A familiar buyer is set to be very busy in the next year of seniors housing M&A activity, as Focus Healthcare Partners has closed on its Focus Senior Housing Fund II LP and raised approximately $370 million in capital commitments for it. The closed-end, commingled discretionary real estate fund will target private pay seniors housing assets across active adult, independent living, assisted living and memory care, but no stand-alone memory care. Campuses with a full continuum of care would be the most attractive, too.
The fund is 20% larger than its predecessor vehicle, which raised $312 million in 2017 from seven institutional investors. Fund II, by contrast, drew from 15 different investors/limited partners, including university endowments, state and corporate pension funds, insurance companies, wealth managers, family offices, and other institutional investors. Most investors from Fund I participated in Fund II, as well.
While Focus is open to some ground-up development projects, much of the equity will go towards acquisitions, in addition to some distressed debt and preferred equity opportunities. The assets will also span the risk spectrum, from core-plus to value-add to distressed deals. Focus will look to leverage deals at around 65% loan-to-cost, in addition to doing unlevered acquisitions. Incubation Capital Partners LLC served as the exclusive advisor for the fundraise.
Already, Focus has announced a deal in North Carolina, with its acquisition of The Willows of Raleigh, formerly Treeo Raleigh. Built in 2019, the independent living community has 143 units and is around 80% occupied. Solera Senior Living took over operations from Leisure Care. The purchase price was not disclosed, but according to filings with Wake County, it appears that the price could have reached $27 million, or $188,800 per unit.
Looking forward, Focus’s deal pipeline “is as robust as it’s ever been,” according to Focus Principal and Co-Founder, Curt Schaller. There are also four other properties under contract, currently. Beyond Fund II, we’ll have III (which could start raising funds in 2025) and IV to potentially look forward to, too.
