As senior housing owners face the 2026 maturity wall, understanding your financing options and acting proactively is crucial. This comprehensive guide explores eight strategic pathways to successfully refinance your properties.

The Challenge Ahead: Understanding the 2026 Maturity Wall

The senior housing and care industry faces a significant financing challenge in 2026 as billions of dollars in loans reach maturity. This "maturity wall" represents both a challenge and an opportunity for property owners and operators. Understanding your options and acting proactively can mean the difference between a smooth refinancing process and a stressful scramble.

Current Market Conditions

The financing landscape has evolved considerably since many of these loans were originated. Key factors shaping today's refinancing environment include:

• Higher Interest Rates: The Federal Reserve's actions have pushed rates significantly higher than the 3-4% many owners enjoyed in recent years
• Stricter Underwriting: Lenders are requiring stronger debt service coverage ratios and lower leverage
• Increased Scrutiny: Operations, occupancy trends, and market dynamics receive more careful evaluation
• Capital Stack Complexity: More deals require mezzanine debt or preferred equity to close the gap

Eight Strategic Refinancing Pathways

1. HUD/FHA 232 Financing

The HUD 232 program remains one of the most attractive options for qualifying properties.

Advantages:

• Non-recourse financing
• 35-year amortization
• Loan-to-value up to 85%
• Rate locks available early in process
• Assumable loans add future value

Considerations:

• 6-9 month timeline minimum
• Extensive documentation requirements
• Properties must meet physical and operational standards
• Requires approved HUD lender

Best For: Stabilized properties with strong operations, owners planning long-term hold, properties that can withstand longer closing timeline.

2. Fannie Mae Senior Housing Loans

Fannie Mae offers several products tailored to senior housing.

Advantages:

• Competitive rates
• 30-year amortization available
• Flexible prepayment options
• Supplemental financing available
• Quicker process than HUD (3-5 months)

Considerations:

• Requires Fannie Mae-approved lender
• Minimum DSCR requirements (typically 1.25x+)
• Maximum 75-80% LTV
• Market rent restrictions in some cases

Best For: Properties with solid operations seeking balance between terms and speed, owners wanting more flexibility than HUD.

3. Freddie Mac Senior Housing Loans

Similar to Fannie Mae but with some distinct characteristics.

Advantages:

• Competitive with Fannie Mae on pricing
• 30-year amortization
• Green financing incentives available
• Strong servicing platform

Considerations:

• Similar DSCR and LTV requirements to Fannie
• Requires approved lender relationship
• Market-specific restrictions may apply

Best For: Properties meeting GSE criteria, owners comparing agency options for best execution.

4. Life Company Permanent Loans

Traditional life insurance companies remain active in senior housing.

Advantages:

• Relationship-based lending
• Flexible structures possible
• Long-term fixed rates
• Can move relatively quickly (2-4 months)
• Often more flexible on property types

Considerations:

• Lower leverage than agencies (typically 60-70% LTV)
• Stricter operational requirements
• May require stronger sponsorship
• Prepayment penalties can be significant

Best For: Well-capitalized owners with strong operating track records, properties that may not fit agency boxes, sponsors with existing life company relationships.

5. Bank Portfolio Lending

Regional and national banks continue lending on senior housing.

Advantages:

• Faster closing timelines (45-90 days possible)
• More flexible underwriting
• Relationship-based decisions
• Can work with transitional properties
• Potentially lower closing costs

Considerations:

• Shorter terms (5-7 years typical)
• Lower leverage (65-75% LTV)
• Floating rates or shorter rate locks
• May require recourse or partial recourse
• DSCR requirements vary

Best For: Transitional properties, bridge to stabilization, owners with strong banking relationships, properties needing quick execution.

6. CMBS Refinancing

Commercial mortgage-backed securities remain an option for larger deals.

Advantages:

• Non-recourse structures
• Can achieve high leverage in right circumstances
• 10-year fixed rates common
• Defeasance allows for sale flexibility

Considerations:

• Typically $10M+ minimum loan size
• More rigid operational requirements
• Assumption/defeasance can be costly
• Market conditions impact availability
• More documentation requirements

Best For: Larger portfolios, stabilized properties, owners comfortable with less flexibility, rate-focused borrowers.

7. Private Credit and Debt Funds

Private lenders have become increasingly important in senior housing.

Advantages:

• Speed of execution (30-60 days)
• Flexibility on property condition and operations
• Higher leverage possible
• Creative structures available
• Fewer covenants
• Can work with value-add situations

Considerations:

• Higher interest rates (8-12%+)
• Shorter terms (2-5 years)
• Higher fees
• May require equity participation
• Due diligence still required

Best For: Transitional assets, lease-up situations, properties requiring capital improvements, bridge financing, time-sensitive situations.

