The senior housing capital market shows signs of regaining balance, which is a good thing, especially for projects delayed by Covid-19. Banks have begun underwriting construction and development financing, but they often demand recourse in return from borrowers. Recourse requirements for construction financing are starting to lessen and may result in lending activities and a rise in new construction. This occurrence, however, depends on factors such as confidence in vaccination procedures and demand for senior housing comes through. If you need a reliable firm that can put you through the process of senior housing construction financing in Florida, ALF for Sale is your right choice. Learn more about how ALF For Sale can help the recourse process and construction financing.
What Does Senior Housing Construction Financing Entail?
Last year, the equity and debt markets returned to the sidelines and chose to wait out the halt brought about by the wave of Covid-19 positive cases. Lenders went back to the needs, private debt occupied the void created by national banks, and underwriters found favor in structured deals. Regional banks requested recourse in some measures, depending on equity brought by the borrower to a development. Before the pandemic, banks gave non-recourse loans at loan-to-cost ratios of 55% to 65%. Presently, these non-recourse loans go at ratios of 40% to 50% range. And this might remain the standard for the near future.
What Other Events Followed?
National banks and big regional banks chose to satisfy their existing clients with excellent development records throughout the pandemic, dividing deal size. Projects that required construction financing below $25 million could secure loans. Projects with the $40 million cost to $50 million range had more changes to need syndication to land financing. Banks increased recourse requirements, thus opening up more avenues for private debt funds to provide non-recourse debt, although at high rates. Currently, private funds offer a non-recourse debt rate at a 75 point and 100 point basis, higher than interest rates offered by banks for recourse debt. So, weigh your options and choose which is best for you.
Why Do You Need Us?
Lenders now conduct stringent scrutiny, checking market demographics and construction pro formats to ensure it is worth underwriting. Developers and operators have to access their development channels and prioritize projects with high chances of success. At ALF For Sale, our senior housing collection comprises various communities in medium and high-end markets in Florida. We are searching for avenues even in neglected markets to tap the potential. Operators and owners should discuss at the onset of a project to note areas of improvement. It is essential in this period as baby boomers become aged, leave the workforce, and gravitate towards senior housing. Trends such as swimming pools, centralized common spaces, organized outdoor areas, and fitness centers will increase future demands. Reach out to an operator early so they can discover opportunities for design elements of your vicinity.
ALF For Sale is available to guide you through financing senior housing construction in Florida and ensuring you get the best and nothing less. Take this opportunity to work with an experienced team of professionals. Call us today for a free consultation.