HUD’s Section 232 mortgage insurance program is an excellent, tried-and-true option for refinancing existing skilled nursing, assisted living and memory care properties.
Section 232 for new construction? Well, that has been quite a different story. Less than 10% of HUD’s Section 232 production historically has been for construction or substantial rehabilitation.
That could change dramatically in the years ahead.
Demand for seniors housing and healthcare is on the rise, as the industry continues to recover from the effects of COVID and an aging population, especially the Baby Boom generation, increases demand.
As developers and operators seek capital to finance new projects or renovate and expand existing communities, the benefits of HUD-insured loans for construction and rehabilitation warrant a closer look. Permit us to give you a preview of what such loans offer:
- Non-recourse – no guarantees or pledges of outside collateral are required.
- Long term – up to 40 year amortization, with flexible prepayment options.
- Fixed rate of interest – no need to worry about refinancing risk.
- Assumable – this could be valuable in connection with a sale.
- High leverage -75% – 80% loan-to-value, up to 90% of replacement cost
Senior housing developers, ask yourself – does my commercial bank or other lending institution offer these favorable terms for construction financing? If the answer is no, contact us and we’ll help you take a closer look at the Section 232 program.
