Senior Housing Financing Hits Multi-year Highs Amid Stronger Lender Interest

Competition for senior housing investments remained high in the last year, led by tighter spreads, more aggressive bank pricing and increased deal structure flexibility.

That’s according to the NIC MAP Lending Trends Report. These signs show that “capital has reengaged with the sector,” NIC Senior Principal Omar Zahraoui told Senior Housing News on Tuesday.

Lending activity “strengthened” in both senior living and nursing care in 2025 as permanent and bridge loan volumes reached multi-year highs, Zahraoui noted.

“At the same time, lenders remain disciplined and highly focused on operator quality/performance, and market fundamentals,” Zahraoui told SHN. “For operators, that means access to capital is improving, but strong execution and operating performance remain critical differentiators.”

Increased competition among lenders signals “growing confidence” in the senior living sector, as lenders compete amid improving occupancy rates that will prompt further transaction opportunities, Zahraoui said.

Inflation of costs and geopolitical instability caused by the Iran-US war are pushing lenders to “remain active yet disciplined” in managing future transactions, he said. The report notes that lenders will focus on sponsor strength and the availability of debt when considering future deals.

“The Fed has become more cautious as inflation progress has moderated, and current expectations point toward rates remaining relatively steady through the remainder of the year, which provides lenders and borrowers with more predictability/visibility than we saw during 2022–2024,” Zahraoui said.

Debt service coverage constraints also continued to drag on transaction underwriting given still-elevated interest rates. Despite this, lenders reported an increased pace of loan applications and approvals, showing that capital availability was still improving as the sector moved into 2026.

Permanent lending increased in the second half of 2025, reaching “multi-year highs” of approximately $4.2 billion in the second half of last year, including $2.5 billion in the fourth quarter alone. This marks the highest level since mid-2019, according to the report. This increase was spurred on by elevated acquisition financing demand, improved property fundamentals and a “more competitive lending environment.”

The second half of 2025 saw the most active climate for permanent financing in years, characterized by an increase in transaction activity. The momentum was driven by multiple factors including declining benchmark interest rates, narrowing credit spreads and a revitalized interest from capital providers. Lenders focused on credit quality while prioritizing conservative debt service coverage ratios with disciplined underwriting standards.

Bridge loan volume totaled roughly $2.4 billion in the third and fourth quarters of last year, which was the highest two-quarter total since 2016 led by growing lender confidence in short-term financing deals and strong demand for acquisitions, repositionings and capital during lease up.

In the second half of 2025, senior living construction lending remained historically low, totaling $277 million in the third quarter and $143 million in the fourth quarter, the report states. This comes as supply remains “largely unchanged” in the second half of last year. Senior living delinquencies improved from 2.0% in the third quarter of 2025 to 1.5% in the fourth quarter of 2025, down from a 4.3% peak in 2023, while foreclosures in the second half of 2025 totaled $74.7 million.

The remainder of this year “will likely continue to see” active lending and transaction activity, Zahraoui said, among stabilized assets with strong operators.

“The biggest long-term theme remains supply. Construction activity is still historically low while demand continues to grow, creating the potential for supply-demand imbalance heading into 2027 and beyond,” Zahraoui said.

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