Investors are bullish on long-term care, according to a recent survey.
Financing for new construction projects, renovations and acquisitions is flowing into the long-term-care and senior-living industries, the National Investment Conference for the Senior Living and Long Term Care Industries and Valuation Counselors has found.
"Lenders and investors are realizing that the industry is not just about real estate," said Harvey Singer, research director for the conference. "It's an ongoing business with significant service components that provide higher returns."
This summer, the conference surveyed 600 lenders and investors who had earlier indicated that they provide financing for senior-living, long-term-care and related healthcare projects.
The conference is a not-for-profit research group in Annapolis, Md. Its board of directors is composed of investors and lenders.
The 91 financiers who responded to the survey have collectively placed $12 billion of capital in the long-term-care and senior-living industries, the conference said. The primary respondents were commercial banks, mortgage bankers, investment bankers and insurance companies throughout the country.
From a reward vs. risk standpoint, 89% of the respondents rated long-term care as having better or as good lending potential as traditional real estate investments, compared with 73% in 1994. Senior-living projects were viewed as favorable by 95% of respondents in 1996, compared with 87% in 1994.
The respondents appear to be acting on this optimism. The survey found that 98% of respondents made loans to senior-living and long-term-care properties in 1996, compared with 69% in 1993. The median loan size for a senior-living or long-term-care property hovered at $50 million in 1995 and 1996 but is expected to rise to $80 million in 1997.
The properties the respondents said they are backing now are more service-oriented than in the past. Eighty-two percent of respondents financed nursing homes in 1996, compared with 63% in 1994; 78% financed assisted-living facilities, com-pared with 48%; and 44% financed specialty-care facilities, compared with 37%.
In addition, the conference reported that 60% of the respondents are offering more construction and risk capital financing, although proven properties are still preferred over start-ups.