With so many large REIT’s in the senior housing space, the government sponsored entities (GSEs) are being forced to re-think their approach to the sector reports Multifamily Executive.
According to Real Capital Analytics, data shows there have been $22.6 billion in closed and in-contract deals in senior housing so far this year. The majority of these deals have been financed through REITs, which have access to the financing market outside of Fannie Mae and Freddie Mac.
“It looks like we’re heading toward just one,” joked Ken Bowen, president of Columbus, Ohio-based lender Red Mortgage Capital during an interview with Multifamily Executive. “The REITs have the capital, they’ve got access again to the unsecured financing market and the corporate bonds, so they’re taking advantage of their favored financial position in the capital markets to grow.”
But the problem for many borrowers, is meeting the requirements of the GSE’s in order to obtain financing. For instance, one requirement of the GSEs’ senior housing programs is that the borrower must have five other similar assets to qualify. Fannie Mae holds the line pretty tightly on this requirement—if you only owned two or three other assets, you’re out of luck.
“It’s a limited pool—to qualify, you’re talking about some of the big public companies, but those companies have their financings almost entirely in place for the foreseeable future,” says Don King, who leads GSE production for Boston-based agency lender CWCapital. “If Fannie and Freddie want volume, they’re going to have to open up the credit box a little bit. And they’re thinking about it—the box in the Fannie Freddie seniors world is in the process of changing.”