Development capital for senior housing new construction financing has been in need of some modernization for quite a while. Historically, FHA/HUD have been the major players in providing incentive to fuel development of various classes of senior housing including assisted living, dementia care, skilled nursing care, independent living and age-restricted multifamily rental properties. The problems have been time and cost. The underwriting process can take years and the costs just keep adding up. Bank financing may be quicker in some cases, but the leverage is significantly lower and the rejection rate for new developers is higher than 4 out of 5 applications.
Senior housing development financing is fraught with risks that many people do not understand and cannot adequately quantify. Senior housing development financing requires a thorough underwriting approach that takes into account the reality that the take-out financing commitment (hard or soft) has to be there first or the rest of the capital stack – especially the equity financing – just will not come together before time expires and the entire senior housing development deal goes down the tube.
We need a game-changer for senior housing. Ideally, this game-changer would provide the following benefits:
- It would be faster than bank financing; and
- Provide more financial investment leverage than bank financing; and
- Provide non-recourse financing for the long-term; and
- Provide a sustainable model that can be just as certain as the FHA/HUD model; and
- It would be affordable.
If you are seeking these kinds of benefits then it is time to talk to INVIZEN about our DST take-out financing program and how it fits into creating a sustainable capital stack development strategy for your new construction project. Please contact us today at 832.663.9634 to learn more.