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PGIM Invests $1.6B in Senior Living, Driving Record Year for Transactions in 2021

PGIM Real Estate completed $35 billion in transactions in the U.S. in 2021, with senior living demand helping to drive that total.

PGIM invested $1.6 billion in the senior living sector in 2021 as part of a larger global investment strategy that totaled a company record of $42.7 billion across several continents.

The strategy of Newark, New Jersey-based PGIM – the global asset management business of Prudential Financial (NYSE:PRU) – is exemplified in $78 million independent living, assisted living, and memory care development in Florida. The 187-unit community, Holden Delray Beach, is slated to be operated by The Arbor Company, which is the largest operating partner in the PGIM’s senior living portfolio.

Increased demand for senior living communities, propelled largely by the aging U.S. population, drove PGIM’s senior living investments last year, according to Steve Blazejewski, managing director and senior portfolio manager for senior housing strategies at PGIM Real Estate.

“Demographics provide the most obvious driving force in senior living investment, and those will continue to improve over the next decade or more,” Blazejewski told Senior Housing News via email.

For PGIM, the investment comes as the sector recovers from Covid-19. The bid-ask spread was still particularly wide last year, which impacted pricing.

“Buyers weren’t quite ready to pay full price for assets that were still recovering from 1Q21 occupancy lows,” he said.

However, as occupancy continues to recover, PGIM’s position is that the bid-ask gap will narrow, leading the sector to pre-pandemic levels of investment volume and pricing in the coming quarters – and potentially to new highs.

“Senior housing investment has historically been characterized by strong, consistent income growth and, combined with appreciation, has outperformed other real estate sectors in most years,” said Blazejewski.

Central to PGIM’s investment strategy are the operators it chooses to partner with. The firm seeks operators in senior living with specific portfolios and experience levels, according to Blazejewski.

Typically, PGIM operating partners will have anywhere from 10 to 50 communities, clustered across regional states and/or markets. The aforementioned Arbor Company, based in Atlanta, operated a portfolio of 45 communities as of Sept. 2021, spread across 11 states in the Mid-Atlantic and Northeast regions.

At that time, Arbor had five communities under development with no plans to expand far beyond the range of about 50 communities.

“Development of new communities and lifestyle options for seniors also presents attractive investment opportunities,” Blazejewski said. “Our strategy also places an emphasis on partnering with established senior living developers.”

The post PGIM Invests $1.6B in Senior Living, Driving Record Year for Transactions in 2021 appeared first on Senior Housing News.

Source: For the full article please visit Senior Housing News

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