Insights in Seniors Housing & Care
By: Omar Zahraoui and Bill Kauffman | February 08, 2023
Business Environment | Economic Trends | Market Trends | Senior Housing
NIC Analytics has released the 3Q 2022 NIC Lending Trends Report. The quarterly report, available for free to NIC’s constituents, currently tracks $85.1 billion in senior housing and nursing care loans. The report includes data over six years for construction loans, mini-perm/bridge loans, and permanent loans from 3Q 2016 through 3Q 2022.
Against a backdrop of a sharp and quick rise in interest rates over the course of 2022, closed new permanent loan volumes fell to a time series low in the third quarter of 2022 for both senior housing and nursing care. Closed new permanent loans for senior housing fell by 21.6% to approximately $776.9M in the third quarter of 2022, while new permanent loans closed for nursing care decreased by 37.6% to $413.1M. For the sample of lenders tracked in the Lending Trends Report, new permanent loan volumes closed for nursing care were 47% less than that of senior housing.
Similarly, new construction loan volume weakened for both senior housing and skilled nursing. Senior housing new construction loan closings fell by 61.6% in the third quarter of 2022 on a same-store quarter-over-quarter basis. This was the largest quarterly decline since 2017. Skilled nursing construction volumes, already weak, fell further in third quarter 2022 to its lowest level since the beginning of the pandemic in the first quarter of 2020. The quarter-over-quarter same-store growth for nursing care new construction loan closings was negative 91.4%.
As a result of weak activity in both permanent, bridge and construction lending, total loan balances decreased for both senior housing and nursing care in third quarter 2022. On a same-store basis, the senior housing and nursing care loan balances fell by 1.6% and 3.0% in third quarter 2022, respectively.
Also, total construction/mini-perm/bridge loan balances for senior housing declined in third quarter 2022, down 4.6% on a same-store quarter-over-quarter basis. This marked the first and largest decline in the time series after eight consecutive quarters of growth for senior housing, while nursing care loan balances had a double-digit decrease of 18.2% in third quarter 2022 on a same-store basis. This was also the largest decline in the time series. These trends reflect the notable slowdown in construction activity, according to NIC MAP Vision data.
The number of delinquent loans edged higher in third quarter 2022 for both senior housing and nursing care. Notably, delinquencies as a share of total loans stood at 1.2% for senior housing and 1.3% for nursing care - up 0.2 and 0.4 percentage points from prior quarter, respectively.
However, no foreclosures were reported for the sample in third quarter 2022 for both senior housing and nursing care.
Note: 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 4Q2022 NIC Lending Trends Report is scheduled be released in mid-May 2023.
Interested in participating? The NIC Lending Trends Report helps NIC Analytics to deliver on NIC’s mission to enable access and choice by further enhancing transparency of capital market trends in the senior housing and care sectors. We very much appreciate our data contributors. This report would not be possible without them.
If you would like to participate and contribute your data, please contact us at analytics@nic.org. As a courtesy for providing data, data contributors receive this report early before publication on the website. The information provided as part of the survey will be kept strictly confidential. Individual answers will be combined with the answers of all other respondents. Data acquired from this survey will only be reported in the aggregate, and therefore, the resulting aggregated data will not be attributed to you or your company upon distribution.
Omar Zahraoui, Principal at the National Investment Center for Seniors Housing & Care (NIC), is a senior housing research professional with expertise in providing quantitative analysis and insights on seniors housing & care market data; building new products and reporting capabilities, including dashboards and proformas for clients and internal stakeholders; and implementing new processes and data solutions. Prior to his current role, Omar worked as a data analyst, at Calpine Corporation, supporting the development of new-business strategy initiatives, analyzing sales and financial data, and developing statistical modeling of consumers’ behaviors to drive business performance. Omar holds a Bachelor’s degree in Business Administration with concentrations in Finance and Management, a Master in Corporate Finance from IAE Lyon School of Management at Jean Moulin Lyon III University in France, and a Master of Science in Management Information Systems and Data Analytics from Pace University.
Bill Kauffman works with the research team in providing research and analysis in various areas including sales transactions and skilled nursing. He has lead roles in creating new and enhanced products and implementation of new processes. Prior to joining NIC he worked at Shelter Development in investing/acquiring, financing, and asset management for over $1 billion in assets. He also had key roles in the value creation and strategic planning and analysis for over 65 entities. He received his Bachelor of Business Administration in Finance from the College of Business and Economics at Radford University and his Master of Science in Finance from Loyola College in Maryland. He also holds the Chartered Financial Analyst Designation (CFA).
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