If the lenders who are lining up to romance senior housing/healthcare borrowers have anything to say about it, 2016 should be a very good year for securing needed capital.
“There’s an abundance of capital available in what continues to be a very competitive marketplace,” says Cambridge Realty Capital Companies Chairman Jeffrey A. Davis.
Cambridge is one of the nation’s leading senior housing/healthcare lending specialists. Mr. Davis provides the following breakdown for lenders he believes will be active in 2016:
FHA-approved HUD funding programs will continue to have a major impact in the marketplace this year. As an exceptionally active first mortgage lender, HUD only approves insured loans for licensed facilities, primarily assisting stabilized skilled nursing homes and assisted living facilities. Last year HUD completed $2.7 billion in financings and is expected to remain equally aggressive in 2016.
Generally speaking, community banks view senior housing properties similar to the way they view commercial real estate. They put a heavy emphasis on who the borrower is. Although their senior housing expertise is not broad-based, they have had good success working with local customers.
Regional banks have a much broader platform than community banks. Primarily, these bankers are actively lending on senior housing and long-term care facilities and typically have dedicated units that lend in this area.
These bankers target senior housing and long-term care as part of their national healthcare lending program. National bankers have been lending on senior housing for quite some time and will once again be active in 2016.
Freddie Mac/Fannie Mae
Although not as active as several years ago, these government conservatorships continue to aggressively participate in senior housing, focusing on independent living and assisted living properties and passing on skilled nursing homes.
Apparently, insurance companies are beginning to more actively test the waters on independent living and assisted living properties.
Credit companies have been active participants in senior housing and long-term care at all levels. Historically, the most active player in the market was GE Capital, which was purchased by Capital One in the final quarter of 2015.
Equity investors remain quite active in senior housing and long-term care. This includes local private equity groups, high net worth family offices, syndicators, private REITS, institutional equity and other variations.