TOMBALL, TX—Large local and regional care managers and private funds are targeting nursing care centers, which remain a significant portion of seniors housing transaction velocity. Initial yields for skilled nursing properties can extend from the 8% area to above 11 to 12.5%, depending on a number of factors, according to Marcus & Millichap's most recent senior housing report.

In an example of a recent funding for this type of product, Love Funding recently closed an FHA loan to take out bridge financing for the acquisition of an assisted living and memory care facility in Tomball. Love Funding senior director Leonard A. Lucas of the Boston office obtained the bridge loan from Love Funding's parent company, Midland States Bank.

“As the population ages, greater and greater numbers of people suffer from dementia,” Lucas tells GlobeSt.com. “This disease often requires around the clock care, making the memory care assisted living environment the senior housing provider of choice.”

The new loan, secured through the US Department of Housing and Urban Development's Section 232/223(f) program, will pay down the bridge loan and provide low-rate non-recourse financing for a 35-year term. The bridge loan made it possible for the buyer to move forward with the transaction on the seller's timeframe. Love Funding's affiliation with Midland helped keep the financing costs down, despite the very short-term nature of the bridge loan.

“It would have been very difficult for the borrower to obtain a 60-day loan from another party at something less than a premium,” Lucas said. “This was a unique transaction made possible by our parent company, Midland States Bank.”

Love Funding introduced the bridge loan platform in May 2015 as a means for providing interim funding support for acquisition and refinancing applications on HUD multifamily and healthcare loans. The platform was later expanded to include tax credit equity bridge loans, and construction/mini-perm financing for multifamily and healthcare development. To date, Love Funding has financed more than $153 million in bridge loans, with another $220 million in loans in the pipeline.

Strong demographic trends are propelling the seniors housing market forward, says Marcus & Millichap. According to the Social Security Administration, a person turning 65 today will live, on average, well into his or her 80s, with 25% of those individuals' lives extending past age 90. This age cohort will expand significantly during the next 10 years as more than 20 million from the baby boomer generation joins this segment, and the 65-plus age cohort will account for 20% of the total population, GlobeSt.com learns. As a result, housing and medical services to accommodate these individuals' needs have become a top priority for select groups and have prompted a construction boom in the seniors housing segment. Luxury assisted living and independent living communities are leading the charge.

Instant Insights /

Investors Target Senior Housing as Population Grays

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