Senior housing has long been viewed as a growth sector due to the wave of aging Americans expected to move into senior living communities in the coming decades.
Yet when it comes to financing new development and expansion, not all lenders are created equal. Some lenders have been attracted to the space by favorable demographics, yet they lack the experience that is so critical in senior housing and care. And particularly during uncertain markets and economic downturns, such as that fueled by the 2020 COVID pandemic, it’s essential for those seeking financing to work with a lender that is expert in the market.
“Our knowledge of the industry and sector, coupled with our strong understanding of banking products, allows our team to develop financing plans or treasury products around the needs of the operators and investors,” says James Vincenti, senior vice president/department head
Commercial Banking – Healthcare for Investors Bank.
Here are some of the key benefits an experienced senior housing finance company offers owners and operators.
A team of individuals with extensive healthcare lending experience
Investors Bank has collective experience of roughly 75 years in lending and advising specific to the health care sector with backgrounds spanning health care lending, commercial lending, leveraged finance, not-for-profit and treasury management services. The 9-member Health Care Lending Commercial Banking team was established in 2012 and has since generated over $1 billion in loans, a majority of which have been with senior housing borrowers.
Serving both for-profit and not-for-profit entities, the team has a national presence and works with borrowers that have operations in multiple states.
“Most of our bankers have worked with other financial institutions including some of the nation’s largest commercial and corporate banks, investment banking, private equity and regional banks,” Vincenti says.
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Understanding of and appreciation for health care and senior housing needs
Specific industry experience can be a critical differentiator in any senior housing finance scenario, as there are many unique components of senior housing such as payor mix, regulatory considerations and safety requirements.
“We have a strong understanding of the current market environment, including reimbursement status through Medicare and state Medicaid programs; payor mix of patients and challenges, and most recently COVID,” Vincenti says. “We understand senior housing financial statements and profitability of the business and can work with operators due to our strong knowledge of the sector.”
Among the other issues specific to senior living providers that an experienced industry lender can address are clinical and non-clinical needs, occupancy trends, property types from assisted living to skilled nursing and transitional processes involved when a merger or acquisition takes place.
Senior living and senior facilities operations knowledge
In addition to senior housing financial experience, a lender’s intimate knowledge of senior living operations can be critical to success. The pandemic’s impact on the industry, for example, has very specific challenges to operations and finance that an outsider likely will not fully grasp.
“In light of the current environment, COVID and its impact on senior housing has been a tremendous challenge,” Vincenti says. “Although we believe that a vaccine is on the horizon, we have maneuvered our clients through the issues with adjustments made via, PPP and in some cases, additional liquidity.”
Reimbursements and the changing reimbursement landscape among Medicare- and Medicaid- certified service providers is another element that has strong bearing on an operator’s financial performance, as are other factors such as new competition inside and outside the industry, referral sources and clinical changes, among others.
Expertise in recommending and customizing appropriate financial products
But perhaps the most important areas where an experienced lender can work with senior housing owners and operators seeking financing is in terms of product offerings. Knowing which financial products are a right-fit for industry players is a key benefit Investors Bank provides. Term loans can be used for real estate, acquisitions and equipment purchases, with tax exempt products in the form of direct purchase and loan programs — customized based on need.
Likewise, revolving and working capital can be used in scenarios where operators are transitioning facilities and may have a need for working capital related to projects and expenses. Finally, depository services include operating and reserve accounts, mobile banking and other services, comprising a full-service approach for senior housing banking customers.
Whatever the need for finance, Investors Bank is prepared to assist with a suite of products and services geared toward senior housing owners and operators including:
- Commercial lines of credit with variable rates
- Commercial term loans with flexible terms up to 10 years and competitive interest rates (bridge to HUD financing is also available)
- Treasury management solutions that simplify control over cash flow
“We are committed to expanding our geographic footprint by diversifying our portfolio in multiple geographic regions throughout the U.S.,” Vincenti says. “We started this growth path in 2020 and will continue on this path going forward.”
To learn more about Investors Bank and its Health Care Lending Commercial Banking team, visit Investorsbank.com/SLL.