The team at Newmark Knight Frank is off to a good start so far in 2020, doing equity, debt and sales transactions. In California, they closed just over $48 million in an equity raise for a new senior living development in the Los Angeles metro market. The community will total 336 units of independent living, assisted living and memory care. While technically not a CCRC, it is a rental community offering everything except skilled nursing, which seems to be where the market is heading these days.
The total cost is estimated to be north of $200 million, or more than $600,000 per unit. While high, it is LA, where the difficulty for new development is well known. It is also quite a large community, and perhaps the hope is to block out any future competitors in the local market, at least for several years. A lot will depend on how long it takes to fill up. A longer fill-up would dissuade other developers, but a shorter one could demonstrate unmet need. We will see.
The owner is South Bay Senior Living, which has been building out some urban in-fill developments in high-barrier-to-entry markets. Their affiliated operator is West Bay. They have about eight active developments in LA, Philadelphia, New Jersey and South Carolina, and one in the Chicago market that is in lease up. The equity raise was completed in late January and construction has already started. Sarah Anderson, Ryan Maconachy and Chad Lavender worked on the deal for Newmark.
Separately, Ms. Anderson placed $72 million in floating rate debt for a community that the team previously sold. The community was formerly an active adult community in the Houston, Texas market that was converted to independent living with a 30-units addition of assisted living added. There are now 232 units, inclusive of the assisted living. The debt was placed with ACORE Capital. Newmark’s latest investment sales will be coming up soon, and they total nearly $150 million.
