Lenders are showing more interest in financing retirement housing, according to a recent report by Irving Levin Associates, a New Canaan, Conn.-based healthcare and housing research firm.
In previous years, retirement housing developers had difficulty obtaining access to capital, but "this is on the verge of changing," the report said. Irving Levin includes assisted-living and continuing-care retirement communities in its definition of retirement housing.
Commercial banks are stepping back into the market, and real estate investment trusts are "making a major push into the retirement housing and assisted-living market," the report said.
The improved lending environment is one of several trends highlighted in Irving Levin's 1994 edition of The Retirement Housing Acquisition Report. The report summarizes trends in the acquisition of retirement facilities from 1989 through 1993 and includes statistics on the sale of 150 retirement facilities with more than 20,000 units.
During the first half of 1994, REITs financed more than 25 retirement/assisted-living facilities with a total value of just under $400 million. Much of the dollar volume represents financing by Newton, Mass.-based Health and Retirement Properties Trust for Host Marriott's 14 retirement communities.
In addition, Toledo, Ohio-based Health Care REIT has designated as much as $26 million in financing for future acquisitions of assisted-living facilities by Standish Care Co.
Securitized mortgage programs, although in their infancy, offer another financing vehicle for retirement properties, the report said.
Although there are only three publicly traded retirement housing/assisted-living companies, Irving Levin foresees at least one more initial public offering by the end of 1995, and more if that offering is successful. The firm also believes there will be a new REIT dedicated to retirement housing by the end of 1995.
The renewed availability of acquisition financing, development of new properties and today's cost-containment incentives bode well for the market, Irving Levin said. Also, the federal government's simplified method of obtaining a Medicaid waiver for providing assisted-living services will lead to the growth of Medicaid as a payer. Assisted-living facilities have mainly served private-pay patients.