Finding capital for worthy projects remains a challenge for many senior housing/healthcare borrowers, the head of a company that specializes in lending on these properties said at a recent conference.
Jeffrey A. Davis, chairman of Cambridge Realty Capital Cos., said at the American Health Care Association and National Center for Assisted Living Independent Owner Leadership Conference in New Orleans, "Even though the capital markets have improved considerably, the community banks that funded a lot of senior housing projects in the past are not the reliable funding source they once were.
"HUD and to a lesser extent, Fannie Mae and Freddie Mac have attempted to step into the funding breach, and other lenders are testing the waters as well."
He pointed out that bridge lending and term lending with commercial banks continues to be constrained. Most banks are not courting new customers and are heavily dependent on relationships already in place, either directly with borrowers or through intermediaries representing clients.
But life insurance companies are beginning to re-enter the senior housing sector, targeting well performing independent living and assisted living facilities. Healthcare REITs and credit companies also have become more active lenders for these properties.
"Ironically, today it seems somewhat easier to put together an institutionally-backed, larger deal than a more typical bread-and-butter opportunity," he observed.
The future of the government-sponsored enterprises is a concern for getting these projects funded, Davis said, declaring "If Fannie Mae and Freddie Mac disappear from the scene, it would be a major blow for the senior housing senior housing industry."
