EXPERT OPINION: A Conversation with Alec Blanc

May 8, 2012

In this “ Expert Opinion” interview, Alec Blanc, Senior Vice President and Team Leader of the Healthcare Banking Group at Regions Bank, discusses HUD lending, loans, future plans, and more.
 

Watch the video      Read the transcript

Mr. Blanc joined Regions Bank in 2010 as the Team Leader for the Long-Term Care / Not-For-Profit Healthcare specialty of the Healthcare Banking Group.  Mr. Blanc came to Regions Bank from First Bank, where he founded its Healthcare Banking division.  Prior to that, Mr. Blanc worked at US Bank and its predecessors for fourteen years, serving as the head of the Healthcare division for the last seven years.  Mr. Blanc started his career with the American National Bank of Chicago (now part of JP Morgan) in 1987. Mr. Blanc will lead the Not-for-Profit team in serving skilled nursing operators and not-for-profit healthcare providers across Regions’ sixteen state footprint. Mr. Blanc is a graduate of University of Illinois, receiving a B.S. in Economics and additionally attended J.L. Kellogg Graduate School of Management, Northwestern University and received his Master of Management.

Contact Information:

L. Alec Blanc III
Senior Vice President & Team Leader
Healthcare Banking Group
Regions Bank
8182 Maryland Ave
St. Louis, MO 63105
(p) 314-615-3597
(f) 314-615-2355
(c) 314-780-8684

 

Watch the video of the interview: 

 

Read the interview transcript:

Steve Monroe
We all know that the banks are coming back into the market and a lot of the banks never left lending for seniors housing and care.  I have with me today Alec Blanc, who is the Senior Vice President and Group Manager for Regions Bank. He’s based in St. Louis.  Regions has been in the business for quite a while. Alec, can you tell me a little bit about what Regions Bank is doing in seniors housing and care right now? 

Alec Blanc
Sure Steve. By and large we’re doing what everybody would expect: conventional bank term lending, bridge to HUD, refi/acquisition. The thing I do want everybody to know is we’re actually getting set to roll out a HUD lending business. We’ve recently hired an underwriter, a guy by the name of Ed Williams. We expect to have that up and running third quarter. We’ll be taking applications, hopefully, early July.

Steve Monroe
Great. Do you think you’re going to grow that a lot? 

Alec Blanc
Yes. That’s definitely an opportunity for growth. We see it as, obviously, a very valuable tool, both for us as well as for our clients. We have a lot of skilled nursing clients, and HUD has been the primary permanent financing vehicle for those clients, and so we wanted that as a tool in our war chest.

Steve Monroe
As the economy has been improving, and more particularly the senior care and senior housing market improving, have you seen new loan requests coming in? 

Alec Blanc
Yes, buying has gone up. I think the industry sort of hit a pause button, particularly on the skilled nursing side, in the fourth quarter of last year. But as we’ve seen the impact of the cuts filter through into the financial statements this quarter, and I think even more so next quarter, the activity has kind of returned.

Steve Monroe
That’s good. Do you have any targeted number for loan volume for 2012?

Alec Blanc
Last year we did about $200 million in new loan originations. We’ve done just shy of $50 million so far this quarter, so we’re about on pace with last year. But the pipeline is strong—it’s over $200 million currently, so I think we can do $300 million.

Steve Monroe
You’ll probably break that. That’s good. And what about loan size?  Do you have a sweet spot in terms of what size loan you like to do? 

Alec Blanc
We do, Steve. We’ll do $5 million to $50 million, but generally we like to be kind of in that $10 million, $15 million-ish, up to $25 million, sort of the sweet spot for us.

Steve Monroe
How about geographic preference? 

Alec Blanc
We are a regional bank. We prefer to stay in-footprint, which for us means either the headquarters of the operators should be in-footprint, or the facility should be in the footprint—and preferably both, obviously, but either one will work. Our footprint runs from Florida, to Virginia, to Iowa, to Texas. It covers 16 states.

Steve Monroe
Nothing out west or northeast? 

Alec Blanc
That’s correct.

Steve Monroe
Any plans for that?

Alec Blanc
I’m not going to be able to tell you that, Steve. I’d have to kill you.

Steve Monroe
The seniors’ housing side of the business, and assisted living, really had a very strong market last year. Do you think you’re going to want to get more into that, or stay more heavily with skilled nursing? 

Alec Blanc
I’d like to see us do a little more on the assisted living side, Steve. We’ve been fairly heavy in the skilled nursing. I don’t expect us to be on the independent living or the CCRC side of the business in any meaningful way. We are really health care lenders at the core, and so we prefer to lend into properties where hardcore health care is being provided. We believe that’s skilled nursing and assisted living.

Steve Monroe
I wondered, some people called assisted living the skilled nursing of 35 years ago, and with so many services in home health coming into assisted living, you think you might start looking at that as a heavy health care business? 

Alec Blanc
Yes, definitely.

Steve Monroe
People are talking about new development coming. And not many people are scared about that, but you’re a balance sheet lender, and you say you’re going to get into the HUD business. That’s not a big part of your business now, but do you see yourself maybe getting into that? 

Alec Blanc
You know, we haven't done a lot of construction lending, Steve. We’re cash flow lenders at our core, and at the base a construction project is a startup. So that gives us some pause. We did two construction loans last year. In both cases they were for existing clients with fairly healthy portfolios, meaning sizeable portfolios, meaning sizeable portfolios that had lending cash flow that we could rely on if something went wrong with the new property. We felt good about those loans. Those projects are tracking. I think maybe we’ll do a couple more this year, but I don’t expect that to be a big portion of business this year.

Steve Monroe
And, you know, the whole market has been kind of heating up. The assisted living and the independent living side, we saw values go up on the sales side about 50 percent. Cap rates didn’t decline too much, but they did decline. Skilled nursing was still relatively strong, despite the uncertainly with Medicare. Is there any worry that, especially with the returns that people can get with skilled nursing relative to other real estate, any concern of an overheating market at the bank? 

Alec Blanc
Not at this point. I think we’re still pretty early in the cycle. As you said, particularly the lighter levels of care, the assisted living, independent living, did start to heat up a little bit last year. The pause that we took in the fourth quarter on skilled nursing, I think probably dialed values back a little bit. And buyers will come back to the market over the course of the year but, in my belief, not at a level that is really going to overvalue those properties, if you will.

Steve Monroe
Well, good luck with the portfolio, and it would be nice if you hit $300 million, a nice 50 percent increase would be great for you.

Alec Blanc
It would be terrific. Thanks Steve.

Steve Monroe
Thanks.

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