Hudson Realty Capital has launched a bridge lending platform focused on senior housing and skilled nursing properties. The New York City-based firm anticipates lending between $300 million and $400 million through this platform in the next 18 to 24 months.
The platform has been in the works for “quite some time” and follows Hudson Realty Capital’s first senior housing transaction last fall, Managing Director Justin Elshire told Senior Housing News.
The deal announced in Oct. 2021 involved two bridge loans aggregating $37.75 million, secured by two senior living and memory care communities owned by Columbia Pacific Advisors.
Since its founding in 2003, Hudson Realty Capital has managed investments totaling more than $4.5 billion in aggregate transaction value across various sectors, including multifamily, office, mixed-use and hospitality.
With the bridge platform, Hudson Realty Capital is targeting loans of $15 million to $50 million with terms up to 36 months and a maximum loan-to-value ratio of 80%. The bridge loans will be accessible to qualified borrowers who are targeting either conventional or FHA/HUD permanent financing, with three-year, interest-only terms available.
The firm has no mandate in terms of how much capital to lend to skilled nursing versus private-pay senior living, Elshire said. However, he estimates that the current pipeline is roughly 70% assisted living and memory care and 30% skilled nursing.
Hudson Realty Capital has received some independent living requests, and these tend to be new construction projects that opened in the last year or so and are not meeting lease-up projections due to Covid-related market volatility and other factors, Elshire said.
Elshire has observed a slowdown in absorption rates following the boom in move-ins that occurred when the Covid-19 vaccines and boosters first rolled out; lease-up projections calculated during that occupancy boom were sometimes overly bullish.
But other market trends also are playing out that make bridge financing attractive or necessary as communities work toward higher occupancy, he said. For instance, some communities are experiencing some rockiness as they are transitioning from lower to higher acuity residents. And, many operators aggressively raised rates to help offset dramatic increases in labor, insurance and other operating costs. This may have resulted in strategic disruption in occupancy.
“The reality of it is, there’s a lot of need for the bridge product,” Elshire said.
In terms of what Hudson Realty Capital is looking for in a potential borrower, the firm is focused on quality operators and sponsors with track records of success.
“We want to know who the operator is, I want to keep in relationship with the sponsor [and determine] is the facility well maintained, are the residents being taken care of, are the employees being taken care of, is the sponsor committed to the industry,” Elshire said.
And he is confident that the pieces are in place to make the bridge lending platform a success.
“It really comes down to trust and certainty of execution, as well as proof of concept, and we have those things in place,” he said.
He also touts Hudson’s willingness and ability to customize loans to the particular needs of owners and operators.
“We’re nimble, we’re small, we’re growing, so that inherently allows some ability to customize the product,” he said.
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