How would HUD treat projects involving for-profit owners that have formed non-profit operating entities?
Both the for-profit borrower and the non-profit operator would need to be underwritten using for-profit mortgage criteria (i. e. factoring in taxes, management fees, etc.). As such, the underwriting would need to rely on comparable for-profit operated properties. See 4232.1 REV-1, Production, Chapter 3.2.
The underwriting of the non-profit operator would need to show that the operating entity, or a principal or principals of the operating entity, have a successful operating track record, especially with projects similar in scope and services to the subject facility, significant project operating experience, a positive track record of compliance with regulatory requirements, as well as a solid financial and operational history. -- Dec-19