The market for commercial healthcare loans is growing

Written by Monica Correa on 20 September 2022


The market for commercial healthcare loans is growing

As commercial lending transactions are slowing slightly due to rising interest rates in financial institutions, commercial healthcare lending is becoming a growing market in South Florida thanks to the increase in the number of licensed physicians and the expansion of Florida population.

City National Bank is adding a medical division within its private banking lending capabilities in response to a significant increase in the size of Florida’s medical, dental and veterinary practices.

“This is a growing market for us. We believe the opportunity to work with these doctors, dentists and veterinarians in their financial position is important, not just for the bank but for the community, ”said Ricardo Garbati, private banking executive at City National Bank.

Applications for commercial medical loans are expanding in the area, he said. “What we are seeing the most are the requests for practice acquisition [loans] for physicians who are looking to grow their practices, either by purchasing an existing practice or by merging with other practices. We are also seeing many practicing doctors trying to start their own practice ”.

The new division of the bank will also seek to cover financial planning for medical practices, equipment financing and commercial real estate investments for private practice doctors, dentists, veterinarians, diagnostic centers and outpatient facilities.

Five experts are joining the NBC’s group of private medical banks, including Frank Nogareda, as senior vice president; Shaina Mejia and Gerson Sotolongo, as vice presidents and relationship managers with private banking; Leniel Rendon, as vice president and sales manager for treasury management; and Adriel Martinez, as Senior Customer Service Specialist.

According to Florida Health’s Physician Workforce Annual Report 2021, the number of physicians providing care in Florida has increased by 24.6% over the past decade, while the population of Florida has increased by 13.5%.

“The number one factor causing this growth is the large migration of people to Florida in general, the demand from high-income individuals who have settled in South Florida, and the income growth our market has experienced for the locals, “said Mr. Garbati. “The demand for qualified medical assistance … has fueled growth in this area.”

Growth is evenly spread across South Florida, he added, “in large hospitals that acquire talent from across the country, large dental practices acquiring smaller dental practices, and physicians looking for opportunities to go it alone and feel more comfortable where the economy is up to a practice holder ”.

In addition, other commercial loan markets have stabilized somewhat. “Florida continues to be hot and showing growth, but the transaction volume has slowed slightly,” she said. “We attribute this to rising interest rates, but we continue to see a strong buyer group [of commercial real estate] as people continue to move to South Florida and other areas.

Pablo Pino, president of the South Florida commercial banking market at TD Bank, said commercial lending is outpacing pre-pandemic volumes, although it is stabilizing in a number of sectors due to higher interest rates and cost of business. ‘inflation.

Clients seeking commercial loans are looking for additional working capital, he said. There is demand for commercial loans on all-out equipment, mortgage loans and treasury management services. “They are buying equipment and are thinking about whether to buy [real estate]compared to the lease ”, as rents have increased.

There is pent-up demand in the hospitality industry, he said; in addition, in the distribution of food, consumer goods, nutrition and vitamins, aviation industries, automobiles and auto parts distribution industries. “There appears to have been pent-up demand coming from the pandemic,” Pino said. “Many people held back.”

Manufacturing and distribution companies are purchasing their raw materials in bulk to ensure they have the materials needed for their production, he added. “Carrying more inventory will require more working capital.”

Additionally, with the return to traditional office operations, Pino said, companies are adding the technology they implemented during the pandemic to their core business.

“We anticipate it [the medical division at CNB] it will continue to grow and the demand for high-level healthcare will not change, ”Garbati said. “Migration to South Florida was different than in years past. People are enrolling their children in schools, participating more in the community, so we believe the medical side of the market will continue to be an area of ​​growth for years to come. ”

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