EXPERT OPINION: A Conversation with Cathy Voreyer

March 12, 2012

In this “Expert Opinion” interview, Cathy Voreyer, Managing Director of Wells Fargo, gives insight into the seniors housing market from the perspective of one of the largest commercial banks.

Cathy VoreyerWatch the video      Read the transcript

Cathy Voreyer is Managing Director of Wells Fargo Multifamily Capital. WFMC is focused on providing real estate loans on Multifamily, Senior Housing, Age-Restricted Apartments, Student Housing and Manufactured Housing. Cathy is primarily focused on Agency business (Fannie Mae and Freddie Mac) with an emphasis on seniors housing. There are a variety of financing strategies both fixed and variable rates, short- and long-term available to clients. Loan executions include Fannie Mae, Freddie Mac, FHA, Conduit, Balance Sheet lending, loan syndications and equity.

Prior to joining Wells Fargo, she worked for Berkshire Mortgage where she originated over $500 million in senior housing loans. Cathy was employed with Berkshire for approximately six years. She started her career with GE Capital where she held numerous positions during her 17 year tenure. She has a B.S. in Finance with an Economics minor from CSU Sacramento and an M.S. in Real Estate from Georgia State.

 

Contact Information:

Catherine Voreyer
Managing Director
15750 Alton Pkwy, 3rd Floor
Irvine, CA 92618
Phone: (949) 754-7426
Fax: (949) 754-7422
Email: cathy.voreyer@wellsfargo.com
 

Watch the video of the interview: 

 

 

Read the interview transcript:

Steve Monroe
A lot of senior housing providers are looking for financing and the big question mark for several years has been commercial bank financing. And I’m sitting here with someone from one of the largest commercial banks, Wells Fargo, Cathy Voreyer, managing director of Wells Fargo.

Tell me a little bit about Wells and what you’re doing in the seniors housing business.

Cathy Voreyer
Sure, thanks, Steve. Wells Fargo really has consistently been in the marketplace for senior housing. Even during the financial crisis, we were still there providing Fannie, Freddie, FHA, as well as construction lending and balance sheet lending. So what we’ve really done relative to senior housing is develop specialists and focused in on senior housing, but very particular the owner-operators that we want to do business with. And so we’re going to be committed to this industry as we have been, but we’re going to pick our spots accordingly.

Steve Monroe
And how many people would you say in all of Wells Fargo are dedicated to seniors housing and senior care?

Cathy Voreyer
Oh, boy. You know, each division has their own specialist, but if I was to guess, I’d say 50-plus people.

Steve Monroe
Wow.

Cathy Voreyer
From originators to closers to underwriters. And that’s not including asset management, so we manage, obviously, all our balance sheet and Fannie and Freddie.

So, within each division within Wells Fargo that has that sort of financing that could provide senior housing operator financing, will have specialists within that division.

Steve Monroe
And kind or property types are you really out there looking for right now?

Cathy Voreyer
Yeah, I’d say what we’re really focused in on is the IL/AL, ALZ or a combination therefore. Standalone SNF, really, the execution for us is FHA. SNF we really are not putting on our balance sheet. All the other product types or community types, balance sheet or agency execution.

And then we’ve done a few buy-in CCRCs and we’re not really doing that anymore.

Steve Monroe
On the refinance or construction side?

Cathy Voreyer
Both.

Steve Monroe
Both.

Cathy Voreyer
Both. And part of it was legacy Wachovia days, that those came over. But I’d say rental CCRCs we’ll take a look at. Buy-in CCRCs, not our cup of tea right now.

Steve Monroe
Right, okay. And the kind of loans you’re seeing today, is it more on the refinancing side or acquisition side? And do you have a preference for one or the other?

Cathy Voreyer
Yes. You know, I’d say where rates are right now we are seeing a lot of refi activity, but we do acquisition, also. So we don’t have a preference for either. I think on the acquisition front, the market’s pretty competitive and so, if our client needs to close quickly, we can get the team together and provide that sort of quick close. But we’ll…

Steve Monroe
Sixty/90-day type of thing or…?

Cathy Voreyer
It could be shorter than that.

Steve Monroe
Shorter than that?

Cathy Voreyer
Yes. I’m not saying every deal we could do that, but for the clients that need that, we’ll figure out a way to get it done.

Steve Monroe
You mentioned a minute ago construction financing. And that’s been a big vacuum, there’s only a few banks who are doing that. Are you okay with construction?

Cathy Voreyer
Yes, we’ve been doing construction. I’d say that the first thing is, our construction is recourse. So I know there’s some competitors out there doing non-recourse. We’re a recourse lender. But we’ve been very active in senior housing.

