There’s room in the senior housing industry for both REITs and lenders, a Capital One healthcare real estate executive told NIC Insider. And Capital One intends to take advantage of the opportunity.
“The market need for a bank with a strong balance sheet and capability to lend on a national level coupled with the significant healthcare expertise and contacts of our new team led to the growth of our group,” the bank’s Imran Javaid, managing director, health care real estate, commercial and specialty finance, told NIC Insider, a publication of the National Investment Center for the Seniors Housing & Care Industry. Capital One Finance hired 10 former Capital Source Inc. team members earlier this year to form a group for specialty finance. Its contacts and experience in healthcare should help lead to its growth, Javaid said.
Capital One will pursue deals between $5 million and $100 million in skilled nursing, assisted living, independent living and continuing care retirement facilities, he said. The bank’s strong balance sheet will enable it to pursue those transactions.
When it comes to market competition, especially the portion of the market occupied by REITs, Javaid said there is plenty of room for success for lenders.
“The overall market, despite the dominance of the REITs in recent transaction activity, is large enough for both REITs and lenders,” he said. “The lending institutions are not likely to make meaningful inroads in large multi-facility acquisitions where the operator is looking for close to one hundred percent financing (this market will continue to be dominated by REITs). On the flip side, the REITs probably won’t have an appetite for smaller portfolios with lower leverage since those transactions are not really meaningful to their bottom line.”
Read the full NIC Insider interview with Capital One’s Javaid.
Written by Elizabeth Ecker