Issuance of Permanent Debt Hits Historical Low Point for Senior Housing

Following the changing credit conditions stemming from the Federal Reserve’s efforts to slow inflation, new permanent debt for senior housing has hit its lowest levels in the last six years..

That’s according to the Q1 2023 NIC Lending Trends Report, released Aug. 9, which indicates the new permanent loan volume closed in the quarter — which totaled about $620.2 million —was the lowest on record since Q3 2016, when the National Investment Center for Seniors Housing & Care (NIC) began tracking this data.

Meanwhile, bridge debt for senior housing fell nearly 50% compared to late 2022, with the report stating some borrowers have been preferring short-term loans over permanent options.


Alongside these decreases, the total balance of delinquent loans saw a 68.9% increase in senior housing in the quarter, with nursing care rising 16% from the previous quarter as well. The delinquent loans as a share of total loans is currently on the rise as well, up to 2.1% compared to the 1.3% from Q4 2022.

These trends align with what Beth Mace said in May, when she warned during a webinar that distress in the sector was likely to increase. Mace at the time was NIC’s chief economist and now has transitioned into a senior advisor role.

Construction lending also remained “notably weak,” Mace and NIC Principal Omar Zahraoui wrote, in summing up the lending report. Construction lending has been tight coming out of the pandemic, and totaled $204.6 million in Q1 2023.


Unsurprisingly, given these trends, new senior housing units currently being built within NIC’s primary markets remained near the lowest volume since 2015, according to information from NIC MAP Vision.

These lending trends are due to several factors, including the increased interest rates established by the Federal Reserve, which increased the benchmark rate by another 0.5 percentage points in Q1 to reach 5%.

The report states these trends are likely to continue throughout the year due to high inflation and interest rates, which is predicted to have an effect on lending standards and a stronger preference for short-term loans compared to permanent options.