 billion dollars in closings with a 95% success rate. And while much has changed since Cambridge’s founding in the 1980s, “In all of our years, Cambridge has never moved away from our guiding principles,” Erkes assured. “We are always communicating, listening, asking questions, reacting to questions, and remaining transparent for the good of the relationship.”
