PGIM Senior Housing Fund Raises Nearly $1 Billion

PGIM Real Estate exceeded the fundraising target for its latest senior housing fund, securing almost $1 billion.

The Madison, New Jersey-based real estate investment announced on Monday it closed its capital raise for its Senior Housing Partners Fund VI with $996 million in commitments. This is the largest raise to date in the fund series and easily exceeded its original $750 million target.

The fund’s performance is another example of the appetite investors are exhibiting for senior housing, which has emerged in recent years as an institutional-grade asset class. An unprecedented flood of money is entering the senior housing capital markets and all types of investors — REITs, institutional and office funds and private equity — seek opportunities in the space.

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A growing number of investment funds are targeting senior living. Locust Point Capital’s debut senior housing fund closed oversubscribed with $312 million in commitments in September 2018.

Kayne Anderson Real Estate Advisors (KAREA) and Bridge Investment Group each raised senior housing funds in excess of $1 billion. Last year, Bridge used money from its fund to acquire the assets and operations of Somerby Senior Living, giving it a national operating platform.

Institutional capital accounted for the vast majority of the funds. PGIM received $570 million in commitments from existing institutional clients, as well as $426 million from new institutional and high-net-worth investors. PGIM Real Estate partnered with affiliate PGIM Investments to offer the fund to high-net-worth investors.

PGIM announced last May that it was halfway toward its $750 million target. Previously, it received a $100 million commitment from the Pennsylvania State Employees Retirement System (SERS), a to-be-determined commitment by the Hawaii Employees’ Retirement System and a $75 million commitment from the Ohio Bureau of Workers Compensation.

The fund will target private pay independent living and assisted living facilities, using 65% of leverage, and targeting net returns between 9% and 13%.

PGIM has a track record in senior housing, and most recently was involved in the high-profile sale of 11 Brightview Senior Living communities to Chicago-based Harrison Street.

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