EXPERT OPINION: A Conversation with Kathryn Burton Gray - October 29, 2012

October 29, 2012

In this "Expert Opinion" interview, Kathryn Burton Gray, Senior Managing Director and Head of Health Care at Red Mortgage Capital, discusses some of their lending activities, HUD, and the current state of the market.

Kathryn Burton GrayWatch the video      Read the transcript

Ms. Burton Gray is Head of Health Care and Senior Managing Director for Red Mortgage Capital, LLC. She joined Red Mortgage Capital, LLC in June 2012. She is responsible for overseeing RED’s financing and private placement activities in the health care sector, including real estate proprietary bridge lending and Fannie Mae, Freddie Mac and FHA loans. Her areas of expertise include the long-term care sector of the health care industry with a focus on underwriting and portfolio responsibilities.

Ms. Burton Gray has over 28 years of banking experience in both large commercial banking platforms, including Wells Fargo Bank, as well as smaller regional and community banks. Prior to joining RED, she worked for finance companies, including GE, Finova Capital, and most recently CIT Group where she led the national health care real estate platform in the Commercial Finance Division and was responsible for originations in the seniors housing and skilled nursing space.

Ms. Burton Gray serves on the Foundation Board of Mission Hospital, a St. Joseph’s Hospital subsidiary, and many other industry specific boards including ASHA (American Senior Housing Association). Her past board memberships have included HCap, LTC 100, and the NIC Advisory Committee.

 

Contact Information:
Kathryn Burton Gray
Senior Managing Director
Red Mortgage Capital, LLC
500 Newport Center Drive, Suite 930
Newport Beach, California 92660
Tel 949.610.0270
Cell 917.679.9982
Fax 949.610.0276
kburtongray@redcapitalgroup.com


 
Watch the video of the interview: 
 

 

Read the interview transcript:

Steve Monroe
The debt markets have definitely improved in the last couple of years. Interest rates are low and lots of people are refinancing. I'm sitting here with Kathryn Burton Gray. She's a senior managing director and head of health care at Red Mortgage Capital. Kathryn, you've taken over as head of Red Mortgage Capital's senior housing group. This must be an exciting time for you?

Kathryn Burton Gray
This is definitely an exciting time, and it's really evident here at the NIC conference where we're seeing the resurgence of a lot of new lenders, some old lenders, some old friends and new friends. Some new Fannie and Freddie lenders as well, Bridge lenders. It's a fun, exciting time. It's telling me that the market's coming back.

Steve Monroe
Are there any new initiatives that you're starting at Red Mortgage Capital in your new role?

Kathryn Burton Gray
Well, we had the initiative of a balance sheet. Now, we're really taking that to task, where we're really looking at some strategic relationships, some existing customers and some possible new customers where we're able to take the balance sheet and give them sort of a bridge to an agency, whether it's Fannie, Freddie or HUD.

Steve Monroe
Red Mortgage Capital’s been pretty much known as a big agency firm.

Kathryn Burton Gray
That's correct.

Steve Monroe
Especially on the Fannie side. Are you going to still go down that path?

Kathryn Burton Gray
Absolutely. It's a great platform. One of the reasons I took this job is because it has such a legacy as being, like you said, a Freddie-Fannie-HUD lender. I think with my background in bridge lending that it really adds to that whole continuum of financing.

Steve Monroe
When you look at 2013, what would you expect the breakdown of new business between Fannie, Fred, HUD and balance sheet lending to be?

Kathryn Burton Gray
That's interesting. So you're saying in the next six months, what do I think is going to happen? I think that right now, as far as agency lending, the FHA, the HUD lending, has had pretty attractive rates, so I think at some point you're going to get that same competition coming up with Fannie and Freddie. But basically for skilled nursing, they really have one alternative for long-term, within an agency financing, which is the FHA.

But I think I'm going to start to see more possibly maybe turnaround situations, distressed, because as you well know—we've talked about this—the REITs definitely have been very active in the marketplace. So, a lot of the larger transactions have been taken off the table, so now, what we're looking at is we're going down that spectrum and saying okay, what else is here? Maybe super regional, regional plays or maybe smaller mom-and-pop, maybe consolidations. Some maybe turnaround, repositioning. Construction lending is another—I'm starting to see more people repositioning and building out. I have not seen as many construction lenders out there but the demand is definitely there.

Steve Monroe
What about the profile on the balance sheet side, the profile of the kind of borrower you're looking for?

Kathryn Burton Gray
I think to use our balance sheet funds, really those are precious funds, so I really want a strategic relationship. I just don't want to do a one-off, let's do this transaction and then we're done. I really want the relationship of possibly looking at maybe doing a credit facility, where we take a portfolio and what we do is we put it into a mix and as it seasons we can take it out and take it to agency. They can again put another property in, and continue this. That's one possibility.

Another possibility would be again strategically maybe an acquisition-type facility where maybe they have a couple of assets that are not stabilized yet, so it allows that stabilization and take the portfolio to an agency exit. So I think that's typically what I'm looking for.

Steve Monroe
How about again on the balance sheet side, what kind of loan size are you comfortable with doing?

Kathryn Burton Gray
That's an interesting question. I think my sweet spot would be within let’s say $20 to $25 million range. I'm not adverse to doing larger transactions. In fact, we're looking at a rather large transaction. But I think that's a really good portfolio. Now, if it's a one-off, I would say $5 million to $7 million to $10 million is also another good—so it really is twofold.

Steve Monroe
Red Capital is adding staff, I understand. What are you looking for in terms of any kind of sector specialty, or just senior housing experience, real estate experience?

Kathryn Burton Gray
Mostly senior housing, real estate experience is what we're looking for. I'm very fortunate we just hired two more people, again, because the industry is really good right now, there are a lot of lenders that are looking maybe to switch jerseys, so we're re-evaluating. We want to make sure culturally it's a good fit, but mostly experienced lenders.

Steve Monroe
Historically, though, Red Mortgage Capital has not been a big player in the skilled nursing side. It has been much more in the senior housing side. Do you think that's going to change, or are you going to stick with your knitting?

Kathryn Burton Gray
No, definitely it's going to change. In fact, that's probably my expertise and I would say for the last ten years I've been doing a lot of skilled nursing. So I know the other people that we have made offers to and people that are with Red Mortgage Capital right now are looking at a lot of skilled nursing facilities.

Steve Monroe
Okay, good. So in 2013, you're looking to see some of that kind of growing in your portfolio and in your business.

Kathryn Burton Gray
Absolutely, yes.

Steve Monroe
Okay, great. Well, good luck in the new job.

Kathryn Burton Gray
Thank you. I'm excited.
 

 

Comments

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

I have read many books

I have read many books written by Kathryn Burton Gray and I am so inspired with her thoughts and findings. She had played a major role in overseeing RED’s financing and private placement activities in the health care sector. Thanks for sharing. Email Help

Post new comment

The content of this field is kept private and will not be shown publicly.