This Cleveland-based lender makes a name for itself by providing personal contacts in all four time zones.
A bank is a bank is a bank; under any other name it would do the same job. Unless, of course, it could not only finance a high-quality project, but provide you with a relationship manager and a credit officer in every region of the country as well.
But what lender can do all this? Key Commercial Real Estate, that's who.
"We have not only production officers in all four time zones, but we also have real estate credit officers in each one of those regional areas, which givesus the ability to service clients' needs in the most expeditious and efficient manner," says George Emmons, executive vice president and national manager of commercial real estate. "By having real estate credit officers shoulder to shoulder with relationship managers, we believe this gives us a competitive market advantage, and it certainly underscores the whole basis here of speed being of essence."
Key Commercial Real Estate, the real estate business of Cleveland-based KeyBank, is a commercial real estate lender that provides financing for basically all property types to both public and private companies.
Key's commercial real estate group began coming together in 1992, when the company was known as Society National Bank. At that time, the real estate group decided to change its perspective in the way it conducted business.
"We really opened up our territory to be a national lender," says Paul Horning, national production manager-Key Capital Markets. "So if we have the right client, we would follow that client to any market where they had an attractive opportunity, and we would play a role as their financing source no matter where they went."
In 1996, Key created the capital markets group, which was headed up by Horning. "Essentially what we decided to do there is to start to capture some of that fee income in the placement of permanent mortgages for our client base with life companies and pension funds," Horning adds.
Apparently this change in outlook and a growing list of programs have worked well for the firm. Today, Key has 300 real estate professionals under its roof, and its annual loan production for 1997 was in excess of $4.25 billion.
Key has been building its different lending programs for years, but its core line of business is commercial real estate finance, with an emphasis on construction lending. As extensions of that core line, Key also provides CMBS, REIT, mezzanine and equity products as well as acquisition lending and bridge loans.
As part of the REIT lines of credit, Key began a major sales and syndication initiative in 1995. And in two years, Key has increased its sales and syndications from $300 million in 1995 to $2 billion in 1997.
Typically, Key underwrites loans up to $300 million and, on average, the firm holds somewhere between $15 million and $40 million, depending on the size of the deal, and then syndicates the balance.
"[Sales and syndications] definitely grew out of the REIT initiative because of the publically financed companies, but also some of our large privately held companies also have been utilizing this service," says Renee Csuhran, regional manager-Great Lakes and national REIT loan production manager. "This is significant because that is ancillary fee income for us and our line of business. And that number will certainly grow in 1998; we will probably be $3 billion, if not more."
All of these products and initiatives are driven under the real estate group, Horning says, which is important because it brings together all the efforts of the real estate group.
"When we compare notes on internal structures and attitudes with other institutions, a lot of these initiatives that other banks on a similar path as us really come from the capital markets group or the corporate finance group or whatever group develops a very creative initiative, and they really try to layer them onto their real estate group," Horning says. "There's no cohesive push to achieve a real estate vision, and that's the one thing that we have at Key is that we have a real estate vision. It directs what we do, what we develop and what lines of business we get into and really promote, and that has been the key to our success."
Of course, Key is always looking at new products to better serve its clients, and one of its recent additions is a new program-loan initiative.
"For instance, if we have a developer that has an entire construction program he is trying to finance, we will try and structure something to allow him to do all the projects," Horning says. "He may have 15 or 20 projects he wants to do in various states or locations, and we really want to deliver the program and let him do all 20, rather than underwrite the first loan and make 20 decisions and have him prove himself over and over and over again. That's not adding value to the client."
Key also plans to add a new hybrid CMBS product this year. This program will provide smaller loans in the range of approximately $250,000 up to $1 million, which is tapered into a conduit, says Horning.
And, "we will be developing mezzanine debt products as well as equity products that we'll offer to our private and public developers," Csuhran says.
The focus of Key's growth strategy for the year ahead will be on its current lines of credit, Emmons says.
"Our growth strategy has always been to evolve into a commercial real estate finance company," Emmons says. "We've done very, very well with our loan products, and the next growth rung on the ladder for us is essentially the CMBS market, the permanent market, where we can take our developer from the construction loan to the permanent loan, and that is what we'll be doing in 1998."
The group expects to build its productions in its CMBS product to $1 billion this year, and it wants to grow the REIT portfolio to $1.5 billion in commitments.
Also in 1998, Key expects to set itself apart from the others by increasing the knowledge base and skill set of its relationship managers in order to provide its clients with one point of contact, says Csuhran.
"One of the unique ways in 1998 that we will be differentiating ourselves is through providing some more tools for our relationship managers to solve the clients' needs." Csuhran adds. "We are going to enable the relationship managers to not only sell income property construction loans, but they will also be marketing the CMBS products to the client base as well. We are going to be further pushing down on these responsibilities to the market managers, and that is going to be a key to our success in 1998."
And to ensure that its professionals are well-trained in all the different areas of commercial real estate financing, Key has designed an educational training program that will be rolling out this year.
"We have a very detailed education program that has been developed and will be distributed to all the relationship managers so that they can benefit and so they will have with them sort of a bible of real estate lending for our line of business," Csuhran says.
Being in an industry where clients are pushing more and more for one-stop shopping, this one point of contact is sure to be another growth factor for Key.
"When you are talking to your calling officer, when you're talking to your relationship manager, you're talking to your lender, and not a lot of other institutions can say that across all their products," Horning adds.
It is this sort of training and determination to please the clients that has led to the success of Key today.
"Your client really wants to have the confidence that they are dealing with somebody that has the knowledge and know-how of how to get things done," Emmons says. "That's where I think we really hit on something here. We wouldn't be able to have $4.25 billion in quality production if we didn't do this."