The Future of Real Estate Financing in Seniors Housing

With 2026 in motion, we’ve sat down with two members of the VIUM team, Brendan Healy and  Connor Zierden, to discuss the current trends and projections for financing in seniors housing. Follow as they discuss whether we will see new construction in the coming year and what trends the industry has been underestimating and overestimating.

Q: Are there specific loan products, debt structures, or underwriting approaches gaining traction in the next cycle?

Something that's been talked about in the last few years, at every conference, is that new construction has been slow to rebuild from the pandemic. It really hasn’t hit pre-pandemic levels yet. But given the supply and demand issue coming down the pike over the next five to ten years, as baby boomers continue to age into assisted living and other acuity types, more new construction is expected to start.

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There will be a lot of construction debt being placed to help finance the construction of assets and support the lack of supply that exists today, compared to demand coming in the next few years. Having conversations with bank partners and preparing for that is important.

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PACE financing is also being used a little bit more. It’s a form of supplemental financing secured by the property and repaid through a property tax assessment. People are getting more creative. As new construction grows and more institutional capital flows into the space, lending will likely become more aggressive as groups become more bullish on senior housing.

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Over the next three to five years, there will likely be a lot of construction debt, along with creative secondary financing options like mezzanine debt or PACE, continuing to grow. In terms of underwriting approaches, things stay fairly similar. Short-term rates have come down slightly over the last year or two, which helps seniors housing projects better pencil and flows into underwriting. Between supply and demand, and where short-term rates have gone, those factors should work together to allow for more reasonable construction financing options.

Q: In 2026, will we see more new builds or more rehabs?

The expectation is that there may start to be more new builds, although it’s unclear if the inflection point happens this year. Over the last couple of years, there have been numerous acquisitions by large REITs, and the focus has been on rehabbing buildings, putting CapEx into them, and repositioning the projects in their respective markets.

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At some point, there will be more construction. That inflection point could happen this year, but even if it doesn’t, there are already more opportunities being discussed—whether it’s actual construction or just hearing about more potential projects. There will likely be a lot more activity this year.

Q: What are the biggest shifts in the seniors housing capital markets?

The capital markets have opened back up entirely. That shift began toward the end of last year. Coming out of COVID, it took several years for the census to fully rebound. During that time, inflation was high, which allowed operators to push through strong rent increases that were generally absorbed while also rebuilding census from pandemic lows.

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Now census is near peak levels and continuing to climb in most markets. At the same time, the Fed rate cuts and banks clearing congested balance sheets are leading to more exits off bank balance sheets and into permanent financing markets. Interest rates are coming down, census is up, and cash flows are improving.

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It’s almost analogous to what happened in 2012 and 2013 after the Great Recession, when the floodgates opened in the capital markets. As a result, there are more opportunities for operators and owners to acquire, refinance, restructure, and grow.

Q: If you’re a seniors housing operator planning for capital needs in 2026, what’s the most proactive step you can take today?

This depends on who you are, but one trend that’s been noticeable is that there are strong operating platforms with experienced teams looking to scale. Many rely heavily on equity partnerships with REITs or private equity to grow their platforms.

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That helps with scale, but the true equity and wealth creation happen on the real estate ownership side. There are creative ways for experienced operators to structure equity for acquisitions and growth that don’t require permanent equity partnerships and still allow them to ultimately capture the real estate.

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As more operators become aware of the upside in creating scale through real estate ownership over time, more of these creative structures are likely to emerge.

Q: Do you expect more owners to refinance, hold, or exit in 2026 based on where the debt markets are heading?

All of the above. There are many loans from 2022 and 2023 coming up for maturity. Performance is starting to hit its stride, and in some cases, banks have simply held loans too long and need to exit to refresh their portfolios.

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You’ll see refinancings, restructurings as credit spreads come in, recapitalizations where equity partners are bought out, and sales driven by the amount of liquidity in the market. Some groups are receiving unsolicited offers at values per unit that are difficult to turn down, even if they weren’t planning to sell.

Q: What trend is the industry overestimating, and what is it underestimating?

One overestimation is how long the industry can continue building assets that target the top 15–20% of income earners in a given market. Savings will be depleted over time with rising costs, and it will be difficult to maintain a full census at those rent levels.

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At the same time, the demographic wave is coming, and many people will not be able to afford those rents. What’s underestimated is how big a problem affordability is going to be over the next 20 years. It’s complicated due to construction costs, labor costs, and interest rates.

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Older vintage inventory may become the more affordable option, while newer developments typically target higher-income residents. Solving affordability will require involvement at the state and federal levels, including Medicaid support and possibly tax credit programs. It’s talked about often, but its importance is still underestimated.

Conclusion 

Senior housing capital markets are gaining momentum in 2026, creating real opportunities for operators and owners who are prepared to act. With construction financing returning, creative capital structures emerging, and refinancing and acquisition activity accelerating, the window to position portfolios for long-term growth is open, but it will not stay open indefinitely.

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Now is the time to evaluate your capital strategy, pressure-test your assumptions, and engage the right financing partners. Whether you’re planning a new development, repositioning an existing asset, or exploring refinancing or exit options, proactive planning will be the difference between reacting to the market and leading within it. Connect with our experienced team today to ensure your strategy aligns with where the seniors housing market is headed next.