RED Capital Group LLC has hired Kathryn Burton Gray as part of the firm’s effort to expand its health care and seniors housing platforms.
Burton Gray will serve as senior managing director. She has more than 25 years of experience and previously served as a managing director with CIT’s health care unit.
RED’s seniors housing group has provided close to $600 million in new loan originations for Fannie Mae, Freddie Mac Seniors and FHA over the past year.
RED has also provided over $100 million of bridge loans to assist its customers in the acquisition and repositioning of properties in advance of an agency permanent mortgage. As the nation’s second-largest FHA lender in 2011, a top 10 Fannie Mae DUS lender, and a provider of bridge financing, RED is to expand these activities with over $900 million in new agency originations and bridge loans in seniors housing and health care over the next 12 months.
NREI talked to Burton Gray about the issues that drive the health care and seniors housing markets.
An edited transcript of that interview follows:
NREI: What do the health care and seniors housing markets need now in terms of financing?
Kathryn Burton Gray: The demands for bridge senior bank/commercial lender financing to agency take-out continues to be in favor. HUD continues to be the choice given its low, long-term, fixed-rate, non-recourse and general flexibility. The need forlending continues as evidenced by the limited amount of senior housing development in the past few years.
In that light, since the average age in the skilled nursing sector is around 40 years, the demand for replacement facilities continues only if the loan for a replacement facility pencils out. That said, this type of lending is attractive in states where land costs are relatively inexpensive and regulatory agencies are supportive.
As an observation, it appears the healthcare REIT plays have softened this year as most of the large consolidation and merger and acquisition of large operators have quieted allowing the REITS to digest what they have consumed in the prior years.
NREI: What issues are currently affecting the health care and seniors housing market sectors now?
Kathryn Burton Gray: On the macro level, the political landscape still offers uncertainty as far as government oversight; the insurance landscape and legislative overlap from both the HealthCare Affordable Care Act and the balance budget process of heavy shortfalls translate into reductions in Medicare and Medicaid reimbursement to providers.
States are also examining ways to create their own sense of balanced budgeting from the smaller tax base generated from the residential housing market fallout that still has not rebounded from 2007. Larger providers can absorb expense reductions over a larger revenue base whereas the smaller operators have a far more challenge to their expense control. The other challenge to our industry is the demand for both private and institutional equity to invest in industries outside our segment because of the competition for higher returns and less risk appetite from governmental reimbursement.
All that said, the demographics continue to be compelling to both invest and lend into this healthcare segment of seniors housing. Industry specialists have noted that if the trend of the increased costs of medical care outpaces inflation that investments in healthcare related industries may continue to provide high yields to portfolio investors such as the publically traded healthcare REITS.
Healthcare alone is a very specialized industry with nuances that require expertise in lending that differ from other commercial real estate classes because of the clash between a hospitality model and true needs-based healthcare loan.
NREI: Tell us about an experience you've had in one of your previous positions that you feel has prepared you for this new role.
Kathryn Burton Gray: My experience in the healthcare sector has allowed me to live through various business cycles and understand the dynamics to survive lending to this industry.
That includes past “ghosts” of the Balanced Budget Act of 1997 and the more recent 11.3 percent reduction in FY2012 Medicare rates, which specifically impacted the skilled nursing industry. This industry is not for the faint of heart, as the obvious risks continue to be the reliance of revenue driven from government reimbursements and that revenue base being inconsistent compared to other commercial real estate classes.
The challenge is to be flexible in balancing the client’s loan requests with making a risk adverse loan by understanding all the components, including reimbursement, clinical operations and diligent financial analysis. If the skilled nursing sector is challenged, then refocusing efforts on the private pay sector, such as independent and assisted living may prove more advantageous.
NREI: What advice would you give someone who is just starting out in the commercial financing sector?
Kathryn Burton Gray: My advice would be to understand the drivers and demands of this healthcare segment by attending the regional and/or national industry conferences that provide both education and inspiration to the seniors housing industry. If your institution was inexperienced in lending to this healthcare area, then I would collaborate with an experienced lender to participate as a second set of eyes and [to provide] validation of solid lending practices.
David T. Weinert has resigned from his post as senior vice president of leasing at Taubman Centers Inc. into pursue other interests.
Immediately assuming day-to-day leadership for the leasing function will be William S. Taubman, the firm’s COO. He is currently responsible for, operations and leasing for the company, a real estate investment trust engaged in the development, leasing and management of regional and super regional shopping centers.
Weinert had been with the company since 1986, having previously served as a commercial real estate broker in the Chicago office of Coldwell Banker Commercial Real Estate.
Gazit-Globe, the Israel-based real estate company, announced that Senior Executive Vice President and CFO Gadi Cunia will be leaving the firm as of October 1.
The firm, which focuses on acquisition, development and redevelopment of supermarket-anchored shopping centers, intends to appoint Gil Kotler to the post. Kotler previously served as the company's CFO for 12 years, as senior executive vice president and CFO.
In recent years, Kotler has resided in Miami, where he has been engaged in a wide range of strategic activity, including leading the group's international financial activities.
Lee & Associates NYC LLC hired three executive managing directors at the firm.
