Investment Firm Greene Park Capital Enters Active Adult Sector With $250M Pipeline Ahead

Greene Park Capital has invested in a 225-unit active adult community in the Boston metro area, marking its first foray into the active adult sector.

But it won’t be the last, and the company has a $250 million pipeline with which to grow in active adult senior housing.

Based in Chicago, the investment firm focuses on active adult communities, seniors housing and healthcare-focused assets with an emphasis on joint ventures.

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According to Jordyn Berger, partner of the senior housing investment platform at Greene Park Capital, active adult is an attractive sector due to its strong fundamentals and lack of competition.

“It’s a great time for us to bring a competitive advantage and find opportunities with very little competition,” Berger told Senior Housing News.

Recent NIC data shows the active adult sector is still relatively uncrowded, at least according to penetration rates. As of last year, average active adult penetration rates sat at just 0.5% nationally, compared to between 11% and 12% for senior living.

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The risk-adjusted returns in investing in active adult are more favorable than other healthcare asset classes, according to Greene Park Capital Founder Carrie Hiebeler. 

According to Berger, additional positive trends for the sector include strong rate growth, growing length of stay and younger resident profile compared to senior living communities. With residents tending to stay longer, there doesn’t need to be a continuous reinvestment of CapEx to turn units around, she added.

“This asset class has been around for a few years. It has the best rent collection by property type compared to any other asset class,” Berger said. “They have less than 1% bad debt collection. The next best is storage, which is about 93%.”

She added: “Most likely, the only time that they need to move out is when they need true healthcare needs, like moving into an assisted living or skilled nursing building.”

As a whole, this is Greene Park Capital’s first “true senior housing investment” so far, but the plan moving forward will be to look across the full spectrum of care options. The investment firm has a pipeline of investments totaling around $250 million, with an eye on value-add communities where the firm can buy a property below replacement cost.

The company is seeking to partner with local and family owner-operators and amass small to mid-sized portfolios and grow them larger over time.

“The institutions are going to want to get into the sector, but there hasn’t been a large enough kind of portfolio trade for them to get into the sector,” Berger said. “Some of the large private equity, they want to invest at least $100 million of equity, and these deal sizes are just not there. I would say the average one we’re kind of buying is anywhere from $30 million to $75 million.”

The company is seeking to grow in major metropolitan and suburban areas, according to Berger.

“It’s important to note that investing in healthcare always requires experience and expertise and we think the sector is very attractive over the next five to 10 years,” Hiebeler said.”We believe we’re well positioned to invest in the sector with great partners.”

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