Two investment partners based in Boston, Mass. and Austin, Texas, are teaming up to target a new pipeline of senior housing investments in the coming months and years.
Hawkeye Partners, LP, a real estate private equity firm, has committed $175 million to Blue Moon Capital Partners LLC to seed the creation of a new fund that will provide capital to acquire, reposition and develop senior housing products throughout the U.S.
“Blue Moon Senior Housing I LP (BMSH I) is structured as a value-add fund that is looking to provide equity capital primarily via joint ventures with qualified operators and developers to do ground-up development of new senior housing in qualified markets as well as reposition existing properties,” Kathryn Sweeney, co-founder and managing partner of Blue Moon, tells SHN.
The closed-end fund will focus primarily on independent living and assisted living/memory care operators, while mostly leaving entry-fee continuing care retirement communities (CCRCs) and skilled nursing facilities out of the mix.
And it’s already gaining the attention of players in the space.
“The pipeline is very robust right now; in fact we have term sheets out on some deals,” Sweeney says. “We’re really looking at metros where there is a demand and supply imbalance, but we’re also looking at operators who have a long tenure of experience in the sector.”
In addition to Hawkeye’s commitment of $175 million, Blue Moon Capital Partners has made a co-investment, but declined to disclose specific dollar amounts.
For Blue Moon, the fund represents the first of many, as Sweeney says the company envisions it will be the start of “a successive series of funds.”
Headquartered in Boston, Blue Moon is a newly formed company that focuses exclusively on the senior housing sector. On the other hand, Hawkeye Partners is new to the senior housing space, but is in the business of sponsoring new platforms.
“We like the long-term fundamentals in senior housing,” Scott McArtor, co-founder and managing partner of Hawkeye, tells SHN. “It’s a sector that’s going to continue to develop; we think that the opportunity to come in and do ground-up development and value-add acquisitions is here today and in the foreseeable future — and it’s an industry we want to be in.”
Hawkeye’s $175 million commitment comes from its Scout Program, which is a series of real estate private equity funds that invest in and support the development of new and emerging managers, or platforms.
Through the creation of BMSH I, Hawkeye sees big opportunities for growth.
“It’s definitely a space where there’s a lot of room for growth,” McArtor says. “The demographics support it, and it’s an area in which I believe our investors … will continue to inveset in going forward.”
But BMSH I is different from other capital funds in the space, Sweeney says. Unlike others, it will value the senior housing product and the players in the industry, rather than treat them as opportune investments.
“What we see is a group of operators who are highily skilled, experienced and are looking to attract capital that appreciates the value that the operating team brings to the real estate,” she says. “We’re seeing a growing and impressive array of quality operating partners, but the operating partners are seeing a dearth of capital that truly values the expertise that they bring to the table.”
Written by Emily Study