Caution Advised on Health Care Properties

CHICAGO-The health-care sector of real estate is experiencing a mortgage delinquency rate of 1.8%, more than three times the rest of the commercial sector, with both operators and lenders discovering there are more challenges than they might have anticipated. Problems with the health-care sector–actually more of a business than it is pure real estate–dominated morning sessions Thursday at the seventh annual commercial and multifamily administrative conference of the Mortgage Bankers Association of America.

The hotel sector also is coming under scrutiny, with the record 654 attendees having to look no further than Downtown’s star-crossed Block 37, where the developers’ inability to finance the hotel component of a proposed $250-million has killed their plan. However, problems owning hotel properties pale by comparison to owners of health-care and assisted-living facilities, as well as their lenders who might become reluctant owners of the underlying real estate.

“I think it’s probably No. 1 on the list in terms of special servicing, and one area where investors may want to look at loss severity,” says Henry J. Bieber, senior vice president of San Francisco-based GMAC Commercial Mortgage Corp.