The venture, formed with IRA Capital and a global institutional investor, gives the Canada Pension Plan Investment Board a 47.5% ownership stake and is expected to have an acquisition capacity of approximately $850 million dollars.
The portfolio was acquired from a publicly traded REIT and represents the seed investment of a newly formed IRA-sponsored healthcare real estate venture targeting the acquisition of several billion dollars of medical facilities over the next 12-18 months.
Private equity firm IRA Capital has launched a $500 million closed-end fund focused on the acquisition of medical properties and senior housing assets in the U.S.
IRA Healthcare Real Estate Fund will target the acquisition, development and financing of healthcare assets in high barrier-to-entry and supply-constrained markets. The California-based company projects the fund will have annualized net returns of 14% to 16%.
“We intend to acquire assets across the risk spectrum with a focus on core-plus and value-add opportunities,” IRA Capital co-founder Jay Gangwal said in a statement. “The diverse strategy will result in a balanced portfolio with a combination of yield and appreciation, while providing downside protection given the needs-based demand.”
The fund is open to both institutional clients and high net worth investors, including domestic and foreign endowments, pension funds, insurance companies and family offices. Southern California-based IRA’s principals are adding their own capital to the fund, according to the release.
The push to acquire healthcare and senior housing assets comes as the sector slowly recovers from pandemic-era financial challenges, inflationary pressures and decreased occupancy. Overall occupancy at senior housing facilities was around 78% in April, up 5% from pandemic lows but still down from the 87% seen before the global health crisis.
The healthcare sector was at a moment of “peak volatility” in February, according to Spencer Levy, global client strategist and senior economic advisor at CBRE. The near-term uncertainty is being exacerbated by high interest rates, but Levy said an expected peak of rates later this year will present opportunities for buyers as asset values are likely to increase in one to two years.
“The current capital markets environment is also presenting unique re-positioning opportunities that we expect will create significant value and generate outsized returns,” Gangwal said.
Source: Bisnow
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