From Les Sparks:
My answer depends on asking a few questions. First, is this loan a Section 232 Nursing Home or assisted living? If so, is on of the entity’s the operator, while the other is the real estate entity? Second, do these entities share a common TIN? Or, third, is this a normal rental project and the other entity is the management company?
Depending on the answer to those questions let me just say the following – HUD usually only wants to see the financial statements of actual project. Such statements are only EVER combined with other projects who share the actual TIN. In those cases HUD allows the project to file consolidated statements with consolidated reports notes and basic statements. However, a separate FDS must be filed for each project.
Master leases on normal HUD project are not well laid out in HUD requirements. Agreements required a combined surplus cash calculation.
From Scott Loveday
Dear Confused,
Please know that you’re not alone…I’m confused too. This is another one of those, “make a square peg fit in a round hole” situations. Housing published the guidelines and the regulatory agreements on these deals without any consultation with us as to how we would actually collect these things and what they would look like. We don’t have a template for them. For now we are advising them to submit a financial statement for the lessor and to include the combined computation of surplus cash in the notes to financial statements. Unfortunately that’s the only way we can do this for now and there are currently not enough of these deals out there to make it worth the money to change the system.