Unitranche Loans Offer Competition with Debt Funds

by Sarah Daniels

Unitranche loan programs blend senior and junior debt pricing and terms into a single, first lien debt facility — a single financing that replaces the multitranche debt approach. The unitranche arrangement provides the benefits of a fully levered mezzanine debt structure, while the single financing structure streamlines the agreement and costs for borrowers.

KeyBank Real Estate Capital, the commercial real estate business unit of KeyCorp, recently partnered with Welltower to establish a unitranche loan program with $750 million in lending capacity for seniors housing and skilled nursing facilities. Industry expertise in the healthcare space has been critical for creating a fund that appeals to borrowers who might otherwise be interested in debt funds, says Meredith Houseworth, SVP, national portfolio manager for healthcare financing at KeyBank.

“When working with KeyBank and Welltower, the client is working with companies that understand the industry and are long-term investors in the space. [Both companies are] very much client and relationship driven, which is critical to the execution for the client,” says Houseworth. She elaborates that knowing revenue drivers, submarkets, expenses and challenges in the seniors and healthcare industry is what allows KeyBank and Welltower to offer seamless execution upon delivery for the client.

Watch Houseworth’s interview on unitranche loans to hear about higher-levered financing solutions generally not available to seniors housing clients via a traditional bank market.

This article was written in conjunction with KeyBank Real Estate Capital, a content partner of Seniors Housing Business.

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