Insights

Overview

The 2025 National Investment Center (NIC) Conference underscored the complex but opportunity-rich environment facing the healthcare real estate market. Discussions focused on Skilled Nursing Facilities (SNFs), Assisted Living (AL), Independent Living (IL), and the middle-income seniors housing market. Labor shortages, policy shifts, and rising costs continue to challenge operators, but capital availability and innovative financing strategies are creating potential new opportunities.

Bridge financing emerged as a recurring theme across sessions, providing a critical pathway for borrowers to stabilize assets, reposition portfolios, and prepare for long-term debt solutions.

Skilled Nursing Facilities (SNFs): Navigating Staffing, Costs, and Policy Risks

• Skilled Nursing Facilities are facing persistent staffing shortages due to limited immigration, high rate of burnout among nurses, and wage competition from retail and service jobs. Operators are forced to pay more for staff while reimbursement levels remain uncertain.
• Federal minimum staffing rules, though delayed to 2034, are still expected to resurface, potentially adding to operators’ financial burden.
• Policy risks remain high, with Medicaid reforms underway and potential Medicare sequester cuts looming. While some facilities appear shielded in the short term, there may be long-term reductions in funding.
• Tariffs are increasing supply costs, and the rising cost of construction makes it more expensive to upgrade or build new SNF facilities.
• Bridge financing gives SNF borrowers the flexibility to stabilize operations during periods of rising labor and supply costs. It provides critical time to adapt to reimbursement changes and position for HUD takeout or other long-term financing once conditions are clearer.

Assisted Living (AL): Balancing Medicaid Waivers and Rising Demand

• Assisted Living communities often rely on state Medicaid waiver programs, which remain inconsistent and unpredictable across states. Many require residents to pay private rates before qualifying, creating affordability gaps and revenue volatility for operators.
• Despite reimbursement challenges, demand for AL is increasing, especially as seniors who delayed moves during the pandemic are re-entering communities.
• Bridge loans allow AL operators to stabilize occupancy and cash flow during these uncertain times. They provide flexibility to cover gaps while preparing for longer-term financing structures such as HUD or agency debt.

Independent Living (IL) and Middle-Income Senior Housing: Serving the “Silver Tsunami”

• Independent Living and middle-income senior housing are growth priorities as the sector seeks to serve seniors who earn too much to qualify for Medicaid but cannot afford luxury private-pay options.
• Many investors and operators are exploring conversions of older SNFs into Independent Living or affordable Assisted Living. This repurposing strategy meets demand while reducing the cost burden associated with new construction.
• Affordable Independent Living communities targeting blue-collar seniors and middle-income retirees were a recurring theme at NIC.
• Bridge financing enables these conversions by providing short-term capital that borrowers can use to reposition assets while securing permanent long-term financing.

Development, Repurposing, and Certificate of Need (CON) Rules

• Rising construction costs, driven in part by tariffs, continue to hinder new development projects across seniors housing and healthcare real estate.
• Certificate of Need (CON) restrictions further complicate supply dynamics. In CON states, new SNF beds may be limited, while in non-CON states, oversupply and competition risk are higher.
• Repurposing older facilities is an increasingly attractive solution. Bridge financing supports these redevelopment projects, making them feasible at a time when traditional bank debt may not be available.

Market Outlook: Optimism with Caution

• Investors remain highly interested in healthcare real estate, particularly in secondary and tertiary markets where demand is strong and supply remains limited.
• However, participants cautioned that compressed spreads and economic uncertainty could widen financing gaps. Many borrowers are seeking short- to mid-term loans in anticipation of interest rate declines.
• One recurring theme was clear: borrowers should avoid overleveraging and focus on conservative capital structures with greater equity alignment.
• Bridge financing offers the right balance of flexibility and discipline, enabling borrowers to seize opportunities today while remaining prepared for long-term sustainability.
• HUDs recently confirmed Scott Turner is focused on the goal of increasing efficiency regarding applications and closings.

Greystone’s Advantage in Healthcare Bridge Financing

• Greystone’s healthcare underwriting team brings deep experience across Skilled Nursing, Assisted Living, and Independent Living, with a proven ability to identify risks and structure deals that align with long-term goals.
• Dedicated servicing and asset management professionals guide borrowers through staffing shortages, compliance issues, reimbursement challenges, and market shifts, acting as long-term partners rather than just lenders.
• From initial underwriting to asset performance monitoring, borrowers benefit from Greystone’s combination of capital and advisory experience, ensuring they are well positioned to weather uncertainty and capture growth opportunities.

Key Takeaways for Borrowers

• Skilled Nursing Facilities must adapt to staffing pressures, policy risks, and higher costs.
• Assisted Living operators face Medicaid waiver uncertainty but can capture strong demand with the right financing strategies.
• Independent Living and middle-income housing present significant growth opportunities, especially through conversions and repurposing projects.
• Bridge financing is the essential tool that connects short-term stability with long-term solutions, allowing borrowers to navigate turbulence with confidence.
• With Greystone’s underwriting experience and operational support, healthcare borrowers can move forward strategically, turning today’s challenges into tomorrow’s opportunities.

Written by: Luann Gutierrez

Luann Gutierrez serves as the head of the senior housing asset management team for the special servicing division of Greystone.  In this role she primarily manages the resolution and liquidation of a portfolio of distressed senior living properties held in Freddie Mac and other CMBS securitizations, with the goal of maximizing recovery on each property for the benefit of the certificate holders that hold bonds in the applicable securitization. 

The information provided in this article, including, without limitation, any opinions, predictions, forecasts, commentaries or suggestions, is for informational purposes only and should not be construed to be professional or personal investment, financial, legal, tax or other advice.