Independent Living Facility Bridge Loans & Alternative Cash Financing Programming...

Senior housing bridge financing (including independent living facility bridge loans) is becoming increasingly difficult to obtain because commercial real estate lenders and institutional investors continue to worry about "slop over" from the housing market.  They should be concerned.  As housing inventories swell and prices start to fall, the available capital for personal care (including residency in a senior housing project) is likely to decrease.  This condition precedent makes new facility lease-ups even more fraught with market risk.  The solution to this is to increase the developer's financial investment leverage by increasing the equity capital in the transaction.  No consideration should be given to bridge loans unless the property is already open and operating at its maximum sustainable operating capacity.  In the alternative, the roll-out of new facilities must provide for staged development to reduce the inventory lease-up risk to the absolute lowest possible level as a precondition to undertaking a loan application.  But is that enough?  Must the equity go as the price of capital's intervention?

We know, we know...  

You don't want to get diluted; we agree.  We can cushion the equity dilution by dividing the transaction into two (2) parts; the real estate holding company business opportunity and the ongoing facility operations business.  The investors get the real estate interests and the developer gets the operating business along with an earn-out strategy that would make most developers glow in the dark with envy.  Time to check out all of your options before you leap into the breech.

Senior housing bridge loans (and mezzanine loans, for that matter) are currently being offered on a full-recourse basis, so if the deal goes south on the developer, the developer will be personally responsible for repayment; not an optimal outcome.

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