New PE Firm Twin Light Acquires 13-Property Senior Housing Portfolio

A newly formed private equity firm made its initial foray into senior housing, and sees an opportunity to work with the operator to unlock value in what is a mostly stable collection of communities.

Twin Light Capital acquired 10 Diamond Willow Assisted Living communities across Minnesota, as well as Keystone Bluffs Assisted Living in Duluth, totaling 291 units and 398 beds. The deal also includes two sites in Duluth and Fergus Falls totaling nearly 23 acres, Twin Light Managing Partner Chad Buchanan told Senior Housing News

Terms of the deal were not disclosed. According to the Duluth News Tribune, Bethesda, Maryland-based Northstar Realty Finance bought the properties in July 2013 for $55 million. Northstar was later acquired by Colony Capital (NYSE: CLNY) in January 2017.

The portfolio is operated by Duluth-based Full Circle Senior Living.

Based in Holmdel, New Jersey, Buchanan is no stranger to the senior care space. Prior to founding Twin Light with former Ernst & Young Senior Manager John Masterpalo, he spent eight years as chief investment officer for Tryko Partners, a private equity firm focused on multifamily and health care investments across the eastern seaboard. Twin Light closed a funding round in June for an undisclosed sum.

With this deal, the firm is acquiring a portfolio that is mostly stable with an overall occupancy at around 90%, buttressed by an operator in Full Circle with a solid reputation for quality care in higher acuity settings, Buchanan told SHN.

“They have an excellent reputation for caring for people through end of life, as well as with their health care partners and area hospitals. This is what attracted us to the community and management team,” he said.

Twin Light sees the deal as a value-add play. It will implement a capital improvement plan to upgrade common areas and activities rooms, as well as freshening up private spaces as they turn over. There are a handful of Diamond Willow communities where occupancy can be boosted, and others where Twin Light and Full Circle will work together to increase the mix of private pay within the census. The facilities participate in Minnesota’s Medicaid Elderly Waiver program. Buchanan believes that better bed management and qualifying of residents will result in continued availability for both private pay residents and seniors in need of financial assistance.

Twin Light’s entry into the senior housing space is another example of what is a historic time for investment. 

A flood of capital has entered the space from private equity, real estate investment trusts and new players such as family office funds and investors from traditional real estate classes seeking opportunities. Fundraising in seniors private equity is three times today what it was annually over the prior decade, JLL Senior Managing Director Ted Flagg told SHN in August.