8. Preferred Equity and Mezzanine Structures

When senior debt isn't enough, these tools can help bridge the gap.

Advantages:

• Fills gap between senior debt and equity
• No monthly payment required (in preferred equity case)
• Can achieve higher effective leverage
• Flexible structures possible

Considerations:

• Higher cost of capital (10-15%+)
• Subordinate to senior debt
• May include equity participation
• Exit fees common
• More complex documentation

Best For: Supplementing senior debt, maximizing leverage, preserving ownership percentage, properties with near-term value creation.

Common Challenges and Solutions

Challenge: Property Not Stabilized

Solutions:

• Target private credit lenders comfortable with lease-up
• Structure bridge-to-permanent financing
• Consider mezzanine debt to reduce senior debt requirement
• Demonstrate clear path to stabilization

Challenge: Cash-Out Required

Solutions:

• Layer mezzanine debt above senior loan
• Consider preferred equity partners
• Explore sale-leaseback structures
• Review opportunity for rate-and-term refinance instead

Challenge: Tight Timeline

Solutions:

• Start process 9-12 months before maturity
• Consider bridge loan if needed
• Engage experienced advisor early
• Have backup lender options ready

Challenge: Higher Rates Impact DSCR

Solutions:

• Extend amortization period
• Reduce loan amount if possible
• Demonstrate operational improvements
• Consider interest rate caps or hedges
• Evaluate repositioning to increase NOI

Proactive Steps for Success

Start Early (12+ Months Before Maturity)

• Engage Advisory Team: Work with experienced debt advisors who understand senior housing
• Financial Assessment: Update financial projections and property valuations
• Property Review: Address deferred maintenance, conduct physical needs assessment
• Document Organization: Gather rent rolls, financial statements, property docs
• Market Analysis: Understand competitive set and market dynamics

Strengthen Operations (6-12 Months Out)

• Occupancy Focus: Drive census if below market
• Rate Optimization: Review pricing strategy
• Expense Management: Address any operational inefficiencies
• Quality Improvements: Small capital investments with strong ROI
• Documentation: Clean financial reporting, trailing 12-month focus

Execute Strategy (3-6 Months to Maturity)

• Lender Engagement: Start formal process with selected lender(s)
• Due Diligence: Respond promptly to information requests
• Appraisal Management: Prepare property for inspection
• Rate Lock Strategy: Time interest rate protection appropriately
• Legal Review: Ensure loan documents align with expectations

Regional Considerations: Western Markets Focus

For properties in western states (California, Oregon, Washington, Arizona, Nevada), several additional factors merit attention:

Market-Specific Dynamics

• California: Strong fundamentals but regulatory complexity, longer entitlement timelines impact new supply
• Pacific Northwest: Growing senior population, limited new construction in some submarkets
• Arizona: Rapid population growth, active adult migration, competitive market
• Nevada: Tourism-dependent economy impacts senior housing differently by submarket

Regulatory Environment

• Licensing Requirements: Vary significantly by state
• Staffing Mandates: California's higher requirements affect operations
• Certificate of Need: Not applicable in most western states
• Building Codes: Seismic requirements in California, Oregon, Washington

Lender Appetite

• Local Market Knowledge: Lenders with western presence may have better understanding
• Natural Disaster Considerations: Wildfire, earthquake insurance costs and availability
• Market Rent Dynamics: Strong markets command lender attention
• Operational Complexity: California's regulatory environment requires experienced borrowers

Key Takeaways

1. No One-Size-Fits-All Solution: Your optimal refinancing path depends on property characteristics, market position, timeline, and ownership goals

2. Early Action Pays Off: Starting 12+ months before maturity provides maximum optionality and reduces stress

3. Multiple Options Available: Even in a challenging rate environment, numerous financing sources remain active in senior housing

4. Professional Guidance Matters: The complexity of senior housing finance and variety of options makes experienced advisory invaluable

5. Operations Drive Value: Strong operations and occupancy open more doors and better terms

6. Market Knowledge: Understanding regional market dynamics, especially in western states, helps position properties effectively

Conclusion

The 2026 refinancing wave presents challenges, but with proper planning and strategic execution, senior housing owners can successfully navigate this transition. Whether you pursue agency financing, private credit, or hybrid structures, the key is understanding your options and acting proactively.

The financing markets remain active in senior housing, recognizing the sector's strong long-term fundamentals driven by demographic trends. By strengthening operations, starting early, and working with experienced professionals, you can position your property for optimal refinancing terms.

Need help navigating your refinancing options? Contact Justin LeBell at LeBell Advisory to discuss your specific situation and develop a customized refinancing strategy.