The availability for new senior housing construction is starting to increase according to Peter Kane, Managing Director of the Private Bank.
During an interview with the National Investment Center for the Seniors Housing and Care Industry, Kane said after years of cleaning up their balance sheets and working through regulatory changes, investors are demanding improved returns from the financial sector.
“The solution is for lenders to start lending. As lenders emerge from the financial crisis of the past several years, they are looking for ways to increase their interest margin by making loans instead of holding Treasuries,” he said.
Kane added that Private Bank is seeing an increase in requests for assisted living construction projects since the barrier to entry is lower than skilled nursing.
“The lack of new supply over the last few years has been due to lenders not wanting to take on construction, fill and operating risk in the same transaction,” he said. “If there were opportunities to finance underperforming properties that were acquired by more experienced operators, those transactions were more likely to get done as the construction and the bulk of the fill risk were already behind the project.”
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Written by John Yedinak