GE Capital Cautious on Short-Term Seniors Housing and Care Market

GE Capital, Healthcare Financial Services announced in late January that it had financed more than $7 billion to customers in 2011 in more than 200 transactions, with a significant portion of that going toward financing senior housing and care.

Last year was a good year for the company, according to senior managing director and head of healthcare real estate lending Jim Seymour. He said they did around 50 financing transactions with total commitments of about $1.6 billion; out of that, about a quarter went toward medical properties, and about three-quarters into seniors housing and care.

Despite so much activity in 2011, Seymour says there’s a certain level of uncertainty in the industry.

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“We’re a little bit cautious about the market right now,” he says. “On the senior housing side, with independent and assisted living, you’re impacted more by general economic conditions. While the economy’s getting better, it’s still a little bit choppy, and financial institutions are still concerned about Europe.”

However, he emphasized that “conditions are improving,” albeit slowly, and that GE is “generally cautiously optimistic that the space will continue to grow and provide opportunities.”

When it comes to skilled nursing, though, Seymour says the sector is a “different animal” after the Medicare cuts that went into effect last October and with state budgets under pressure on the Medicaid side.

“In the short term, there’s not a lot of activity in that space,” he says. “Most buyers and lenders are taking a little bit of a time-out to see how the cuts are going to manifest themselves in the financials of operating.”

He says that by late spring or early summer, there will be a better picture of how the cuts will play out and affect margins. And while skilled nursing is a “little quiet” in the short term, he says GE Capital’s long-term view is positive.

“The long-term demographics are compelling, and we expect activity to pick up in the second half of the year,” Seymour says. On the senior housing side, he says they “hope to do at least as much volume this year as we did last year in terms of financing for our customers.”

Written by Alyssa Gerace

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