Seniors Housing Business

APR 2018

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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Page 28 of 48

28 Seniors Housing Business n April 2018 By Jeff Shaw To say 2017 was a big year for Fannie Mae and Freddie Mac in the seniors housing lend- ing arena would be an understatement. Fannie Mae's volume skyrocketed 267 per- cent, rising from $1.5 billion in 2016 to a record high of $5.5 billion in 2017. Freddie Mac saw a more modest increase, but still set a record high with volume rising from $3.2 billion in 2016 to $3.6 billion in 2017, a 12.5 percent increase. Both Fannie and Freddie noted that they had an uptick in "large deals" in 2017. Most nota- bly, JLL arranged a $975 million Fannie Mae credit facility to refinance 51 Brookdale Senior Living properties in September. Near the end of the year, KeyBank arranged a total of $192.5 million in Freddie Mac loans for Kayne Anderson Real Estate Advisors to refinance six seniors housing properties in Texas. "We completed several large transactions in 2017, in addition to our day-to-day business," says Phyllis Klein, vice president of multifam- ily customer engagement, production and com- munication for Fannie Mae. "We have always been a great fan of the seniors housing busi- ness. We are very comfortable with increasing our volume to these levels." Both lenders note that seniors housing accounts for between 4 and 5 percent of their total deal volume, a rate that has stayed consis- tent year over year. What raised the bar? Fannie Mae and Freddie Mac are govern- ment-sponsored enterprises (GSEs) that pro- vide liquidity to the multifamily sector. These two agencies purchase loans in the secondary market, which frees up lenders to generate more loans. Steve Schmidt, national director of Freddie Mac Senior Housing Production, says that the recent trend of the major REITs becoming net sellers opened the door for the GSEs. Institu- tional investors and private equity firms have been the buyers in those transactions and are among the prime customers of Fannie Mae and Freddie Mac lenders. "The large deals are going to continue in 2018 and beyond. REITs will stay net sellers, and those properties are often sold to private equity funds," says Schmidt. "This high volume is a trend we'll see for a few more years. Brookdale Senior Living is going to increase its disposi- tions as well, for example." (For more on Brook- dale Senior Living, please turn to page 42). Fannie Mae is forecasting a slower year in 2018 than it saw in 2017, but that's to be expected following a 267 percent increase. Klein predicts the agency's deal volume in the seniors housing space will tally approximately $2.5 billion in 2018, considerably higher than 2016 but much lower than 2017. GSEs Hit High Note n Finance Fannie Mae, Freddie Mac both post record deal volume in 2017. Lancaster Pollard provided a $51.2 million Fannie Mae loan that refinanced construction debt for The Plaza at Waikiki in Honolulu. MW Group owns the property, which was built in 2015. The community has been named Hawaii's best senior living facility for three consecutive years by The Honolulu Star Advertiser. Freddie Mac helped finance an expansion at The Gatesworth, a continuing care retirement community in St. Louis. The three- story, 102,000-square-foot expansion will add 90 assisted living apartments to the community.

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