Loan volume hits record high in fourth quarter, NIC says

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Loan activity in the long-term care industry stayed robust in the fourth quarter of 2006, according to an organization that monitors this growth.

Loan volume totaled $2.2 billion - the highest amount ever placed in the industry by major national lenders, according to the National Investment Center for the Seniors Housing & Care Industry, which has tracked lending data since 1999. Loan performance was strong at 99.4%. Median occupancy rates were fairly stable during the quarter for skilled nursing and continuing care retirement communities.

Another industry indicator is capitalization rates, which were at historic lows in the fourth quarter, NIC said. The mean cap rate for skilled nursing was in the 12% range. Assisted living had a mean cap rate of 8.7% while continuing care retirement communities had a mean cap rate of 8.3%.

The lower the cap rate, the stronger the value of the property. Long-term care is inching closer to cap rates in other institutional real estate asset classes, such as office, industrial, retail and multi-family, said Anthony J. Mullen, research director of NIC.