Bridge launches senior housing fund

Bridge Investment Group Partners, a real estate operator focused primarily on the multifamily sector, is entering the senior housing business. The Salt Lake City-based firm has launched ROC Seniors Housing & Medical Properties Fund, its first to target the emerging property type and its third real estate fund overall.

Bridge declined to comment, but PERE has learned that the firm began marketing the new fund to investors over the past couple of weeks. The manager is targeting a $450 million equity haul for ROC Seniors and is anticipating a first close for the vehicle next month. Bridge, which already has lined up $120 million in potential investments for the fund, primarily will target acquisitions of existing properties, although up to 25 percent of ROC Seniors can be invested in new development opportunities.

Bridge returns to the fundraising trail just one month after holding a final close on its second real estate fund, Bridge Real Estate Opportunity Capital Fund II, last month. Fund II, which was launched in April 2012, amassed a total of $595.5 million in commitments.

In January, the firm began evaluating business prospects in the senior housing sector and hired the former senior housing team at Servant Capital Group, an Orlando -based real estate fund manager, over the summer. The team, which will continue to be based in Orlando, includes Phil Anderson, who will serve as chief investment officer of the new fund; Rick Steinberger, chief operating officer and managing director of asset management; and Robb Chapin, the fund’s chief executive.

PERE understands that Bridge decided to expand into senior housing because of the supply-demand imbalance in the property sector. Currently, senior housing stock in the US consists of 1.4 million units with 15,000 to 20,000 new units being produced each year, a significant shortfall against the current annual demand of 40,000 to 45,000 units, according to the National Investment Center for the Seniors Housing & Care Industry.

Although the firm has been an operator in the multifamily and office sectors, owning and managing all of those properties in-house, Bridge is said to be taking a hybrid allocator/operator approach with the senior housing fund. Because senior housing is more fragmented than other property sectors, the firm plans to partner with 10 to 20 local operators in executing investments on behalf of the fund. For acquisition opportunities, the operators will be responsible for on-site management of the facilities, while Bridge’s in-house senior housing team will be in charge of executing business and asset management plans for the properties.

With most assets acquired through the fund, the operating partner will not earn a promote for its services. With the majority of development opportunities, however, Bridge and its local partners will share in the construction and lease-up risk of the projects as well as the promote structure.