The U.S. Federal Reserve took action on Wednesday by slashing interest rates by 50 basis points, providing a much-needed boost to senior living lending and dealmaking. This move comes as the Fed lowered the target range for federal funds to 4.75% to 5%, marking the first rate cuts since March 2020.
Previously, the Fed had refrained from cutting rates, but Wednesday’s decision was driven by a desire to maintain the strength of the economy and labor market. With occupancy rates improving across the senior living industry, lenders, buyers, and sellers are expected to become more active in the market heading into 2025.
The rate cut was welcomed by industry experts, with VIUM Capital Executive Managing Director Steve Kennedy noting that it would benefit borrowers seeking variable-rate debt. Similarly, Walker & Dunlop Managing Director Mark Myers pointed out that the combination of lower interest rates, increased occupancy, and reduced supply would improve transaction velocity in the market.
While the rate cut signals positive developments for the senior housing sector, challenges still remain. SLIB Executive Vice President Dave Balow expressed hope that lenders would be more willing to issue term sheets, leading to increased acquisition opportunities and better competitive bid environments for deals in the future.
