By Matt Valley and Jeff Shaw
Hunt Mortgage Group services a commercial loan portfolio of $11 billion and has 16 offices across the United States. But until recently, the New York-based lender had a gap in its portfolio — seniors housing.
Hunt created a healthcare lending group, which originated its first seniors housing loan in September — an $8.9 million refinancing of Autumn Leaves of Rockwall, a 50-bed assisted living and memory care community near Dallas.
Financing options from Hunt include loans through the HUD Lean 232 Program, as well as the company’s own proprietary bridge and specialty loan products. The company services all loans that it originates.
Seniors Housing Business recently spoke with Jim Neil, a director for Hunt who leads the company’s healthcare originations team, about the company’s entry into the senior living market.
Seniors Housing Business: How much of Hunt’s business is seniors housing?
Jim Neil: At this point it would be just a sliver because we just started building production in 2015. That said, we do have a pipeline just south of $100 million.
SHB: Will Hunt Mortgage Group lend on new construction in the seniors housing space in addition to offering refinancing and acquisition financing?
Neil: We can provide new construction loans under the HUD Lean 232 Program. Many borrowers shy away from this program because it is a lot more work than a refinancing and takes longer. For a client with patience and the right mindset, it can yield a terrific result.
Hunt’s roots are as a development company. Thus, I am hopeful that we can eventually provide on-balance-sheet construction financing, but this will take a lot of work and we are not there yet.
SHB: As head of Hunt Mortgage Group’s healthcare originations team, do you have any specific goals for your team over the next few years?
Neil: Hiring new originators is challenging. The good ones have a book of business pending for which they will not be compensated if they leave their existing firm.
That said, we have the ability to attract people and expect to hire a combination of experienced people and individuals that have sales and financial analysis skill sets. We can teach them the HUD Lean 232 Program without any trouble. It’s not that the program is simple, but we have the ability to help the right people become effective quickly.
SHB: What is Hunt Mortgage Group’s sweet spot in terms of dollar amount?
Neil: Basically, it’s anything $5 million and up. We do have limits, but most transactions will not test us.
The types of bridge loans we like are time-sensitive acquisitions or refinancings, equity-out transactions and, for the right operators, turnarounds. Our loans are typically non-recourse with two to three years of interest-only payments and a floating rate.
SHB: Currently, seniors housing is enjoying strong real estate fundamentals and capital is plentiful. At the same time new construction is ramping up. How might the current wave of development affect the lending climate in 2016?
Neil: We are keeping our eye on those subsectors that are potentially getting oversupplied in certain markets. We have good business partners that help us with that. Overall, however, I will tell you that everyone I know in our niche is very bullish on seniors housing for the foreseeable future.
SHB: If interest rates rise over the next year, what impact will that velocity have on the seniors housing space?
Neil: I really believe that we will see much of 2015 in 2016. The market has already anticipated a rise in short-term rates and the environment is still historically very favorable.
SHB: What do you want our readers to know about Hunt Mortgage that they don’t know or should know?
Neil: Hunt Mortgage Group was traditionally an agency lender focused on multifamily. Today we are a full commercial real estate lender working with both our agency relationships — Fannie Mae, Freddie Mac and FHA — and our balance sheet program.
We finance multifamily, affordable housing, office, retail, healthcare/senior living, manufactured housing, industrial and self-storage. We have 46 originators across the country operating out of 16 offices.
What sets Hunt Mortgage Group apart from the others is that we are a privately owned firm with flexibility and faster decision-making capabilities. All credit and pricing decisions are done in-house, we have unmatched local market expertise across the country and we operate as an agency lender and a commercial lender.