The issuance of new mini-perm / bridge loans for senior living operators hit a record high of nearly $1 billion in the fourth quarter of 2021, whereas the issuance of permanent senior living loans moderated, according to the 4Q21 NIC Lending Trends Report issued Thursday.
Construction loans decreased in the fourth quarter compared with the volume issued in the previous quarter.
The quarterly report from NIC Analytics currently tracks $86.7 billion in loans to senior living (independent living and assisted living) and skilled nursing operators. The report includes trends for five years of sector construction loans, mini-perm / bridge loans and permanent loans from the third quarter of 2016 through the fourth quarter of 2021.
Mini-perm / bridge loans generally have amortization periods of three to five years and fill a gap between a construction loan and a permanent loan. According to NIC research statistician Anne Standish, the uptick in mini-perm / bridge loans suggests that “some lenders are more comfortable with the lower-risk shorter-term nature of mini-perm/bridge loans as some senior housing operators build occupancy and demonstrate a longer performance track record.”
The report found that delinquencies edged slightly higher in the fourth quarter of 2021 from the previous quarter for both senior living and skilled nursing. Still, delinquencies remain well below the pandemic-related highs in the third quarter of 2020. Delinquencies represent less than 1.5% of total loans to senior living and skilled nursing.
Total loan balances for senior living decreased slightly in the fourth quarter, whereas total loans for skilled nursing continued to increase for the third quarter in a row. Whereas total loans for senior living declined by 1.4% in the fourth quarter on a same-store basis, total loans for skilled nursing increased by 2.1% from the previous quarter. The decline for senior living includes maturing loans coming off the books for some lenders.