JER eyes $300m of deals in US healthcare

JER Partners is starting to emerge from its aggressive asset management mode – eyeing the potential for up to $300 million of new deals in the US’ senior living sector.

JER chief executive officer Barden Gale told the July issue of PERE magazine that the McLean, Virginia-based firm was continuing its “blocking and tackling” of legacy investments, but in doing so had also seen some “compelling” opportunities in the US healthcare sector.

“Our number one job has been to focus on investments,” said Gale. “However, as we worked through our investments, we recently started saying to ourselves we also couldn’t overlook some of the opportunities we’re beginning to see in some sectors. Healthcare is one of them and it’s pretty compelling.”

When you look at the demographics you can see demand is set to grow, however new supply is not necessarily coming online. JER managing director Frank Small

Led by managing director Frank Small, JER’s healthcare team has already closed on one deal, the acquisition of a six-building portfolio of skilled nursing facilities in Florida and Pennsylvania, which will be leased back to the operator. The deal, valued at $50 million and with a cap rate of nearly 12 percent, is part of a $300 million pipeline of potential healthcare-related transactions JER is conducting due diligence on.

Small said the skilled nursing sector – where medical and nursing care is provided to residents – “jumps out as the most interesting opportunity from a risk-return perspective”.

“When you look at the demographics you can see demand is set to grow, however new supply is not necessarily coming online,” he added. Throw into the mix the recent US healthcare overhaul legislation, which extended health insurance coverage to more than 32 million people, and Small predicted the “occupancy needle” could only move higher in future years and decades.

To read the full interview see the July issue of PERE magazine, or click here for subscription details.