Berkadia Prepares For Active 2025 As M&a, Development ‘pendulum’ Swings Toward Growth

Building off of an active year of senior living transactions in 2024, commercial real estate lending firm Berkadia is seeking to maintain its momentum in 2025.

Last year, Berkadia delivered over $1.63 billion in senior housing loans with Freddie Mac, Fannie Mae and Department of Housing and Urban Development (HUD) structures, leading government-sponsored enterprises (GSE). .

“You could really feel the momentum and the pendulum swinging back with more activity in the market both on the debt side and sales side,” said Cody Tremper, who is the managing director of Berkadia Senior Housing and Healthcare.

While distressed deals drove activity in 2024, value-add acquisitions and stabilized properties have brought “more attention” to transaction activity in 2025, Tremper added.

In 2025, Tremper said Berkadia expects its Fannie and Freddie transaction volumes to be “busier” compared to last year’s record-setting pace, driven by greater access to capital and operating performance metrics improving for portfolios across the country.

Development this year remains slow, widening the gap between new supply and demand. Newly implemented tariffs only complicate that picture. Even so, Tremper said investors and operators “understand and realize” new construction is needed and was optimistic that new construction and development would occur before too long..

“A year and a half ago, trying to find development equity was very tough,” Tremper said. “Now, it’s definitely changed and we’re out in the market with multiple deals right now trying to source equity partners for development and the list continues to grow.”

While these conversations on new development are still in the “early innings,” Tremper said, the industry was “getting close.”

“We’re positive and optimistic that we see the pendulum shifting towards more development versus acquisitions and financing from commercial banking,” Tremper added.

As this positive momentum grows, Tremper said, Berkadia has “multiple deals” involving three or more assets within a senior living portfolio compared to past year’s in which single properties were trading hands. For 2025, Tremper sees these multi-property deals being made while single-property deals will continue.

“We believe 2025 is going to be a really strong year for the industry and beyond,” Tremper said.

Regarding the potential privatization of Fannie and Freddie, Tremper said the future of GSEs remains a “complex policy matter,” with Berkadia focused on the present transaction landscape rather than speculate on future changes.

While capitalization rates often are deal-specific with varying terms, Tremper said overall cap rates were compressing and values were improving in early 2025. Senior living operators have started taking more strategic approaches on generating net operating income (NOI) and driving margin improvement this year.

Margins, Tremper said, were a figure those involved closely on transactions would continue to monitor to determine fiscal health of properties.

Following Welltower (NYSE: WELL) and the Toledo, Ohio-based real estate investment trust’s investment in the Affinity active adult portfolio, Tremper estimated that lower acuity products like active adult and independent living would remain popular for transactions in 2025, along with full continuum communities including IL, assisted living and memory care.

“People like having the back door with assisted living and memory care,” Tremper said, as memory care communities “generate a ton of interest.”

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