Let me just—so, for instance, our construction program would typically fill out like this: We’d be looking at 65% load-to-value. Probably about 75, 80 percent loan-to-cost. We’re LIBOR-based, so it’s LIBOR-plus. And it’s really a risk-based pricing. So, depending on the acuity type and the execution, we’d be looking at 2.75 to 3.25, maybe 3.50 over that. But the key really there is risk-based pricing.

And then for us, the way that we really look at the property is we look at what’s called the debt yield. And so, depending on the acuity for an IL property, we’d be at probably a 13% debt yield. And the higher up the acuity, we’d go up to 14 or 15 percent.

And then, for us, the key is, when we do construction financing, we’re really looking at what’s our exit strategy? And the way that we’ve done most of our construction is we make sure that the construction is financeable in the permanent market. And so the two groups that provide the balance sheet lending and the agency lending, we work together to make sure that exit strategy’s there in the permanent market.

Steve Monroe
Good. And that’s a good segue into, with your group of total of 50 people in seniors housing, what’s—is your focus more on the agency side, the Fannie and Freddie and HUD? Or are you more on the balance sheet side? Or is it 50/50?

Cathy Voreyer
I don’t know if it’s 50/50, but both sides, you know, very active in. Wells Fargo is a very active lender in commercial real estate in general. And to get money out for the right real estate is really what we’re focused in on. So we don’t have any mandates on we need to do this much in agency or this much in balance sheet. We’re going to really assess, who’s the customer? How can we add value? What’s the risk? And, can we get a deal done that makes sense for both of us?

Steve Monroe
Can you give me an example of a recent senior housing deal that you’ve done that was a particularly good one or interesting one?

Cathy Voreyer
Yes. The one that we had done, I’ll start with the agency, was two deals that were being acquired. Pretty short timeframe. Very good client of the bank’s. And so we executed that under Fannie from rate log, or from loan app to rate log was about 44 days. And so we met the needs of the client very quickly and really had the partnership with Fannie to get that done. It really was to execute, you know, on a pretty low interest rate environment.

Steve Monroe
And how big of a financing was that?

Cathy Voreyer
So the two deals combined were just shy of $30 million.

Steve Monroe
You have it on the balance sheet side?

Cathy Voreyer
On the balance sheet side, a construction loan that we’ve just recently closed up in the Pacific Northwest, same sort of thing, a long-term client of the banks. We’ve done probably six deals with them, so this would be the sixth one. And it’s that model that we’ve built where we’ll do the construction lending, let it lease up, stabilize and then we’ll take it out to permanent. So you’ve got some of those coming off our balance sheet. We feel comfortable adding more on. And so that was a construction loan. It was 65% loan-to-cost. I think that was an IL/AL and that was priced at LIBOR plus 3.

Steve Monroe
Okay. And it sounds like you’re working nationally.

Cathy Voreyer
We’re working nationally.

Steve Monroe
So, a lot of the banks would not do that. How do you differentiate yourself from some of the other national players?

Cathy Voreyer
Yes. You know what I’d say is, one, we’re national. Two, I don’t think most of the owner-operators would hit our exposure limit. I keep hearing that from different clients that I’m calling on maybe for the first time, that they’ll, after the third deal, they’ll kind of hit the ceiling with the bank and then they have to go out and find financing. I think it’d be pretty difficult for someone to hit the exposure limit that we’re looking at. So that’s one.

Second thing, we’ve consistently been in the market. So even the last three years, when the market’s been pretty rocky, we were in there consistently. We’re going to continue to be in the commercial real estate/senior housing industry.

And then the other thing is really solutions-oriented. When we look at Wells Fargo, yes, we had the balance sheet, but the balance sheet could be for bridge financing. Could be construction financing. It might be a line of credit. Maybe somebody needs a letter of credit. Obviously, we have the depository, treasury management services. We’ve got the licenses for the three agencies. We have equipment financing, insurance services. So it’s really, this solution-oriented, is looking for a client that needs many of those products and us providing that solution to them to really add value.

Steve Monroe
Well, good. Well, you’ve got a lot of options for…

Cathy Voreyer
A lot of tools in the toolbox.

Steve Monroe
A lot of tools in the toolbox. And, hopefully a lot of capital to put out in 2012.

Cathy Voreyer
Yes. 2011’s been a very, very good year for us in senior housing. And the portfolio is healthy, which obviously helps, so I think 2012, we’re just going to stick to our game plan.

Steve Monroe
Well, good luck in 2012.

Cathy Voreyer
Well, thank you, I appreciate that.

Steve Monroe
All right, thanks for sitting down with me.

Cathy Voreyer
You bet.

 

 
 

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