Capitalizing on growing investor interest in senior living facilities, Locust Point Capital announced it closed its debut fund with $312 million.
The fund, Locust Point Private Credit Fund, set a target of $250 million. The fund had raised nearly $96 million as of February, according to SEC filings that month.
The New Jersey-based firm will use the fund to provide senior mortgages, preferred equity and subordinate debt to owner-operators in the senior housing, memory care, assisted living and skilled nursing sectors.
Nearly $100 million of the fund’s capital has been deployed in secondary and tertiary markets with a significant need for senior housing, Locust Point Capital Founding Partner Eric Smith told Senior Housing News.
“We typically follow repeat owner-operators with whom we have existing relationships,” Smith said.
As more baby boomers retire, investor interest in senior housing has grown in recent years. The sector is seen as “recession-proof” by some investors, although some executives in the industry recently warned that an economic downturn would hurt occupancy.
Two-thirds of Locust Point’s capital came from American investors, while the balance was raised from European interests. There is growing interest in senior housing from foreign investors, Smith said. Senior demographic trends over the next 20 to 30 years — and the demand that will create — are very enticing to investors.
“The consistency of returns is appealing and we provide them access to markets where larger institutional investors may not have access,” Smith said.
Locust Point plans to spread the fund’s capital across the senior housing spectrum. He estimates 30% to 40% will be earmarked for skilled nursing facilities, while the lion’s share of the capital will be deployed in senior living. The capital can be used for acquisitions, renovations, ground up construction and general working capital purposes.
Written by Chuck Sudo