EXPERT OPINION: A Conversation with Imran Javaid

January 13, 2014

In this "Expert Opinion" interview, Imran Javaid, Managing Director, Healthcare Real Estate, Commercial and Specialty Finance, Capital One Bank, discusses CCRCs, HUD, assisted living, client flexibility, and more.....

    Watch the video      Read the transcript

Mr. Javaid is Managing Director of the Healthcare Real Estate Group, lending practice within Capital One Bank’s Commercial and Specialty Finance business. In this role, Mr. Javaid leads the team which provides financing to companies in the senior housing and care industries.

Imran Javaid joined Capital One in July 2011 to lead its efforts in Healthcare Real Estate within the Commercial and Specialty Finance division of Capital One. Prior to joining Capital One, he was a Director in the Healthcare Real Estate Group of CapitalSource, Inc. a commercial lending and banking, investment and asset management company. He led loan transactions and direct real estate investments including acquisitions and dispositions for long-term care facilities including Skilled Nursing Facilities and Assisted Living Facilities. Since 2001, Mr. Javaid has been involved with over $3.0 billion in capital transactions. Mr. Javaid has led large acquisitions and dispositions between CapitalSource and Omega Healthcare Investors, Inc and CapitalSource and Healthcare Property Investors, Inc. 

In 2008, Mr. Javaid served as the Chief Accounting Officer for CapitalSource’s efforts to spin off its owned healthcare assets into a new publicly owned real estate investment trust (“REIT”). He was heavily involved in all aspects of the initial public offering (IPO), oversaw development of financial and performance statistics, submitted documentation to the Securities and Exchange Commission (SEC), and prepared for public release.

Prior to joining CapitalSource, Mr. Javaid worked for the Carlyle Group, a nationally renowned private equity firm.  With the Carlyle Group, Mr. Javaid undertook portfolio management and financial modeling for office and telecom buildings, hotels, and light industrial facilities. 

Mr. Javaid holds a BA in Accounting from Franklin and Marshall College in Lancaster, Pennsylvania, is a non-practicing licensed Certified Public Accountant (CPA) in the State of New York and a Chartered Financial Analyst (CFA) charterholder.



Contact Information:
Imran Javaid
Managing Director, Healthcare Real Estate Group
Commercial & Specialty Finance, Commercial Banking
4445 Willard Ave., 6 Floor
Chevy Chase, MD 20815
301-280-0212 (office)
301-280-0298 (fax)
imran.javaid@capitalone.com




Watch the video of the interview: 

Read the interview transcript:

 

Steve Monroe
The lending market for senior housing and care has been pretty active in 2013 and probably will continue to be even more active in 2014. I’m here with Imran Javaid. He is a managing director of commercial and specialty finance at Capital One Bank. Imran, a lot has been going on at Capital One Bank in the past couple years, but recently Capital One announced the acquisition of Beech Street Capital. What’s that going to do to your seniors housing platform?

Imran Javaid
Steve, thank you for having me here. What it allows us to do is be a full-spectrum lender, right? We have always been a balance sheet lender. Now this will give us agency capability. And then we will be a one-stop shop for people who so choose, to have both bridge capabilities, balance sheet, or agency. We can cover it all.

Steve Monroe
Is this something customers have been asking you about?

Imran Javaid
Certainly that is a question that has come up in the past, so, absolutely. That is a question that has come up, and we’re excited to be able to offer that full spectrum.

Steve Monroe
That’ll be good. When you guys first started the senior housing group at Capital One, I know you had a business plan obviously. How has that gone? Have you met your expectations, exceeded them?

Imran Javaid
Yes. The primary goal that we started out with when we first talked was we wanted to build our brand recognition. Now, Capital One had been lending in this market, in its footprint, so we wanted to build a national brand for Capital One for lending in this space, and I think we’ve been successful in doing that. So that was our objective No. 1.

Secondly, we had fairly aggressive goals for the fact that we had not been lending in this space. And we’ve met all of those objectives and exceeded those goals, at least so far, and hope to continue exceeding those.

Steve Monroe
Is there a particular area you want to grow in, expand in? Skilled nursing, senior housing?

Imran Javaid
We like the needs-based aspects of the skilled nursing or assisted living facilities. CCRCs as well. We are more attracted to the needs-based side. We think independent is less needs-based-driven, so we’re not as active in the independent space as the others. But that’s the area we like to grow. Since our inception, we’ve been lending on the middle market. That means basically regional operators. That doesn’t give you a size per se, but it tells you what our regional operators are.

Steve Monroe
Right.

Imran Javaid
So, the smaller and larger regionals, that’s been our market. Not that we haven’t done any of the really large transactions, because we have done bookends on both the really large and also the smaller shop, like the two-facility operator. We have done those transactions as well. But our focus has clearly been in the middle market, so we would like to continue to grow that.

Steve Monroe
When your customers are coming in, what seems to be the priority? Are they looking for the low rate, looking for low leverage? Are they looking for minimal covenants?  What’s the sweet spot for them?

