In early November of last year, ROC Seniors Housing Fund Manager, a subsidiary of Bridge Investment Group Partners, was looking to finance its acquisition of Thunderbird Retirement Resort before the end of the year. Fast-forward 43 days after applying for a loan with Grandbridge Real Estate Capital, ROC Seniors had $21.2 million in which to fund its purchase of the 345-unit seniors housing community in Phoenix.
As a lender to the seniors housing industry, Richard Thomas is confident that his seniors housing and healthcare team at Grandbridge Real Estate Capital can quickly meet any demand from a qualified borrower. The Charlotte-based company is a wholly owned subsidiary of Branch Banking and Trust Co. (BB&T) and is fully integrated with the bank’s national footprint. Having access to the bank’s balance sheet is a nice chip to have for Grandbridge when looking to source deals for prospective borrowers.
The balance sheet through BB&T Real Estate Funding’s structured loan program was instrumental for Thomas and his team to close on the Thunderbird Retirement Resort acquisition loan so quickly.
“When we walk in the door, we do have a balance sheet behind us, which means we have money in our pockets so to speak,” says Thomas, who serves as the senior vice president of Grandbridge’s seniors housing and healthcare finance group based in Atlanta.
Grandbridge works very closely with BB&T, which held $186.8 billion in assets as of Dec. 31, 2014. The Grandbridge officers collaborate with the BB&T bankers to source debt on behalf of BB&T, its clients and Grandbridge’s clients.
“As the bankers source their opportunities and they look for ways to help their clients, they would work with a Grandbridge officer,” says Thomas. “In most cases, bankers with a seniors housing opportunity would call my team to assist in those efforts.”
Grandbridge’s Atlanta-based seniors team offers construction, nonrecourse, acquisition/bridge and permanent financing to seniors housing owners across the nation. Thomas leads a team of four in Atlanta, which concluded roughly $500 million in seniors housing deals in 2014 alone. Altogether, BB&T company-wide lent approximately $1.5 billion last year in seniors housing and healthcare debt.
In addition to its proprietary relationship with BB&T, which allows for a lower cost of capital when compared to competitors that do not have direct balance sheet access, the company also structures loans through agencies (Fannie Mae, Freddie Mac and FHA), life insurance companies, CMBS investors, pension fund advisors, commercial banks and capital markets investors.
“I can’t think of anyone else in the country that has the full breadth of capabilities that we have,” says Thomas.
Richard Thomas leads Grandbridge Real Estate Capital’s seniors housing team in Atlanta.
Primarily a lender to multifamily owners, Grandbridge also lends to owners of retail, industrial, office, hotel and self storage real estate. As of this writing, the company has a servicing portfolio of approximately 5,000 loans totaling roughly $28 billion through approximately 100 capital providers. The company answers loan requests from $1 million mezzanine options to unlimited size portfolio loans.
According to its 2014 servicing portfolio across all property types, Grandbridge’s lending activity (totaling $5.26 billion) by capital provider is broken down as follows:
• 40 percent via insurance companies
• 24 percent via banks
• 20 percent via agencies (Fannie Mae, Freddie Mac and FHA)
• 13 percent via CMBS lenders
• 3 percent is from other capital sources
The Origins of the Originator
Grandbridge Real Estate Capital LLC was formed out of a merger in 2007 of two commercial mortgage banking firms, Collateral Real Estate Capital LLC based in Birmingham, Alabama, and Laureate Capital LLC, which was owned by BB&T.
Since the merger, the company has acquired Houston-based Live Oak Capital (2008); Louisville, Kentucky-based BFG Realty Advisors (2009); Dallas-based Quantum First Capital (2009); and Southern California-based Dwyer-Curlett & Co. (2012).
Thomas has been part of the seniors housing division of Grandbridge since 2003, when it was known as Collateral Mortgage Capital. Since then, Thomas has been involved with more than $5.5 billion in seniors housing transactions. He credits BB&T’s commitment to seniors housing for his team’s success.
“BB&T as an organization is heavily committed to seniors housing,” says Thomas. “There’s a pretty heavy commitment to the space through our healthcare corporate banking, healthcare investment banking and our insurance arms. We touch and serve clients across the spectrum of whatever their financial or advisory needs might be in this space.”
Today, Grandbridge has more than 200 professionals in offices across the country. The company has its strongest presence in the Southeast with offices in Alabama, Florida, Georgia, South Carolina, North Carolina, Virginia, Maryland and Washington, D.C. Even though it’s based in the Southeast, Grandbridge’s seniors housing group is active across the country.
“Our seniors housing group is a national practice,” says Thomas. “We’re concluding seniors housing and healthcare transactions nationwide. There’s no reason we couldn’t go to Puerto Rico, Alaska and Hawaii.”
Thomas and his team’s recent seniors housing transactions nationwide include a $9 million refinance loan for Woodland Terrace at the Oaks in Allentown, Pa.; a $4.5 million supplemental loan for Noble Village of Sugarloaf in Suwanee, Ga.; a $6 million acquisition loan for Acadia Assisted Living in Dallas, Texas; a $12 million refinance loan for Highgate Prescott Lakes in Prescott, Ariz.; and a $12.25 million refinance loan for Quail Park in Eugene, Ore. They also concluded a four-property, four state (Mich., Ala., Tenn. and Okla.) portfolio transaction advising the seller and arranging $100 million of new debt.
Why Seniors Housing?
Grandbridge Real Estate Capital is bullish on seniors housing for the same reasons that investors and developers are bullish: The real estate fundamentals are attractive, and more and more baby boomers are crossing into the seniors housing-age threshold. Seniors housing is currently enjoying a stability not universally shared by its counterparts, even during the midst of the recession.
“Even at the worst of times, most seniors housing owners and operators might have experienced a slight dip in occupancy, but generally still had stable to positive rent growth throughout the period,” says Thomas. “It compares very favorably to the other industries.”
In addition to rent growth, Thomas says occupancy during the downturn was still in the upper 80 percent range for seniors housing assets. Since the recession, the asset class has been a magnet for investors looking for acquisition financing, developers looking for construction financing and owners looking for permanent financing, so Grandbridge’s services have been in demand from a variety of borrowers.
Grandbridge and BB&T are also attracted to seniors housing because residents tend to stay at a community for a longer length of time than typical multifamily residents.
“We’re looking at some age-restricted apartment communities where the residents have stayed 10 to 15 years,” says Thomas. “As you move up the acuity scale, residents are staying two-and-a-half to three years on average. That means less unit turnover and less wear-and-tear, which ultimately helps to bolster investment returns.”
Thomas declined to forecast loan production volume for 2015, but he did say Grandbridge is going to continue expanding its capabilities in the seniors housing space. Grandbridge has begun a state-by-state initiative, starting with Tennessee, to target seniors housing owners and operators to build relationships between them, local bankers and Grandbridge.
“It’s a very focused effort to dig even deeper and to look for relationships within our market at a very granular level,” says Thomas. “We’ll continue to work through the states, assist seniors housing clients and identify lenders that can close deals. It will really benefit all of our clients going forward.”
— John Nelson
This article originally appeared in the February/March 2015 issue of Seniors Housing Business and the March 2015 issue of Southeast Real Estate Business. Click here to learn more about Grandbridge Real Estate Capital’s seniors housing business.