Over $1 billion in senior housing loans are now delinquent
LONDON: Across 15 different lenders, there were over $1 billion in loans tied to senior housing communities delinquent for over 60 days in the first quarter of 2021. And foreclosures totaled nearly $54 million during this period.
But the pace of loan delinquency has declined significantly from its Q3 2020 peak, according to a new lending trends report released Thursday by the National Investment Center for Seniors Housing & Care (NIC).
Additionally, closed new permanent and construction loans remained relatively weak in the quarter, and were at their lowest levels since the industry group began recording activity in mid-2016. And the same-store growth rate for permanent and construction loan issuances trended negative for four consecutive quarters.
The 15 organizations that contributed to the report included banks, commercial real estate services firms and other lenders.
Total senior housing loan delinquencies totaled $1.087 billion in Q1 2021 – a 50% drop from $2.2 billion in the third quarter of 2020 and 30.6% drop on a sequential basis, from when the second major wave of positive Covid-19 cases swept through the country.
Same-store new construction loan growth has been negative throughout the duration of the pandemic.
Total loan balances among participants in the report totaled $57.4 billion; delinquencies accounted for 1.9%. Foreclosures in the first quarter totaled $53.8 million, marking the first time foreclosures were recorded in the study since the first quarter of 2019.
This may reflect growing distress during Covid-19 among smaller operators that were already struggling with operations and financial performance prior to the pandemic’s onset.
Overall, new lending in the first quarter of 2021 was weak, with $1.2 billion in total closed loans. New construction lending, in particular, was impacted by projects being postponed due to pandemic-related uncertainties: the report’s participants reported $153.1 million in new construction loan volume during the quarter.
Participants reported $789.2 million in new permanent loan closures in Q1 2021 – a 45.6% drop from the previous quarter and the lowest recorded volume since the third quarter of 2016.
There are signs of optimism, however. The study’s authors cite anecdotal evidence among participants of improved lender interest in senior housing, coinciding with vaccine rollouts, which may be reflected in future quarters.
