IRA Capital is entering the senior living sector in a big way with the acquisition of two newly built communities in California, and plans to acquire $1 billion worth of senior housing units in the coming years.

The Irvine, California-based private equity firm has acquired two 80-unit assisted living and memory care communities from Capital Health Group for $106 million. Elegance Senior Living operates the communities, which are called Elegance at Dublin and Elegance Hamilton Hill and are located respectively in Dublin and Novato, California.

The transaction marks the first foray into the senior housing industry for IRA, which also invests in medical office, life science and ambulatory surgery assets. The company has a goal of strategically acquiring similar communities in high-barrier-to-entry markets on the West Coast, from Seattle to San Diego. IRA has also allocated $1 billion to acquire more than 2,000 senior housing units in the next two years.

To help oversee its senior housing expansion, IRA hired Azhar Jameeli as vice president of investments about six months ago. Jameeli has spent more than a decade of experience in the senior living industry, most recently with real estate investment trust Healthpeak (NYSE: PEAK), Holiday Retirement and Fortress Investment Group.

IRA had its eye on the senior housing space even before the Covid-19 pandemic began, according to Jameeli. But two factors convinced the company that now was the right time to dive in: the number of baby boomers rapidly approaching senior housing age, and the fact that the pandemic led to a slowdown in new development and construction starts and disrupted the flow of capital into the space.

“We thought it was a great opportunity to capitalize on accretive assets right now,” he told Senior Housing News. “People are just trying to follow the herd, and so we thought that we will maintain our contrarian approach and we will follow the fundamentals rather than the crowd.”

The company plans to expand in the senior living industry in two main phases. During the first phase, the company will focus on acquiring relatively new core and core plus communities in established markets along the West Coast; and already, IRA has developed a pipeline and is working with partners to make that happen.

“As we expand our strategy and we grow, we will identify regional players,” he said. “We are firm believers of focus, and there are a handful of operators in the market that have proven to be extremely successful.”

During the company’s second senior living expansion phase, IRA plans to look for opportunities with more scale, including in parts of the country other than the West Coast.

“We want to make sure we have enough clustered communities, where we can go talk to the [operating companies] and they would have an incentive to come manage our assets,” Jameeli said.

In addition to acquisitions, the company is also open to development deals.

“We are looking at a handful of development opportunities,” Jameeli said. “As we get to some scale, tucking in programmatic developments — a few a quarter — would actually be a pretty good play.”

IRA Capital has also ramped up its investment activity outside of the senior housing space. The company has put about $750 million into acquisitions over the past 90 days in its other targeted investment classes.

“We invest in medical equipment, media production, consumer goods … from a private equity standpoint,” Jameeli said. “But from a real estate standpoint, we are predominantly a healthcare investor., and that’s why going into the senior housing space was a logical step.”