Feature Story: Same underwriting, new ‘math’

Inflation, interest rates and the bid-ask gap have slowed HRE lending

By John B. Mugford

Changes to economic conditions and the healthcare real estate (HRE) market are what are driving a decline in loan volume, according to a recent panel discussion of HRE lenders. (Photo courtesy of BOMA)

If healthcare real estate (HRE) loan volume has declined in recent months, lenders say, don’t blame them.

The real culprits, they say, are rising inflation and higher interest rates, as well as the gap between seller expectations and what buyers are willing (and able) to pay. Although underwriting standards are similar, they say, those other issues have “changed the math” for HRE lending, resulting in fewer opportunities, fewer asset sales and, consequently, fewer loans.

That was according to a group of the HRE industry’s top lenders who gathered at the recent 2023 BOMA International Medical Office Buildings (MOBs) + Healthcare Real Estate Conference in Chicago.

“Our underwriting standards have stayed very similar, so we haven’t really changed a lot in that regard, and our risk tolerance is about the same as it’s always been,” Erik Tellefson, senior managing director with a healthcare-focused team at McLean, Va.-based Capital One (NYSE: COF), told the BOMA audience.

“I would say that the primary change is

The full content of this article is only available to paid subscribers. If you are an active subscriber, please log in. To subscribe, please click here: SUBSCRIBE

Existing Users Log In