Why Family Office Investment Must be ‘On the Radar’ for Senior Living Operators 

In order to meet growing demand for senior living, providers will need additional capital partners to enter the space, which could be through single-family offices.

That’s according to a recent blog post by Lisa McCracken, the head of research and analytics for the National Investment Center for Seniors Housing and Care (NIC). In the analysis, McCracken notes a recent data estimate from Deloitte that organized entities that represent family wealth of $100 million and above could increase to 10,720 by 2030. 

“While existing capital will still have a seat at the table, we always need to be exploring additional partners,” McCracken told SHN in an email on Thursday. “We feel that family offices present a great opportunity for some meaningful partnerships to help bridge the supply-demand gap we see in the years ahead.”

With private family wealth growing significantly, overall wealth accumulations could overtake hedge fund wealth in the next five to six years, McCracken wrote in the blog post.

Currently, a small number of senior living operators rely on single-family offices to drive capital, including Brightview Senior Living, Avenue Development and Cardinal Senior Management.

As reported by SHN earlier this year, Brightview Senior Living launched its most-recent fund, known as Fund IX, targeting $200 million in private investment. Most recently, Brightview rallied $202 million from 363 investors in 2023 to finance the construction of eight communities through 2026.

Avenue Development’s Viva Bene active adult brand launched in 2022, partnering with Greystar in 2023 for management of the product line. The active adult partnership also has a partnership with Sevi Health to provide preventative care for residents.

Cardinal Senior Management has a portfolio of nine senior living communities and is led by owners Chuck Gray and Joe Pohlen.

Senior living could be a more favorable property type within the target of family offices as they consider future real estate investment, McCracken said. For operators, they must work to align not only mission and vision with family offices, but present “a solid track record of performance,” McCracken said.

“We think that initial investments will likely be in the real estate entity, but as these family relationships play out and trust and confidence build, we believe there is the opportunity to bring forth needed funds for investing in operating companies,” McCracken told SHN.

Typically, McCracken noted, family offices are longer-term investors that could add stability and bring continuity to the vital owner-operator relationship, a key area of emphasis for providers in the wake of many challenges in the last four years. Family offices could offer greater flexibility in deal terms and how relationships are structured as compared to their institutional capital counterparts.

“The growth in family offices should be on the radar of those in senior housing and care. Attracting capital from family offices into senior housing can be a viable strategy given the alignment across several key goals,” McCracken writes.