Speaking at the American Health Care Association and National Center for Assisted Living Independent Owner Leadership Conference in New Orleans, Jeffrey Davis, chairman of Cambridge Realty Capital said that finding capital for senior housing projects remains a challenge.
“Even though the capital markets have improved considerably, the community banks that funded a lot of senior housing projects in the past are not the reliable funding source they once were,” he said. “HUD and to a lesser extent, Fannie Mae and Freddie Mac have attempted to step into the funding breach, and other lenders are testing the waters as well.”
Obtaining financing through HUD’s 232 program continues to pose challenges from a speed standpoint. The agency’s LEAN program was supposed to help move files through underwriting faster but sources tell SHN it can still take anywhere from 10 to 12 months to get a commitment on a property.
As far as bridge loans and term lending with commercial banks, things are still strained according to Davis. Most banks are not courting new customers and are heavily dependent on relationships already in place, either directly with borrowers or through intermediaries representing clients.
But life insurance companies are beginning to re-enter the senior housing sector, targeting well performing independent living and assisted living facilities. Healthcare REITs and credit companies also have become more active lenders for these properties.
“Ironically, today it seems somewhat easier to put together an institutionally-backed, larger deal than a more typical bread-and-butter opportunity,” he observed.
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