Preqin’s Real Estate Online service currently tracks 34 private real estate funds targeting senior housing, medical and healthcare office properties as part of a wider investment focus. Together these funds are seeking $9.9bn in commitments from institutional investors.
Higher risk value added and opportunistic funds are the preferred strategies for fund managers investing in senior housing and medical properties. Including these property types in the investment focus generally incurs more risk than more traditional properties; therefore, the fund’s strategy is generally higher on the risk/return spectrum. Debt (representing 18% of funds), core-plus (9%) and core strategies (6%) make up smaller proportions of the funds currently in market targeting senior housing and medical properties.
Generating momentum in fundraising is key for managers marketing their funds, as achieving a first close quickly can validate the vehicle for other investors. Among private real estate funds in market targeting senior housing and medical properties, 62% have yet to hold an interim close, while 38% have done so. As shown in the chart above, 48% of all funds have been on the road for 12 months or less, 67% of which have yet to hold an interim close.
An example of a real estate fund currently in market targeting senior housing and medical properties is Hamister Hospitality Fund. The fund is targeting $100mn for under-performing senior housing properties in high-growth, high-demand US markets. It will reposition, redevelop and convert properties to senior housing facilities.