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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42 www.seniorshousingbusiness.com Seniors Housing Business n August-September 2015 Commonwealth Land Title Company is proud of our SENIOR HOUSING AND HEALTHCARE DIVISION! Commonwealth Land Title Company happily provides a variety of services to our amazing clients. Our Senior Housing and Healthcare Division is unparalleled in regards to our knowledge, experience, and devoted team of professionals. As a national title and escrow provider, we strive to make every transaction a smooth and seamless process. Commonwealth is the leader of title and settlement services for specialized senior housing and healthcare. Our trained and experienced staff focuses on senior housing and healthcare real estate transactions. Contact us today so we can assist you with your next transaction! RON HOWARTH Senior Vice President (949) 724-3150 • www.cltcsales.com ©2015 Commonwealth Land Title Company New private equity fund managers tend to get ignored in the brutal competition to attract investors. But in December, Blue Moon Capital Partners LLC, a new private equity fund manager focused exclu- sively on seniors housing, closed the fundraising for its frst fund, Blue Moon Seniors Housing I. "Seniors housing presents a very strong investment case," says Kathryn Sweeney, co-founder and managing partner of Boston-based Blue Moon. The vast experience of Blue Moon's executives helped the new fund manager attract investors like Hawkeye Partners, which invests in real estate on behalf of institutions such as pensions funds and endowments. "Blue Moon's team has an exceptional track record of investing in the sector," says Claudia Faust, managing partner of Austin, Texas-based Hawkeye Partners. Not every new fund is as successful as Blue Moon in attracting investors. Only 14 percent of investors in private equity funds plan to invest with frst-time fund managers over the next year, according to PERE magazine's 2015 PERE Investor Perspectives Survey of nearly 100 real estate invest- ment specialists. More than one-third of respondents to the survey indi- cate that they are simply not willing to invest with frst-time managers. All $175 million of capital for Blue Moon's frst fund came from Hawkeye Partners. "Seniors housing is a property type that insti- tutional investors have limited exposure to and one where the funda- mentals should remain favorable for the foreseeable future," says Faust. Blue Moon's frst fund is focus- ing 70 percent of its resources on new, ground-up development. "The opportunities are coming from development," emphasizes Sweeney. Blue Moon will invest the other 30 percent of Blue Moon Seniors Housing I in purchasing and repositioning seniors housing properties. Blue Moon initially planned to commit all of the capital in its frst fund to new development. The fund altered its plan as the markets changed. "We didn't want to contribute to overbuilding," says Sweeney. "We dialed down development to be highly selec- tive and contribute to a balanced supply." Blue Moon is already succeeding with its frst investments in seniors housing, according to Sweeney. In June 2014, Blue Moon partnered with LCB Senior Living to acquire Cedars Assisted Living community of Dartmouth, in Dartmouth, Mass., for $9.9 million. The 78-unit independent living, assisted living and mem- ory care community was renamed the Residence at Cedar Dell and underwent a $1 million renovation. The occupancy rate at the community has already begun to improve, according to Sweeney. "We are ahead of plan. We are going to exceed our expectation on when to hit planned results." — Bendix Anderson The Residence at Cedar Dell in Dartmouth, Mass., received a $1 million renovation after Blue Moon Capital Partners teamed up with LCB Senior Living to acquire the property in June 2014 for $9.9 million. "We dialed down development to be highly selective and contribute to a balanced supply," says Kathryn Sweeney, co-founder and managing partner, Blue Moon. Blue Moon Capital Partners is of to a running start as fund manager Glastonbury, Conn., Southeast of Hartford. "A lot of the private equity funds that had a bias to big mar- kets are now going into second- ary and tertiary markets and not blinking," says CBRE's Will. High risk, high reward Private equity funds eager to make high-yielding investments are also putting capital into prop- erties that have some potential upside to their valuation. "In a perfect world, we would only invest in high-yield projects with no development risk, but the riskier the project, the higher return expectation," says Max Newland, KAREA's managing director of healthcare real estate. KAREA's new $1 billion Real Estate Partners IV fund tar- gets value-added investments, including independent living, assisted living and memory care communities. "We've got a very deep pipeline of investment opportunities — all cash-fowing assets with varying degrees of stabilization," says Newland. "We are targeting Class A properties in markets with strong demographic trends."

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