Imran Javaid
Yes to all.

Steve Monroe
Yes to all?

Imran Javaid
I mean, the reality is, people would love the interest-rate-optional product, but we haven’t found the interest-rate-optional product yet. So we’re not—no, I’m just joking. No, in reality everyone has different goals, right? And so we definitely get a lot of people in who are looking for the lowest rate possible, who are able to compete for those. We get organizations, especially private equity-backed transactions, in which they’re looking for covenant flexibility, or equity cure provisions. We’re able to process both of those as well, given the right structure and the leverage.

We get to know our customers, so we figure out what is important to them and we are able to provide what they need based on that. We are able to cater to both of those factors.

Steve Monroe
Are they looking more for fixed-rate or floating-rate, or does it not matter anymore because you can swap in anything you want?

Imran Javaid
Yes to that, too. Because again, it depends—different strokes for different folks. If people are looking for bridge-to-agency, or a short-term goal, lending solution, they’re looking usually for floating-rate transactions, right? But then there are others who don’t want to go down the agency road, and those, we are able to offer a fixed rate, if that’s what they want. We’re able to offer terms of up to ten years on a fixed-rate basis. With that comes some provisions that obviously prevent as much flexibility in prepayment, and that’s what they have to evaluate. What do they want to do?

Steve Monroe
How about development financing? Because development has been heating up, have you seen much of that, or do you want to do much of that?

Imran Javaid
We do development. We see a lot more transactions than we do on the development side, which I think most lenders would probably attest to. And the reason is very simple. I think development is much easier when we’re looking at a customer who’s already in-house, right? So, if it’s a fresh relationship with someone, that’s hard to do, the first deal as a development deal. But if it’s somebody who we have done business with who comes in and this is the third transaction, or so on and so forth, we will do development for those guys, because we have a track record, and we feel comfortable with obviously doing business with people that we have track records with.

Steve Monroe
And what kind of properties would that development typically be for you today?

Imran Javaid
We have done some assisted living and Alzheimer’s, and yes, there is too much in certain areas, which is why it makes me nervous in some circumstances. So we are very selective about what we do. So, we have looked at a lot, was my point, and we’ve been very selective. So we’ve done some of those. We’ve done some replacement financing for skilled nursing, to do some aging plant that was essentially going on—that’s one of those things that’s easiest for us to look at and get our arms around, because it has a host of other restrictions.

We also have looked at, and have come close to a new CCRC project as well, but not done yet.

Steve Monroe
Really? Entrance fee or rental?

Imran Javaid
Entrance fee.

Steve Monroe
Entrance fee. Yeah, you don’t see banks doing that much of construction financing on that.

Imran Javaid
Right. We like that product, we like CCRCs. And I think in selective circumstances—we are very, very selective—in selective circumstances it makes sense.

Steve Monroe
Mm-hmm. You better be careful, people are going to hear that and start calling you.

Imran Javaid
The people who we like are already calling us.

Steve Monroe
On a straight banking side, I know you don’t want to say you lose business, but everyone loses business. I mean, do you find that people end up going to HUD because they like that nonrecourse 35-year loan?

Imran Javaid
It’s hard not to like the nonrecourse 35-year loan, if you were a long-term holder. But it’s not the right product for everyone. So if you want maximum flexibility, you’re not really going to be a long-term holder of this. It’s not the right product. And for those people, we have a whole slew of other solutions we’re able to craft.

Steve Monroe
I was going to say, where do you find you can provide the most flexibility for your clients?

Imran Javaid
I think in structured. We get to know our clients really well, and I’ll give you a specific example of that one, which is—on the front end, this is going to sound bad, what I’m going to say. We had a client who was very concerned about bad-boy carve-out guarantees. So as a banker, that makes you pause and say, why are you concerned about bad-boy carve-out guarantees? 

Once we got to know the client and understand what their concerns were, they had been burned specifically on something that was not necessarily a provision in order or anything like that, but the bank essentially doing things that were outside of the purview, and they had to litigate and all that. We really got to understand and know them; they’re one of our best clients. We did the transaction with them, crafting an appropriate bad-boy guarantee that we felt comfortable with, they were comfortable with, and everyone was happy. When we got our loan, actually getting off at the end of the year, so it’s been a successful loan. But we really had to get to know our client and understand what their need was.

So I think in structured is where we can be the most flexible, because for agency lending, it either fits your box or it doesn’t fit your box, right? I mean, there are certain parameters. For us, the relationship is the most important, so if it’s somebody we have a relationship with or somebody we are building a relationship with or getting to know them, understanding what makes them tick or what makes their transaction tick, or what are their basic needs, that’s where we can provide and be flexible.

Steve Monroe
Okay, good. It sounds like you’re obviously off to a great couple-year start, and good luck in 2014.

Imran Javaid
Thank you, appreciate it.

Steve Monroe

All right. Thanks for sitting down.

 

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