Seniors Housing Business

AUG-SEP 2015

Seniors Housing Business is the magazine that helps you navigate the evolution of the seniors housing industry.

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Page 38 of 87 39 August-September 2015 n Seniors Housing Business ing fund, AEW Seniors Housing Investors II, with commitments from 11 investors and $371 million. That's a lot more than the fund's original $300 mil- lion target. As of late July 2014, AEW had already invested $302 million of the fund's capital, including several new developments such as Daylesford Crossing. AEW is far from the only seniors housing pri- vate equity fund manager to raise more capital than its original target. In May, Prudential Real Estate Investors (PREI) closed its $629 million Seniors Housing Partners V. The private equity fund raised much more than its original target of $500 million and could have grown even larger. "We cut it off," says Noah Levy, head of PREI's senior housing business. "We didn't want it to get too big." The 15 investors in Seniors Housing Partners V are institu- tional investors including U.S. public and corporate pension plans. In the frst seven months of 2015, closed-end real estate funds targeting niche property types, including seniors housing, have raised $4.4 billion from investors. That's much more than the $1.9 billion niche funds raised in 2014, or the $2.6 billion raised in 2013, according to Preqin, a data frm with offces in New York City and London. The largest fund closings so far this year include Harrison Street Real Estate Capi- tal, which closed its $850 mil- lion Harrison Street Real Estate Partners V fund in January. The fund is making opportunistic investments in real estate, includ- ing seniors housing and student housing properties. In April, Kayne Anderson Real Estate Advisors (KAREA) closed its fundraising for its $1 billion Real Estate Partners IV private equity fund for value-added investments. Pension funds have had more money to invest because many institu- tional investors have gradually increased their allocation to real estate, from around 5 percent in the late 1990s to closer to 10 percent today. A growing number of new investors are also warming up to real estate — particu- larly seniors housing. "We are seeing more investors making a particular play on seniors housing… who may not be large or consistent real estate investors," says Pruden- tial's Levy. "We have not seen that in the past." The pool of investors also has broadened. In addition to institutions like pension funds and endowments, some private equity funds now raise capital through retail channels, such as investment managers who raise investment from fnancial insti- tutions and wealthy individuals. Niche sector becomes core Private equity funds that focus on core real estate are increasingly willing to consider seniors housing. Har- rison Street, for exam- ple, includes seniors housing in its core real estate funds. These private equity funds consider seniors housing "core" real estate partly because new data on the seniors housing market now helps investors assess trends like vacancy rates and new construc- tion underway in the seniors housing market. "Investing in seniors housing is becoming more mainstream," says Beth Mace, chief economist for National Investment Cen- ter for Seniors Housing & Care (NIC). "There is more familiarity and understanding by the invest- ment community in the sector due to greater transparency in the data." "We are seeing more investors making a particular play on seniors housing… who may not be large or consistent real estate investors," says Noah Levy, senior housing business, PREI. "There is more . . . understanding by the investment community . . . due to greater transparency in the data," says Beth Mace, chief economist, National Investment Center for Seniors Housing & Care. "Because of the competitive landscape, private equity funds are making much heavier allocations to development," says Aron Will, executive vice president, national senior housing, CBRE Capital Markets. © 2015 Wells Fargo Bank, N.A. All rights reserved. WCS-1267045 The right relationship matters Our focus on building deep and lasting relationships has helped make Wells Fargo the largest commercial real estate lender nationwide. We'll work with you to provide optimal fnancing for your unique needs. Find out why the right relationship matters. Contact us today to learn more. Senior housing Fannie Mae | Freddie Mac | FHA | Balance sheet loans Cathy Voreyer 949-251-6058 Erin Peart 202-303-3012

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