With construction heating up in the seniors housing industry, Wells Fargo is looking to position itself to help fund that growth using its balance sheet, floating rate lending platform. It started about a year ago when Wells Fargo brought in Mark Cotsakis, who had been with the bank for over 25 years, to head the newly formed Senior Housing Finance Group (SHFG), part of the Wells Fargo Commercial Real Estate Group.
Since then, Mark and his team of about 18 have been hard at work, with approximately a half-billion in closings in the past year, and they are set to close another quarter-billion in the next two months, totaling some 30 transactions. The closings have ranged from $8 million to develop a stand-alone memory care community and up to $50 or $60 million for a large senior living campus that includes independent and assisted living and memory care.
While they will avoid financing 55+ age-restricted housing, they will look to do an independent living project, so long as an assisted living/memory care component is added on at a later date. Geographically, they have been spread out, with concentrations in California, Florida, the Northeast and the Pacific Northwest, all high-value areas (averaging $222,500 per unit for like-communities in those states, according to our data).
Most of the group’s clients are primarily private, “Top-25” operators, with some strong regional operators as well. Though most are experienced operators, SHFG will also look to finance projects by first-time developers as long as they bring in an experienced and proven operator to third-party manage.
As for the typical loan term, SHFG looks to do an initial term of about three years, with two one-year extensions, but the loan details will vary from project to project. And then they would take them to permanent financing, either through agency or elsewhere, through Wells Fargo’s Multifamily Group. On the acquisition side, the new group will look to finance those as well, but only for a potential reposition or expansion project.
