KeyBank, Welltower ‘Hit the Ground Running’ with $750 Million Unitranche Fund

KeyBank Real Estate Capital and Welltower (NYSE: WELL) have partnered on a unitranche loan fund for senior housing and skilled nursing facilities, with $750 million in lending capacity for first mortgage financing.

The two firms announced the fund in conjunction with last week’s National Investment Center for Seniors Housing & Care (NIC) conference in Houston, and already are working through “a number of inquiries,” Jim McLaughlin, Co-Head of Institutional Capital Group at KeyBank, told Senior Housing News.

“We hit the ground running and are starting to look at transactions already,” he said.


The fund incorporates a credit facility from KeyBank as well as capital from the bank and from Welltower, a real estate investment trust (REIT). Securing a unitranche loan enables a borrower to work with a single entity on a first lien debt facility at a blended interest rate, rather than working with multiple senior and junior lenders.

The unitranche program will enable KeyBank to execute on deals that from a leverage perspective “are a little bit richer” than what the institution might typically put on its balance sheet, McLaughlin said.

KeyBank and Welltower were considering this fund in late 2019 but hit pause in the midst of Covid-19. Pre-pandemic, they viewed the program as a way to compete against debt funds; in light of Covid-19, they also see the fund as a way to support the industry with capital as properties continue to stabilize.


“This allows us a way to put capital to work in a manner that suits our risk appetite as a national bank,” McLaughlin said.

They do not have a particular allocation target in mind, in terms of how much of the fund will be deployed to senior living versus skilled nursing borrowers. But McLaughlin anticipates that the “sweet spot” for transaction size will be between $25 million and $75 million, although there could be exceptions.

KeyBank and Welltower also are not targeting particular geographies or company size in deploying the fund, but are looking for “solid, experienced regional owners [and] operators that have demonstrated the ability to provide quality care to their residents,” McLaughlin said.

Not many banks are offering unitranche products like this one, in McLaughlin’s perspective, and the combination with Welltower also differentiates this offering in the marketplace. The REIT is the largest owner of senior living properties in the United States and also has a robust data analytics platform that can be harnessed to help identify and evaluate transactions.

“We are excited to work with KeyBank in launching this initiative,” said Nikhil Chaudhri, Co-Head of US Investments at Welltower, in a press release. “Welltower’s ability to use its unparalleled data analytics platform, combined with its deep knowledge and 50 years of exclusive health care experience, will provide an exceptional relationship network with the top owner/operators in the health care real estate industry to identify attractive financing opportunities.”

After the solid start at NIC, McLaughlin expects to close some deals before the end of 2021.

“We anticipate it will ramp up pretty quickly,” he said.

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