Jonathan Miller, Sidney Rosenthal and Alan Weisman will work at Lee’s Madison Avenue office.
Miller brings more than 40 years of investment real estate sales experience to Lee and has closed transactions totaling more than $1 billion. He has sold the gamut of investment real estate, including office buildings, apartment buildings, shopping centers, garden apartments, hotels and retail condominiums, and also assembled development sites including the easterly block front on Third Avenue between 60th and 61st Streets.
Rosenthal has arranged the assemblage of more than 30 building sites in Manhattan and has been active in the parking business as a broker and consultant for more than 40 years. Major transactions include the $100 million lease transaction with Minskoff Equities and Trinity Church Corp. for the development of 100 Sixth Avenue and the sale of the former Irving Berlin House on Beekman Place to the government of Luxembourg.
As the former executive managing director at Grubb & Ellis New York, Weisman has more than 35 years of experience in commercial real estate and has been involved in more than 7 million sq. ft. of transactions. Notable accomplishments include the 75,000-sq.-ft. Chelsea Arts Tower, as well as the leasing of the 255,000-sq.-ft. building at 450 West 15th Street to high-end fashion and media and arts tenants that repositioned the building and began the Meatpacking District’s revitalization.
Westcore Europe appointed Charles Brooke director of acquisitions with Westcore Sarl, the Geneva, Switzerland-based real estate investment and asset management business that oversees the Westcore Europe commercial real estate portfolio.
In his new position, Brooke will identify and acquire office and industrial assets in Switzerland and other European markets. Westcore Europe and its affiliates manage more than EUR 300 million in industrial and office assets.
Prior to joining Westcore Sarl in 2011, Brooke was affiliated with the Geneva office of CBRE and DTZ, where he specialized in professional services and.
NAI Alliance Commercial Real Estate hired Michael Schnabel as a partner.
Schnabel joins NAI to spearhead the continued development of the NAI alliance investment properties group. In this role, Schnabel will represent institutional and private owners and investors in the acquisition and disposition of commercial properties in the Northern Nevada and Lake Tahoe regions.
Prior to joining NAI Alliance, Schnabel was a partner and senior managing director at CBRE, where he also owned CBRE’s Reno/Lake Tahoe office.
Rick Haughey joined the National Multi Housing Council as vice president of property operations and technology.
Haughey will direct a new initiative to increase the strategic business and industry information NMHC provides in a broad range of apartment operations issues, including technology and automation, property marketing, environmental sustainability, risk management and human resources.
Haughey brings more than 20 years of housing experience in the public, private and nonprofit sectors. While director of multifamily development at the Urban Land Institute, he published numerous reports, white papers and books, including six editions of “Dollars and Cents of Multifamily Housing.”
Haughey joined NMHC from the Corporation for Enterprise Development, where he served as director of affordable housing initiatives.
Rose Associates hired Edward F. Donnelly as director of commercial and technical services.
The commercial and technical services group is a core component of the Rose 360 platform, which operates as an internal consultant for Rose-managed buildings. They work closely with property managers and site-based staff to ensure that their buildings are compliant with regulations. The team monitors building systems and oversees repairs or upgrades. The group also provides emergency response services, and consults on disaster recovery plans.
Donnelly joins Rose from Blumenfeld Development Group, where he was director of property management. Donnelly has two decades of experience managing residential and commercial real estate. In his most recent job, he oversaw the management and operations of more than 3 million sq. ft. of commercial, multi-tenant office and retail real estate.
Avison Young has brought on two real estate research and marketing veterans to its New York City office.
James Delmonte joins the firm as a principal and vice president of research and Elliot Baum joins as principal and vice president of marketing.
Delmonte will oversee all aspects of Avison Young’s market research in the Tri-State area, tracking in excess of 500 million sq. ft. within more than 2,000 properties. He comes to Avison Young from Jones Lang LaSalle, where he was vice president of research.
Baum will direct the firm’s marketing, public relations and branding efforts throughout the Tri-State area. He was previously at Colliers International, where he was senior managing director of the consulting group and head of marketing for the Tri-State region.
Mortgage Solutions of Colorado promoted Robert Clennan to vice president of sales at the firm.
Clennan was previously the downtown branch manager for Freedom Financial Services, a subsidiary of Mortgage Solutions of Colorado. He has been with the company for more than 15 years, and from 1996 to 2006 he was ranked as one of Freedom’s top loan originators. In 2006 he was promoted to Freedom Financial Services downtown branch manager.
The firm has also hired Dennis Campbell as vice president of operations. Campbell brings with him nearly 20 years of experience in the banking and mortgage industries. He previously worked at JPMorgan Chase, Wells Fargo and Countrywide in capacities such as process manager, underwriting manager and first vice president.
Lisa P. Segal has joined the real estate law firm Belkin Burden Wenig & Goldman LLP as Of Counsel in the real estate transactional department in New York.
She will focus on office and retail leasing. Segal has nearly 20 years of experience in real estate law. Before joining BBWG, she was an attorney at Citigroup Inc. in New York, where she was responsible for drafting and negotiating leases, handling various agreements and overseeing outside counsel in connection with transactional and litigation matters.