NIC Notes

Insights in Seniors Housing & Care

By: NIC  |  March 04, 2021

The Art and Science of Lending: A Conversation with Capital One’s Mark Bultman

Business Environment  |  Seniors Housing

The most successful businesses are a blend of art and science. Data provides a solid foundation. Creativity delivers the innovative solutions.

Mark Bultman’s approach to seniors housing finance combines art and science. You can’t have one without the other.

As senior vice president of sales, Bultman is a leader on the seniors housing lending group at Capital One. NIC Chief Economist Beth Mace recently talked with Bultman about his approach and whether the market is headed for an upturn after a difficult year. Here’s a recap of their conversation.

 Bultman Headshot

Mace: What’s your role at Capital One?

Bultman: I work in the long-term care real estate lending group at Capital One. We provide financing in the seniors housing space for independent living, assisted living, memory care, and to a lesser extent, skilled nursing properties.

Mace: How active is Capital One in the sector?

Bultman: Our team has been lending in the space for close to 20 years and has been very active as a balance sheet transactional lender and as a longer-term agency lender. While we’ve still seen activity since COVID-19 hit, there have been fewer trades across the market as a whole.

Mace: Did business pick up in 4th quarter of last year compared to previous quarters?

Bultman: Yes, we’re seeing more deals as 2021 gets started, but activity is down overall and a far cry from 2018-19 and first quarter of 2020.

Mace: Are you anticipating greater deal flow as 2021 progresses?

Bultman: I’m optimistic that there will be more deal opportunities in 2021. We are on the phone with owners and operators weekly, if not daily, and I think there will be a greater desire to transact, buy and sell, and refinance loans. There are a lot of factors at play that will dictate the level of deal flow as we move forward—the vaccine roll out, state and operator-specific rules for visits and move-ins, trends in the property-level workforce, just to name a few.

Mace: A lot of lenders worked hand-in-hand with their borrowers during 2020 to help them through the challenges they were facing. Will that continue into 2021?

Bultman: Absolutely. We’ve worked closely with our borrowers to help them navigate their individual situations. The pandemic has been really tough for the industry, and not just in terms of lost revenue and higher expenses. When you talk to customers on a weekly basis, you can hear the strain in their voices. You can feel the struggle for the staff and the residents. You have to take that into consideration, and we’ve been committed to supporting them through this difficult stretch.

Mace: Is there any difference in the way you underwrite and view seniors housing compared with other asset types within your healthcare real estate business?

Bultman: I would say we’re fairly data-driven in our underwriting approach. There’s a ton of data out there, and we use it all. We look at recent trades and industry trends to assist with the science of real estate underwriting. But we also look at the art of underwriting. Are we aligned with the borrower? Are we aligned on the long-term outlook for the property and the market? Our underwriting philosophy is a blend of the art and the science. Seniors housing is an operating platform on top of a piece of real estate. The hard part is figuring out both parts of the business and aligning with the right players in the industry.

Mace: Do you finance acquisitions, refinancings, re-positionings and new development?

Bultman: We finance all of the above. Our group has been financing seniors housing for close to 20 years. Right now, we’re more focused on acquisitions, refinancings, and agency lending. That’s been our core competency over the past few years and where our expertise lies. We finance a limited amount of new construction and repositionings but will continue to look for the right opportunities across all deal types.

Mace: What do you look for in a sponsor?

Bultman: Aligned interests. We are committed to the industry, and we’re looking for sponsors also interested in being in seniors housing for the long term. We aren’t looking for a buy-and-flip type of sponsor, or one that’s chasing yield. Over the years, we’ve been financing the biggest REITs in the space, the smaller owner operators, and everything in between. We are always looking for sponsors and owners that are focused on operations. Seniors housing is a boots-on-the-ground business and that determines success in this industry. Our customers have historically been well- known and well-regarded sponsors who partner with top operators. We’ve been very successful in lending to these types of groups over the years.  

Mace: How do you decide what lending product is the right fit for a borrower?

Bultman: In a perfect world, we are able to present multiple lending options for our customers and then work with them to find the best fit. That being said, there are situations where it’s fairly obvious that one type of product will better meet the needs of the customer. If the borrower wants a longer-term deal and the property is stabilized, then an agency loan might be the clear choice. A shorter-term deal or the purchase of a pool of assets with different exit strategies, capex needs, etc., might be a better fit for a balance sheet loan. We are fortunate to have the ability to offer multiple lending solutions, and it’s been a big factor in our success. We were proud to be named the top Freddie Mac seniors lender in 2020 - a fantastic accomplishment and a testament to our industry presence and best-in-class agency lending team.

Mace: What else would you like our readership to know about Capital One?

Bultman: At Capital One, our goal is to find ways to add value for our customers and the market, and to build relationships. We have had tremendous success as transactional lenders in seniors housing, and we will continue to be leaders in the space. One exciting thing we are working on this year is improving and expanding our traditional bank product offerings (treasury services, depository services, payment cards, etc). There’s a need in the industry for banking services tailored to seniors housing, and we’re utilizing our industry knowledge and banking expertise to bring better solutions to market.

One last thing, if I may, Beth. It’s been hard to watch how this pandemic has affected our industry. For someone who’s been in seniors housing for 20 years, this is the worst year that I’ve seen in terms of the overall impact on the properties themselves. I’m thankful for all the hard work being done to figure this out in real time, to keep residents and staff safe and uphold the industry’s reputation. Seniors housing is a fantastic industry and great product, and I’m thankful and fortunate to be a part of it.

About NIC

The National Investment Center for Seniors Housing & Care (NIC) is a nonprofit 501(c)(3) organization whose mission is to support access and choice for America’s seniors by providing data, analytics, and connections that bring together investors and providers.

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