Debt is certainly plentiful these days in the seniors housing and care market, leading us to a record level of M&A and investment in the industry. But what about equity? That can still trip up investors looking to purchase or develop a seniors housing property, especially if they have to raise it among family and friends, or from their own personal funds. But alternative asset manager Locust Point Capital is announcing its own project equity financing program for the seniors housing industry.
The program will provide owner/operators with between $1 million and $10 million of equity capital for the construction, substantial renovation and/or acquisition of independent living, assisted living and memory care communities throughout the country. When paired with a senior mortgage and/or mezzanine loan, borrowers can finance up to 95% of the total transaction costs, including hard costs, FF&E, soft costs, financing costs and reserves needed to reach stabilization. Owner/operators will be able to refinance the project equity at any time, but is geared towards long-term investors, not real estate investors who hire third-party managers and exit at or near stabilization.
This announcement comes less than a year after Locust Point closed its debut fund, which was oversubscribed from its initial target of $250 million to rest at $312 million. In addition to the new equity program, Locust Point also provides subordinate debt and opportunistic senior mortgage loans.