New nursing home construction loan closings increased sixfold during the first quarter of the year compared to the same time period in 2021. The change marks the sector’s strongest quarter for such loans.
The rate of change is partially explained by a “very weak” fourth financial quarter in 2021, according to the National Investment for Seniors Housing & Care (NIC) Lending Trends Report.
Sixteen lenders contributed to the Q1 report but not all of them lend for nursing care, NIC researchers said; two only originate senior housing loans.
New construction loan closings for senior housing also increased by 39.4% from the fourth quarter, but below their recent peak in the third quarter of 2021, the report found.
Mini-perm bridge loans were down compared to the prior quarter for both nursing homes and senior housing but were still “fairly strong.” These types of loans are generally between three to five years in length and usually function as an intermediary loan following a construction loan, but prior to a longer-term mortgage loan, according to NIC.
Researchers said mini-perm bridge loans remained elevated compared to those originated in mid-2020 through mid-2021.
Nursing home mini-perm bridge loans declined 7.2% on a same-store basis, what NIC calls a modest reduction.
“Last quarter we posited that the heightened mini-perm/bridge loans in combination with the lowered permanent loans may reflect that some lenders may currently be more comfortable issuing a mini-perm over permanent loan for some deals,” added researchers.
New permanent loan volumes overall decreased for nursing care, with $628 million closed for the quarter. The figure is less than half of senior housing loans at $1.3 billion; new permanent loan volumes for the senior housing sector increased 38.2% in Q1.
Despite staffing issues and inflationary costs, participating lenders said there were no foreclosures in the first quarter of 2022.
Total loan balances were relatively stable for nursing and senior housing in Q1, with nursing decreasing 80 basis points. The decline follows three quarters of growth for the sector, NIC researchers found.
“The decline for nursing care reflects some loans coming off the books,” researchers said in the report.
Nursing home delinquencies were surprisingly flat in the first quarter as well compared to the previous quarter.
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