Senior housing veterans with resumes that include stints at Fortress Investment Group (NYSE: FIG), Brookdale Senior Living (NYSE: BKD) and GE have now closed an impressive private equity fund to make investments in the sector, which could total $900 million.
Focus Healthcare Partners LLC, a Chicago-based private real estate investment firm targeting the senior housing sector, closed its first discretionary real estate fund at $312 million, the company announced this week.
Focus was formed in 2009 when Principal Curt Schaller and Paul Froning partnered to leverage each of their more than 20-years of experience in the senior housing industry. Since then, Focus has formed joint ventures with private equity firms, through which Focus has purchased 16 properties for more than $400 million. With this track record, the firm formed its first discretionary fund, Focus Senior Housing Fund I LP, several months ago.
Focus initially set out to raise $200 million and could have closed at more than the final $312 million, but decided this was a comfortable number to allocate over the planned four-year cycle, Schaller told Senior Housing News.
“The fact that we were so successful speaks to investors’ interest in the senior housing industry, especially when they are working with people that they feel know the industry well,” Schaller said.
The fund was accomplished through the support of public pension plan investors, university endowment funds, public insurance companies and other institutional limited partners, and will be leveraged to invest approximately $900 million into senior housing assets. Focus is looking to target private-pay senior apartment, independent living, assisted living and memory care properties nationwide, but not standalone skilled nursing facilities or continuing care retirement communities (CCRCs).
The first deal could be closed as early as August, according to Schaller.
The firm is going to “pursue good, risk adjusted return deals, whatever they may be,” and they are “open to everything from turnaround buildings to stabilized, Class A properties,” he said.
Focus is unique from other private equity and investment platforms in that he and Froning have established a very flat organizational structure, Schaller said. They have autonomy in terms of investment decisions and do not need to consult with a committee or board of directors. Plus, they meet face-to-face with sellers, which Schaller considers important in establishing confidence in their ability to execute strong deals.
“I think it’s going to help differentiate us in a competitive landscape where there’s a lot of capital out there. And the fact that the people who are making the decisions are the people that you’re talking to on a day-to-day basis is going to go a long way to help us be successful in putting out this money,” Schaller said.
Another Chicago-based equity firm, Harrison Street Real Estate Capital, raised a $1.15 billon fund, which will be used in part on senior housing investments.
Written by Elizabeth Jakaitis