Last year was the Year of the REIT, but it looks like 2012 will be the Year of the Refinance, with many senior housing owners looking to take advantage of low interest rates, reports the National Real Estate Investor.
But while money will be available, lenders are being cautious and will continue to practice strict underwriting, the article continues.
“So many banks have impaired portfolios,” notes Jeffrey Davis, chairman and CEO at Cambridge Realty Capital Companies, a Chicago-based seniors housing finance firm. A well-performing seniors housing property due to be refinanced in 2012 may have trouble getting a new loan from a local lender, Davis notes. “The bank may want to reduce its real estate exposure.”
The good news is that interest rates are low and well-performing properties with adept operators should be able to refinance. Many borrowers are turning to government-backed programs from HUD as well as Fannie Mae and Freddie Mac, the so-called government-sponsored enterprises (GSEs).
“This is a great time to refinance if you’re seeking long-term permanent debt,” says Cary Tremper, senior vice president in charge of the government agency lending program at KeyBank Real Estate Capital, a big lender in the senior housing market. He says Freddie Mac currently offers fixed interest rates ranging from slightly less than 5 percent to 5.25 percent for seven-to-10-year terms.
About 75% of Freddie Mac’s 2011 loans were refinances, and the agency expects even higher loan volume in 2012, according to its senior housing director.
Read the full article here.
Written by Alyssa Gerace