For the vast majority of Senior Citizens, the role of HUD as it relates to the financing of senior residential care facilities remains unknown, but is significant, especially in regards to the financing, loaning, and other construction-based initiatives related to senior assisted living facilities.
Within HUD, the Office of Residential Care Facilities “administers the Section 232 loan program. Section 232 is an FHA-Insured loan product that covers housing for the frail elderly – those in need of supportive services. Nursing homes, assisted living facilities, and board and care are all examples of this type of housing.” Essentially, any housing that may relate to the elderly falls within the Section 232 loan program. The purpose of the Section 232 program is to develop certain financing arrangement, packages, and otherwise, “for the purchase, refinance, new construction, or substantial rehabilitation of a project.” The Section 232 program is highly flexible in this regard, as there exists a “combination of these uses is acceptable – e.g. refinance of a nursing home coupled with new construction of an assisted living facility.”
There are a number of substantive reasons as to why Section 232 loans are important, among such reasons are that Section 232 is designed to assist seniors obtain supportive living facilities. As such, the borrower is able to obtain financing for particular housing that he or she may not otherwise qualify for. In turn, “the benefit to the lender is that the loan is insured by FHA [and] the benefit to the borrower is that the loan is at a fixed interest rate, often lower than conventional rates, and is non-recourse.”
Senior housing providers are at a pivotal moment in time, and many are taking economic advantage of the trends among senior residents to seek housing and care facilities. Cambridge Realty Capital is versed in a variety of investments in the senior housing market. Our experience and expertise make us a leader in the investment world.