Constructing off of an energetic yr of senior residing transactions in 2024, business actual property lending agency Berkadia is looking for to take care of its momentum in 2025.
Final yr, Berkadia delivered over $1.63 billion in senior housing loans with Freddie Mac, Fannie Mae and Division of Housing and City Improvement (HUD) constructions, main government-sponsored enterprises (GSE). .
“You may actually really feel the momentum and the pendulum swinging again with extra exercise available in the market each on the debt facet and gross sales facet,” mentioned Cody Tremper, who’s the managing director of Berkadia Senior Housing and Healthcare.
Whereas distressed offers drove exercise in 2024, value-add acquisitions and stabilized properties have introduced “extra consideration” to transaction exercise in 2025, Tremper added.
In 2025, Tremper mentioned Berkadia expects its Fannie and Freddie transaction volumes to be “busier” in comparison with final yr’s record-setting tempo, pushed by higher entry to capital and working efficiency metrics bettering for portfolios throughout the nation.
Improvement this yr stays sluggish, widening the hole between new provide and demand. Newly applied tariffs solely complicate that image. Even so, Tremper mentioned traders and operators “perceive and notice” new development is required and was optimistic that new development and improvement would happen earlier than too lengthy..
“A yr and a half in the past, looking for improvement fairness was very powerful,” Tremper mentioned. “Now, it’s positively modified and we’re out available in the market with a number of offers proper now making an attempt to supply fairness companions for improvement and the listing continues to develop.”
Whereas these conversations on new improvement are nonetheless within the “early innings,” Tremper mentioned, the business was “getting shut.”
“We’re constructive and optimistic that we see the pendulum shifting in direction of extra improvement versus acquisitions and financing from business banking,” Tremper added.
As this constructive momentum grows, Tremper mentioned, Berkadia has “a number of offers” involving three or extra belongings inside a senior residing portfolio in comparison with previous yr’s during which single properties have been buying and selling palms. For 2025, Tremper sees these multi-property offers being made whereas single-property offers will proceed.
“We imagine 2025 goes to be a very robust yr for the business and past,” Tremper mentioned.
Relating to the potential privatization of Fannie and Freddie, Tremper mentioned the way forward for GSEs stays a “advanced coverage matter,” with Berkadia targeted on the current transaction panorama reasonably than speculate on future adjustments.
Whereas capitalization charges usually are deal-specific with various phrases, Tremper mentioned general cap charges have been compressing and values have been bettering in early 2025. Senior residing operators have began taking extra strategic approaches on producing internet working earnings (NOI) and driving margin enchancment this yr.
Margins, Tremper mentioned, have been a determine these concerned carefully on transactions would proceed to watch to find out fiscal well being of properties.
Following Welltower (NYSE: WELL) and the Toledo, Ohio-based actual property funding belief’s funding within the Affinity energetic grownup portfolio, Tremper estimated that decrease acuity merchandise like energetic grownup and impartial residing would stay standard for transactions in 2025, together with full continuum communities together with IL, assisted residing and reminiscence care.
“Individuals like having the again door with assisted residing and reminiscence care,” Tremper mentioned, as reminiscence care communities “generate a ton of curiosity.”
