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Delinquent loans declined in senior living in the second quarter but increased in skilled nursing during the same period, according to the recently released 2Q2021 NIC Lending Trends Report.
The quarterly report from NIC Analytics, which tracks more than $86.9 billion in loans to senior living (independent living and assisted living) and skilled nursing operators, found that senior living loan delinquencies declined for the third consecutive quarter, with only 1.2% of loans being delinquent in the third quarter following a record peak of 3.8% in the third quarter of 2020.
By comparison, the National Investment Center for Seniors Housing & Care noted, skilled nursing delinquencies increased from 0.8% in the first quarter to 1.6% in the third quarter.
Newly closed construction loans
Volume on newly closed construction loans increased for both sectors in the second quarter after four quarters of slowing activity related to the pandemic, according to the report. The increases, according to NIC analysts, could reflect renewed interest in projects put on hold during the pandemic as well as “renewed optimism” about the sector’s recovery path.
Senior living saw newly closed construction loans jump 46.7% on a same-store, quarter-over-quarter basis, the highest recorded quarterly increase since fourth quarter 2017, NIC said. Skilled nursing saw even larger growth, at 71.4%, for newly closed construction loans.
Permanent loans, foreclosures, loan balances
The number of new permanent loans issued for senior living also increased in the second quarter, with a same-store increase of 46.3%, the largest quarter-over-quarter increase since the third quarter of 2019. Skilled nursing numbers, however, slipped in the second quarter, hitting their recorded low point since mid-2016, with same-store, quarter-over-quarter new permanent loans down 25.5%, the largest drop since the first quarter of 2020.
Foreclosures totaled $63 million for senior living in the second quarter, marking the second consecutive quarter that the sector saw foreclosures after nine quarters of none.
Total loan balances remained flat for senior living, with a 0.7% increase in the second quarter. Skilled nursing loan balances, however, increased 3.5% in the second quarter, marking the largest same-store, quarter-over-quarter gain since the third quarter of 2019.
