Orion Partners launches ¥25bn senior living fund

Orion Partners, the private equity and real estate firm formerly known as Ajia Partners, is aiming to raise as much as ¥25 billion (€189 million; $250 million) for its third Japan care homes investment fund.

PERE understands that the firm has embarked on a road show visiting potential Asian investors for the six-year vehicle and is planning another road show for European investors shortly.

To help it raise the capital, the firm has appointed placement agent RiverBridge Capital Partners.

The Ostara Japan Aged Care Real Estate Fund 3 is expected to build upon the firm’s earlier two funds which collected ¥18 billion in 2007 and ¥11 billion in 2010. The funds are fully deployed into 21 care homes.

The incoming vehicle is expected to be focused on acquiring existing senior living assets with a view to generating core-plus returns of between 12 percent and 14 percent net IRRs.

Despite Japan’s ageing population there have been few private equity platforms that have raised institutional capital specifically to acquire real estate dedicated to the country’s elderly. PERE reported in August 2010 how Asia Investment Partners, a Tokyo and Denver-based firm, was in the market looking to raise about ¥15 billion for the property type, but there are few other examples.

Indeed, Orion’s previous foray into senior living accommodation in Japan makes the firm one of the largest landlords in the space with approximately 2800 beds under its management, although it is understood that various REITs in Asia are looking more closely at entering or increasing their exposure to the asset type.

Further, the Japanese government is drawing up plans to enable domestic J-REITs to focus on senior living accommodation as it seeks to make more it more institutionally investible, thus adding support to a growing proportion of its population.

These may in some instances offer Orion competition for acquisitions but could also represent a viable exiting option for the firm.