Recognizing a golden opportunity to expand its relationship with borrowers in the growing seniors housing industry, BMO Harris Bank launched a U.S. commercial real estate healthcare lending platform in March.
Led by Imran Javaid, BMO’s new team will focus on financing the development, acquisition and refinancing of senior living facilities, skilled nursing centers and medical office buildings across the country. The new team will complement the efforts of BMO Capital Markets, a lender and investment banker to healthcare REITs, led by Jonathan Li.
Chicago-based BMO Harris Bank is part of BMO Financial Group, a North American financial organization whose parent company is the Bank of Montreal. BMO Harris Bank’s assets as of Dec. 31, 2015 totaled $104.1 billion in U.S. dollars.
The bank operates nearly 600 branches across eight states with the biggest concentration in the Midwest.
The newly launched platform provides healthcare real estate financing across the nation on a recourse, limited recourse and non-recourse basis. Loan sizes range from $10 million to $250 million for a period of up to five years and up to a 30-year amortization. The maximum loan-to-value is 75 percent.
Javaid, formerly head of Capital One’s HealthCare Real Estate Group, brings more than 20 years of investment, finance and management experience to his new job at BMO Harris Bank. More specifically, he has focused on the seniors housing and care industry for the past 15 years. Seniors Housing Business recently spoke with Javaid about what led to this career opportunity, his short-term goal for the new lending platform and the challenge ahead.
Seniors Housing Business: Why did you make the job switch? Why now?
Imran Javaid: The stars just aligned the way they are supposed to, quite frankly. I made contact with BMO as a potential lending partner at the NIC national conference last fall. Then I found out the bank was looking [for someone to spearhead this new lending platform], and it just so happened that my role was going to be changing because of Capital One’s acquisition of the GE Healthcare Group. That is what prompted me to look. Hearing the fact that this large, very well capitalized organization was looking as well made it a perfect fit.
SHB: Reflecting on your tenure at Capital One, what was your biggest achievement?
Javaid: In the nearly four-and-a-half years that I was there, we took Capital One from a very small player that lent only in its footprint — New York, New Jersey as well as Louisiana and Texas — to essentially being a very significant player in the industry. I’d like to believe that I played some role in that growth. I am most proud of that accomplishment.
SHB: This new lending platform at BMO Harris Bank will focus on three niche property types — medical office buildings, senior living facilities and skilled nursing — that each has its own unique set of issues. Will BMO Harris Bank concentrate on one niche more than another?
Javaid: We will go for the best opportunities where we find them. All three of those product types are very different animals. The common thread between the three is that they all require some form of specialization. In the case of medical office buildings, for example, we’re going to look for opportunities that are aligned with hospital systems or on hospital campuses.
SHB: So, where are the best opportunities today?
Javaid: Certainly, I anticipate seniors housing will account for the biggest chunk of business just because of the dynamics of the marketplace. The growth of the seniors housing business has been greater than skilled nursing. Medical office buildings represent an attractive market space as well. Again, we’ll go wherever the best opportunities arise.
SHB: What goals have you set for the team in the short run?
Javaid: I have ambitious goals for down the road, but simple goals for the near term. I want borrowers seeking debt financing in these three property niches to think of BMO Harris Bank as one of the premier healthcare lenders in the industry. Right now we’re really not in that discussion. We have a vision to be a national lender at a bank that has a great balance sheet and has a low cost of capital. We’d like to grow the business as judiciously as we can.
SHB: What would you like our readers in the seniors housing space to know about BMO Harris Bank?
Javaid: Unlike most national lenders that are in the space, we don’t have an agency shop in-house. Most national lenders, especially if they are making construction loans, want to do agency lending. Or in the case of acquisitions, they ultimately want to do the HUD takeout loan down the road.
We don’t have any such goals. We are a true balance sheet lender, so we are deploying capital for our balance sheet. That’s what differentiates us because we’re not trying to push anyone toward agency execution. We’re agnostic as to what borrowers want to do.
SHB: What’s the biggest challenge to rolling out a lending platform such as this one?
Javaid: Our biggest challenge is going to be making sure that we politely decline deals that we cannot execute on. I do not want to over-promise to clients and under-deliver. You don’t have to do every transaction that comes through the door. Quite frankly, I’m confident that we won’t have an issue getting transaction volume in the door. We just have to make sure that we pick and choose and execute on the few handful of transactions that we choose to take right now as we continue to ramp up our team. You don’t want to flub up an execution.
SHB: What is the size of your team?
Javaid: It’s a team of five or fewer — the folks at BMO who were already lending in this space and myself. It’s a small team that we would be looking to grow. That will be determined by how successful we are in getting transactions in the door.
SHB: Is there room for another lender to ramp up business in the seniors housing space, or has it reached the point that there are too many lenders chasing too few borrowers?
Javaid: It’s not like we’re in the multifamily space where every single bank is trying to lend on multifamily product. Even the larger institutions don’t truly lend to [the sector] on a national basis with coverage coast to coast. There is definitely still room for other lenders in the industry. It’s also a growing industry. You can’t only look at the opportunities right now. You have to look down the road.