The attractiveness of seniors housing has helped propel its growth by reducing some of the barriers to financing that existed a few years ago. While this has been apparent in many of senior housings’ subcategories, perhaps nowhere has it been more noticeable than in the continuing care retirement communities sector.
After the recession ended in 2009, the market for financing continuing care retirement communities (CCRCs) dried up. It then remained flat for a number of years, but today, recent increases in activity indicate that it has picked up. This has been the case even in areas that were hit hardest by the recession. For example in Florida, SantaFe Senior Living, a non-profit affiliate of SanteFe Healthcare, Inc. tried to bring a repositioning of the CCRC East Ridge at Cutler Bay to market for financing in 2010, but was unsuccessful. East Ridge was a complicated project because it involved replacing a health care center and finding enough available space to house existing residents during this process. Even with a team that included the advisory firm Greystone and investment bank Ziegler, SantaFe was unable to generate financing for the project. Indeed, of the attempt to finance the project, Greystone’s Vice President Roger Randall recalls that, “We had a package that for all intents and purposes was ready to go, but the board called a meeting and came out saying they weren’t comfortable issuing that amount of debt with too few incremental revenue producing units in that environment.” Consequently, the project was put on hold and languished for years until just recently.
Today the U.S. economy is growing again, the housing market has stabilized in most regions, and senior housing occupancy is up in a number of different subcategories. In this new environment, Ziegler was able to secure approximately $69 million in fixed-rate, tax-exempt bonds for East Ridge last month and the property has been filling up even more quickly than Ziegler and SantaFe anticipated. Although it took years for the East Ridge project to gain financing and advance, SantaFe believes that this was actually a good thing because the terms it ended up getting were better than the terms it would have received if the project had been financed back in 2010. SantaFe’s success in bringing the East Ridge project to market does not appear to be isolated as Zeigler projects that the number of CCRCs expected to gain financing by the end of 2015 should be at least 18. This is more than twice the original figure of 8 it was projecting last September. Ziegler’s managing director, Rich Scanlon attributes part of this increase to increased marketing savvy by operators who have become adept at tailoring their marketing programs to specific groups and offering incentives that are more likely to draw them in than in the past, and the higher occupancy rates generated by these new marketing efforts have made it easier for CCRCs to obtain financing.
Continuing care retirement communities and other senior housing participants that wish to take advantage of today’s reinvigorated environment for obtaining capital should continue to look to the successful financing firm Cambridge Realty Capital for their capital needs. Cambridge Realty Capital is a Chicago-based firm that has over two decades of experience in financing and offers a broad array of financing options for interested parties. Contact them today to learn more details about the many different options they offer.
