M&T: Positives in Seniors Housing Include Rate Environment, Available Assistance

Matt Pipitone Fannie Freddie Seniors Housing

The seniors housing industry has had a particularly challenging year. But the latest data from NIC MAP shows COVID cases are down in nursing homes and occupancies are expected to rebound from historic lows in the coming months, says Matt Pipitone, seniors housing platform manager with M&T Realty Capital Corp. (MTRCC).

It remains to be seen how quickly leasing will ramp up and to what extent rents and incentives will be impacted long term. But in the meantime, Pipitone points to some positives on the financial side of the industry. Namely, the government has provided several rounds of stimulus money, which has helped operators, especially those who manage skilled nursing facilities. And Fannie Mae, Freddie Mac and HUD have offered assistance to borrowers in the form of forbearance programs and other debt service relief.

The agencies also remain active, but are cautious when treading in the sector, Pipitone says. “Fannie and Freddie have pulled back. Overall leverage is down, and there are debt service reserves required on new deals. But the rate environment is still really good. HUD, on the other hand, has been really steady. Borrowers can still get up to 80 percent loan-to-value with 1.45 times debt service coverage. And pricing for HUD loans is still very good in the mid-2 percent range.”

However, he says, the strength and experience of the sponsorship — operator and manager — is now more important than ever. As is stabilized occupancy.

That leaves many borrowers waiting for performance improvements at their properties and hoping for better credit terms. “This is where M&T Bank and our bridge product can step in to fill the voids,” Pipitone says.

MTRCC has a $2 billion seniors housing portfolio that includes properties across the spectrum: stand-alone independent living, assisted living, memory care, skilled nursing and combinations of each. Together, M&T Bank and MTRCC offer Fannie Mae, Freddie Mac, HUD, life company and balance sheet options for bridge and construction loans nationally.

“We’ve supported the healthcare and seniors housing industries with banking resources for more than 30 years,” Pipitone says. “We’ve continued to lend through the pandemic, just as we did through the recession 12 years ago.”

He adds, “I hope the pandemic has shown how great the seniors housing industry is. These communities never stop working — they work so hard to provide the best care for their residents. The pandemic has forced the industry to be more agile than ever with respect to embracing technology, different marketing tactics, ways to access PPE, changing regulations, the vaccine rollout — and even how they communicate with their teams, residents and residents’ families.”

— By Jaime Lackey. This article is posted as part of REBusinessOnline’s Finance Insight seriesClick here to subscribe to the Finance Insight newsletter, a four-part newsletter series, followed by video interviews delivered to your inbox in March.

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