NIC Analytics released the 1Q2022 NIC Lending Trends Report today. The quarterly report, available for free to NIC’s constituents, currently tracks $86.5 billion in senior housing and nursing care loans. The report includes data for over five years of construction loans, mini-perm/bridge loans, and permanent loans from 3Q2016 through 1Q2022.
While there was a 39.4% quarter-over-quarter increase in new senior housing construction loans closed in first quarter 2022, new nursing care construction loans closed increased quite notably (over 600% on a same-store quarter-over-quarter basis). Though this increase is partially explained by a very small number of new nursing care construction loans closed in the prior quarter, it is still the largest same-store quarter-over-quarter increase for nursing care new construction loans in the recorded time series to date. This blog discusses the key takeaways from the first quarter report.
Takeaways from the 1Q22 NIC Lending Trends Report.
Nursing care new construction loan closings were very strong in first quarter 2022 following a weak fourth quarter 2021. Partially due to the low fourth quarter, the quarter-over-quarter same-store growth for nursing care new construction loan closings was 645.8% in first quarter 2022. Senior housing new construction loan closings also picked up in first quarter 2022 from fourth quarter 2021 at a growth of 39.4% on a same-store quarter-over-quarter basis. However, the senior housing new construction loan volume closed was below its recent peak in third quarter 2021.
Delinquencies were quite flat in first quarter 2022. Nursing care delinquencies remained unchanged from fourth quarter 2021, and senior housing delinquencies had a modest increase of 5.0% on a same-store quarter-over-quarter basis. This increase for senior housing was less than half of its increase in fourth quarter 2021 (13.6%). Delinquencies for both senior housing and nursing care were below 1.5% of total loans (1.1% for senior housing, 1.4% for nursing care). There were no foreclosures for the sample in first quarter 2022.
New mini-perm/bridge loans closed for senior housing were down in first quarter 2022 from their recorded high in fourth quarter 2021, but were still well above the levels from second quarter 2020 through third quarter 2021. On a same-store basis, the quarter-over-quarter decline was 50.7% for senior housing. Nursing care mini-perm/bridge loan closings remained at a high level, but also had a decline in first quarter 2022 from the fourth quarter 2021. However, the decline for nursing care mini-perm/bridge loan closings was more modest at 7.2%. 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.
These data are not to be interpreted as a census of all senior housing and skilled nursing lending activity in the U.S., but rather reflect lending activity from participants included in the survey sample only.
The 2Q2022 NIC Lending Trends Report is scheduled be released in mid-November 2022.
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