Operating evidence and financing
What this package helps you examine
Senior housing can involve leased real estate, operating services, staffing and licenses in different entities. The first underwriting task is to define the structure being financed. A landlord-rent model and an owner-operator model need different evidence, and combining them without eliminations can overstate both income and repayment capacity.
Identify the operating structure
Map property ownership, operator, manager, licenses, resident agreements and related parties. If the property is leased to an operator, analyze contracted rent and the operator's ability to pay separately. If the borrower participates in operations, identify resident fees and service costs directly. Welltower's historical triple-net disclosure is one example of structure, not evidence that every senior-housing transaction uses that arrangement.
Trace resident revenue and staffing costs
Separate occupied units or beds, care/service mix, contractual charges, concessions and collections. Use the actual setting and business model; independent living, assisted living and other care arrangements are not interchangeable. Staffing and agency labor can change differently from occupancy. Show the cost and timing needed to accept additional residents rather than treating occupancy growth as nearly costless revenue.
Fund continuity and transition
Investigate licenses, management agreements, material compliance issues and transfer requirements with the relevant professionals. A property purchase does not itself establish permission to operate the business. Model a transition or occupancy decline with required staffing, insurance, capital work and other continuing costs. Keep any operator support or guarantee separate from cash already held by the property borrower.
Use the workbook
- Use Assumptions!D5 for Base (1) or Downside (2), and the labeled scenario input rows. Enter source data in Care Census!D10:L21; preserve formula cells and an untouched workbook copy.
- This is an operator-cash model using occupancy, resident/service revenue and operating costs. It is not a landlord triple-net rent model or a healthcare reimbursement or licensing determination.
- Reconcile Operations to Summary. Apply the entered lender adjustment separately to the modeled cash flow. Sizing uses amortizing debt service, while first-year payments reflect the entered interest-only period.
- In Assumptions, replace illustrative value, LTV, DSCR, debt yield, rate, amortization and requested ceiling with the intended scenario. Review capacities in Debt and Funding. The smallest modeled capacity does not establish eligibility or approval.
- Closing equity includes the entered opening cash and restricted reserves. Additional operating cash need is measured after that opening cash, so do not add it twice. Inspect monthly cash and remaining principal at maturity.
- Read Review for model conventions and limitations. Save each scenario with its supporting evidence and date; actual lender definitions, legal rights and professional findings control the transaction.
Questions to prepare for a lender
Is repayment based on landlord rent or operating cash?
Entity and agreement map with separate property and operator statements.
What services and resident mix produce revenue?
Resident census, contracts, fee schedules and collection records appropriate to the setting.
What staffing cost supports that revenue?
Payroll, agency labor, staffing plan and operating budget.
Can the proposed party operate after closing?
Applicable license, consent and transition evidence reviewed by qualified advisers.
How does the operator support the real-estate obligation?
Operator financials, rent coverage and any documented support arrangements.
What funds a transition or occupancy decline?
Monthly staffing, capital and debt-service cash plan with accessible sources.
03 / Prepare
Build the evidence file
Use this as a preparation checklist. The lender determines the documents, definitions and review conditions for the actual transaction.
Cash flow and operations
- Resident census or tenant schedule with unit/bed and service definitions.
- Resident contracts or operator lease and actual collection records.
- Separate property and operator financial statements with related-party eliminations.
- Payroll, agency labor and major service expense detail.
- Management, insurance and recurring capital-reserve assumptions.
- Monthly occupancy, service mix and cash-flow trend.
Property and collateral
- Actual-use, license and operating-authority evidence for the setting.
- Condition assessment and capital plan for resident and common areas.
- Life-safety and other qualified-professional findings relevant to operations.
- Equipment inventory with ownership and maintenance responsibilities.
- Environmental and other lender-requested third-party reports.
- Open compliance, repair or regulator correspondence material to the transaction.
Sponsor and execution
- Sponsor and operator experience with the actual care or housing model.
- Ownership chart linking property, operator, manager and guarantors.
- Management agreements and key transition responsibilities.
- Liquidity evidence distinguishing borrower funds from conditional operator support.
- Portfolio guarantees and competing operating funding needs.
- Equity authorization for staffing, capital and transition contingencies.
Closing and funding
- Counsel-confirmed license, operating and change-of-control requirements.
- Lender acceptance of the actual property/operator structure.
- Lease, management and material contract consents.
- Payoff, title, insurance and reserve funding evidence.
- Repair and improvement draw conditions and timing.
- Continuity plan and a funded monthly transition cash schedule.
Watch for these assumptions
- Do not count operator rent both as landlord income and as consolidated operating cash without elimination.
- A license or consent held by the seller may not automatically support the buyer's operation.
- Higher occupancy can require additional staffing and services before the expected cash benefit arrives.
- A property-level model is not a clinical, regulatory or full operating-business feasibility assessment.
Before you rely on the result
- Define the entity and service structure before selecting cash-flow inputs.
- Verify authority and continuity separately from financial feasibility.
- Fund required staffing and capital through the downside period.
Scope and limitations
- Educational analysis; not a financing offer, appraisal, legal opinion or program eligibility determination.
- Workbook figures and thresholds are illustrative editable assumptions, not current lender quotes or universal underwriting standards.
- Document requests depend on the lender, transaction, jurisdiction and property; address unresolved issues with the relevant qualified professional.
Sources and applicability
These references support the stated asset and risk context. The questions and document lists are preparation tools, not a statement that every lender requires or accepts the same package. Actual contracts, applicable rules and the chosen lender determine the transaction requirements. The historical Welltower triple-net description was rechecked in indexed official SEC filing text; it is not a rule for all senior-housing operations.
- Welltower — 2025 Form 10-KItem 1, Triple-net segment description · Checked 2026-10-21Historical issuer-specific structure as of 2025; not a loan program standard.