EXPERT OPINION: A Conversation with Cary Tremper

April 23, 2013

In this "Expert Opinion" interview, Cary Tremper, Senior Vice President/Managing Director, Key Bank Real Estate Capital, discusses Key's history, loan-to-value, seniors housing, construction financing, and more.........

Cary TremperWatch the video      Read the transcript

Cary R. Tremper serves as Managing Director for KeyBank Real Estate Capital’s healthcare mortgage banking and FHA lending groups.  Based in Dallas, Mr. Tremper leads a team of production and underwriting professionals to deliver Key's permanent lending capabilities, including Fannie Mae, Freddie Mac and FHA/HUD, to markets nationwide.  Mr. Tremper has more than twelve years of experience in commercial real estate finance with eight years dedicated specifically to the origination of over $3 billion in seniors housing and healthcare loans.  Mr. Tremper received his BBA degree from Texas Christian University.
 

 

Contact Information:
Cary R. Tremper
Senior Vice President
KeyBank Real Estate Capital
8115 Preston Road, Suite 500
Dallas, TX 75225
(214) 540-9130 - Office
(214) 679-9806 - Cell
cary_r_tremper@keybank.com



 
Watch the video of the interview: 
 

 

Read the interview transcript:

Steve Monroe
So, in a very active M&A market, lending market, refinancing market in senior housing and care, I'm here with Cary Tremper. He's a senior vice president at Key Bank Real Estate Capital.

Cary, during the financial crisis and Great Recession, many if not most commercial banks either withdrew completely from the lending market on a short-term basis or really cut back. Key Bank didn't. What was so different with you guys?

Cary Tremper
Well, Steve, I don't want to say you know there was a pullback, I would say things did slow down for us. But if you look at Key's history in the market, we've been relatively consistent. So, although we weren't out there providing construction financing during that time, I think you saw us doing the right thing as far as our clients. I think that's just a testament to our overall strategy being client-focused, trying to be consistent, not picking the time to be in the market, out of the market. And really trying to build those relationships so you're there for them 100% of the time.

Steve Monroe
I imagine you didn't have any of the derivative issues that some of the large banks had back then or at least nothing in that scope.

Cary Tremper
You know, we really didn't. And that's a good point. We really weren't focused—we didn't have a whole lot of bad loans to deal with, taking up the time. So, most of it was positive, but there are still some things overall at the bank that you kind of get into somewhat of a defensive mindset and it's tough to be always proactive. But I would say, in the space itself, we did a pretty good job.

Steve Monroe
I know you're a relationship bank, but do you see a lot of price shopping out there for better terms or lower rates or is it really just all about service and relationship?

Cary Tremper
Steve, I'd like to say no, but we do. Absolutely. I think people have and it's important. People have a fiduciary responsibility to their investors, to their partners. So we see that. We like to look at it as if we're bringing more than just a balance sheet to a relationship. We try to deliver the platform, which means a little bit more to us when you couple our mortgage banking with our balance sheet, with the investment banking and syndications. I think it helps to alleviate some of that pricing, to where it doesn't become the number one issue. But we certainly see it. We certainly see it.

We expect that people need to keep others honest. And we understand that we need to be kept honest, so we get it.

Steve Monroe
What's happened to loan-to-value since we emerged from the recession? Are they easing? Going up a little bit, from the bank's perspective? Or has it stayed pretty similar?

Cary Tremper
I'd say it's stayed pretty consistent. It really has. At the end of the day, Steve, when you're looking at a loan-to-value, loan-to-cost, banks like to see equity in the transactions. And whether that's cash equity, whether that's market value equity, but I would say that from both the balance sheet perspective as well as whether you're underwriting a Fannie Mae transaction or a Freddie Mac transaction, loan-to-values are in that 70, 75 percent and that's probably the max.

Steve Monroe
What kind of customers are you all looking at at Key in terms of size of borrower, geography, experience? What are kind of your parameters?

Cary Tremper
We have, what's nice is we have a national platform. We've been successful with what I would call a regional/local-type operator. Somebody that has five to 15 properties. Those guys make up a good size of our portfolio. But we focus our efforts still on the health care REITs. And we also focus on some of the national guys, as well. But where we've had luck, where we can be meaningful to those clients are probably more on a regional basis.

Steve Monroe
When your clients come in to you for financing, how do you decide to talk to them about taking the agency route or doing a balance sheet loan? How does that conversation go?

Cary Tremper
That’s a good question. I think it's just trying to be…where we can add some value is kind of peeling the onion back, so to speak, and figuring out what the client's financing objectives are. Whether that's locking in low fixed-rate financing for the next 10 years, non-recourse, with an agency financing, or whether it be a play for the next three to five years for somebody more opportunistically is coming in and, whether investing some more money, doing some unit-mix conversions, where they see the whole period less than five years, or maybe a balance sheet play makes more sense, where you don't get into the prepayments.

Steve Monroe
Right. Are you seeing these customers coming in, are they more sophisticated than they were five years ago or maybe even 10 years ago?

Cary Tremper
Yes, probably a little bit. The structures seem to be more sophisticated in terms of the ownership, but when you look at our business, what really drives the value is the simple things at the local, at the property level. So that hasn't changed at all, right? So it's still the upkeep of the properties, the level of care that you're providing to your residents, those are the things that don't become sophisticated. I think the financing can sometimes get a little bit too sophisticated with some of the structures that are in place, but what really creates the value at the end of the day is looking at the operations.

Steve Monroe
How is the mix of your customers or portfolio between skilled nursing home on one side and private pay seniors housing on the other?

Cary Tremper
We like both. I think it's important to know that—to have a good balance. We certainly, on the skilled nursing side, as far as reimbursement, we look at that risk and we try to manage that risk the best that we can. But we like the private pay side. The majority of our portfolio is private pay, though.

Steve Monroe
Are you doing any construction financing with mini-perms on either side, skilled or senior housing?

Cary Tremper
On the seniors housing side, we are. It's very selective, as you can imagine. We look at the highest and best use for our capital. And if that's going to fill a need for an existing client that utilizes multiple facets of our platform, then certainly we'll provide the construction financing. But, for doing just the transactional one-off construction loan, is probably not going to happen at Key.

Steve Monroe
Not going to happen, okay. And in today's market, a lender like Key, what is the biggest thing you're worried about with regard to a borrower? What would scare you about something that might happen to a borrower?

Cary Tremper
You know, probably just getting out in front of your skis a little bit. Maybe taking too much on. And it's a good question, I think if I could say it a different way, it's not necessarily what we're worried about, but it's what we look for when we look for relationships that we want to bring on to the bank. I think what it all starts with is history, track record. Most of the people we bank have been in this business for a long time, have a long-term commitment to the business. It's not something, what I would call a merchant-type builder.

So, it's what we look for is that track record, somebody that's committed to the space, alignment of interest. Obviously, financial wherewithal is important. But at the end of the day, looking at somebody and saying, we always look at exit strategies. So, whether that's a sale of an asset, whether that's a refinance of an asset, but somebody that can get us to that point.

Steve Monroe
Right. How's the pipeline for 2013?

Cary Tremper
Pipeline is excellent. We had a record 2012, we were the number one seniors housing lender for Fannie Mae, the number one seniors housing lender for Freddie Mac and we boosted our FHA status from a top 30 lender to number 11. So it was a record year and we're getting a lot of good momentum in 2013, so pipeline's good.

Steve Monroe
Well, good, good luck and hope it all works out.

Cary Tremper
Thanks for the time.

Steve Monroe
Thanks for sitting in.
 

 


 

 

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