One of the nation’s largest commercial real estate and finance companies is entering the senior housing space, with help from one of the industry’s fastest-growing operators.
Inland Private Capital Corporation (IPC), the investment arm of Oak Brook, Illinois-based Inland Real Estate Group of Companies, on Wednesday announced the launch of a new investment platform focused on developing, acquiring and managing senior housing, as well as a strategic relationship with Denver-based senior housing developer, owner and operator Spectrum Retirement Communities.
Spectrum has 45 communities in 13 states, and is in the midst of an aggressive expansion to expand its portfolio to 7,400 units by 2021. The firm has 16 projects in its pipeline in Illinois, Indiana, Ohio, Arizona, New Mexico and Texas, President and CEO Brad Kraus told SHN in January 2018.
Spectrum launched a new senior housing development fund last November, which raised $60.5 million in commitments towards its target goal of $100 million. The equity will allow Spectrum to fund six to eight new developments in top U.S. Midwestern and Southwestern markets. Four developments are on sites Spectrum already controls, in markets where it currently owns and operates communities: two in Chicago, one in Scottsdale, Arizona and another in Columbus, Ohio.
IPC invests across a broad range of real estate classes including multifamily, retail, industrial, student housing, hospitality, health care and self-storage. It is the largest provider of securitized Section 1031 exchange opportunities in the country, with more than $8 billion in assets under management as of June 30.
IPC joins the growing ranks of commercial real estate developers and investors seeking opportunities in the senior living space, bringing in significant capital.
The Carlyle Group has had much success in recent years with active adult senior housing, partnered with Greystar and Clover Management to build middle-market senior housing, and raised a $5 billion fund in 2017 that will be used to target senior housing, among other real estate product types. Other private equity giants making moves in the space include Apollo Global Management, which acquired a $428 million portfolio in November 2018, and Bain Capital, which is targeting senior housing with a $1.5 billion fund.
Houston-based real estate developer and investor Hines Interests is working with with senior housing owner-operators MorningStar Senior Living and Watermark Retirement Communities, and formed a partnership with Sentio Investments to invest in senior housing and other health care real estate properties. Chicago-based developer McCaffery Interests and Solera Senior Living are building Modena Reserve at Kensington, a $75 million, 135-unit community with independent living, assisted living and memory care in Kensington, Maryland.
Meanwhile, Related Cos. — the New York City-based developer behind the massive Hudson Yards project — is working with Louisville-based Atria Senior Living on a $3 billion urban development pipeline.
“When looking at the historic investment performance for this asset class – its recession-resiliency, growing demand drivers – in addition to the current supply and demand imbalance that exists, we believe the senior living sector is well positioned to offer our marketplace a product that intersects health care and real estate – each nearly 20% of U.S. GDP and growing,” IPC Head of Investment Product Strategy Nati Kiferbaum said in a statement.
Phil Shapiro Senior Living is advising IPC in its partnership with Spectrum.
IPC and Spectrum did not return requests for comment from Senior Housing News. We will update this story if and when they do.
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