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.
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