Wells Fargo announced earlier this week that it had established a new group specifically to provide financial services to investors, developers, and owners of senior living facilities. The new group will be fully-staffed, and expands support for balance sheet lending in addition to providing traditional banking and credit services.
The demand is high for new senior housing, as the population of Americans over the age of 65 is expected to grow to 80 million by 2040, according to the United States Census Bureau. This will be a 67% increase from 48 million seniors currently. While not every senior will need assisted living, the Department of Health and Human services expects 70% of seniors to eventually require long-term care.
The group has already begun its work, financing several projects in March. These projects include multi-million-dollar memory care, independent living, and assisted living facilities in Fort Lauderdale and Fort Meyers, Florida, Foster City, California, and Albany, Oregon. The most expensive of these projects, located in Fort Myers, cost $53.5 million, while the least expensive, in Oregon, cost $17.4 million.
Wells Fargo utilizes various units of business to encourage the growth of the senior living industry. Wells Fargo Healthcare Corporate Banking provides investment banking services, traditional banking, and capital to health care companies, including senior housing owners and operators. Wells Fargo Multifamily Capital provides permanent financing and balance sheets for assisted living facilities. The newest unit, Wells Fargo Senior Housing Finance, provides its services to finance renovations and construction of senior living facilities, including memory care and assisted living.
While the new financing options mean that it will be easier for developers to build the necessary senior living facilities, care should be taken to not over-saturate the market. Developers should also take care to build quality facilities, and not to cut corners during construction.