Financing for Senior Housing and Healthcare-Oriented Residential Properties
First National provides commercial real estate financing for qualified owners, purchasers and experienced operators of assisted living and senior housing properties.
For more than four decades, First National has originated, underwritten, closed and serviced commercial real estate loans. As a Principal Lender, First National provides its own capital, conducts its own underwriting and makes its own lending decisions.
Senior housing is specialized real estate supported by an operating business. Occupancy matters, but a property’s financial performance also depends on resident mix, monthly rates, levels of care, staffing, labor costs, licensing, operator experience, property condition and local competition. First National evaluates the real estate and the operating business together.
We provide our own capital and make our own lending decisions.
More than four decades of commercial real estate lending inform our approach.
First National considers financing for qualified senior housing projects such as assisted living facilities, memory care facilities, independent living communities, skilled nursing facilities and Continuing Care Retirement Communities (CCRCs).
Financing may be considered for qualified acquisitions, refinancing and other appropriate financing requirements.
Minimum Loan Amount: $4 million
Typical Loan Size: $7 million to $10 million
Typical Loan-to-Value: Approximately 65%
Every transaction is individually underwritten. Final loan structure depends on the property, operating performance, operator, sponsorship, collateral and other underwriting considerations.
First National considers financing for a range of qualified senior housing transactions.
Owners, purchasers and experienced operators may contact First National to discuss a proposed assisted living or senior housing transaction. Borrowers work directly with the organization evaluating and funding the financing request.
Preparing for senior housing financing starts with understanding what a lender will evaluate. Our complimentary guide covers operating performance, occupancy, resident mix, labor, capital needs and First National’s published senior housing program parameters.
Different levels of care can produce different revenue, staffing requirements and operating costs. First National considers the characteristics of each property type when evaluating a financing request.
Assisted living facilities combine residential accommodations with varying levels of personal assistance and support. First National may consider base rates, additional care charges, resident acuity, staffing, occupancy, licensing and operator experience. The cost of delivering each level of care is an important part of the financial picture.
Independent living communities generally serve residents who can live independently while benefiting from housing, dining, social activities and other services. Underwriting may consider occupancy, monthly rates, turnover, operating expenses, amenities, competition and capital needs.
Memory care facilities provide specialized supervision and services. Staffing, facility design, security, programming and regulatory considerations may differ from conventional assisted living. First National may evaluate those requirements alongside occupancy, rates and historical performance.
Skilled nursing facilities can involve additional operating and reimbursement considerations. Depending on the facility, revenue may include private-pay residents and governmental or other third-party reimbursement. Payer mix, reimbursement characteristics, staffing, licensing, operating history and management experience may all be relevant.
A CCRC may combine independent living, assisted living, memory care and skilled nursing on one campus. First National may examine the individual operating components as well as the overall property. The financial structure should be assessed in the context of the specific community.
Occupancy is important, but does not establish the strength of the property.
Underwriting also considers
A highly occupied property with weak margins, or rising costs may present a different credit profile than with somewhat lower occupancy but stronger operating fundamentals.
Therefore, First National considers the sustainability of the operating business together with the value and condition of the underlying real estate.
For an acquisition, First National may review purchase price, independently determined value, equity, operating history, occupancy, resident mix, rates, labor expense, licensing, operator experience, competition, property condition, sponsor capacity and the post-acquisition plan. Purchase price alone does not determine the appropriate loan amount.
For a refinance, First National considers sustainable cash flow, independently determined value, existing debt, operator and sponsor experience, financial capacity and property condition. Any appraisal relied upon in First National’s lending decision is ordered directly by First National.
For substantial improvements, First National may review plans and specifications, budget, schedule, borrower contribution and the effect of work on residents and operations. Advances may require supporting documentation and review of completed work by an unrelated third party approved by First National.
Senior housing generally combines real estate with an operating business providing services to residents. Staffing, resident care, licensing, rates, occupancy and operator experience can therefore be significant underwriting considerations.
First National considers qualified assisted living, memory care, independent living, skilled nursing and Continuing Care Retirement Community properties.
First National’s minimum senior housing loan is $4 million. Typical loans are approximately $7 million to $10 million, although every transaction is individually evaluated.
First National’s typical senior housing loan-to-value is approximately 65%, subject to underwriting and the individual transaction.
Different levels of care can produce different revenue, staffing and operating requirements. Resident mix can therefore materially affect both revenue and expenses.
Senior housing is labor intensive. Changes in wage rates, staffing, overtime, employee turnover and agency labor can materially affect sustainable operating cash flow.
Yes. The experience and financial capacity of the operator are important considerations when underwriting a specialized operating property.
Yes. First National considers acquisition financing for qualified purchasers and operators of senior housing properties.
Any appraisal relied upon by First National in making its lending decision is ordered directly by First National.
