Precedence Life Care is launching a brand new fund to speed up its progress, with a brand new chief funding officer main the hassle.
The corporate is spinning up a brand new $10 million fund to draw and gas co-investment in senior residing acquisitions, in accordance with CEO Sevy Petras. To handle the hassle, the Fort Wayne, Indiana-based senior residing operator has introduced on former Lloyd Jones Chief Funding Officer Dennis Murphy as its first-ever CIO.
The brand new fund is supposed to construct upon the construction of the corporate’s basis as new growth stays difficult, in accordance with Petras.
“We’re doing this in a wholesome method, it’s well-timed out and we’re prepared,” Petras advised SHN Monday.
Precedence Life Care, which operates 64 senior residing communities nationwide, has not raised a fund earlier than to gas progress, nor has it had a CIO place within the c-suite. However the firm is in 2024 prepared to start out a brand new enterprise and chapter, Petras mentioned.
“Bringing any person on who’s managing the fund, working the fund, driving the fund, who additionally has that monitor document, to me, was the profitable mixture,” she mentioned. “It was necessary that we introduced on somebody with expertise, experience and a confirmed monitor document.”
With practically 20 years of senior residing operations expertise, Murphy advised SHN he wished to assist spotlight PLC’s profitable journey from a regional third-party administration firm to an organization of practically 70 communities with a purpose to garner future funding.
Coming from Lloyd Jones and earlier than that, Benchmark Senior Residing, Murphy brings expertise courting investor teams that beforehand hadn’t had giant senior residing portfolios and institutional traders which can be much less accustomed to the business.
“It will likely be attention-grabbing for us to start out this subsequent chapter,” Murphy mentioned. “There’s a whole lot of alternative on the market on the ‘purchase’ facet, and that’s the place we’re trying to bounce in.”
He added: “We’re going to be as aggressive as we might be in increase the pitch deck.”
‘We are going to begin small’
The primary fund’s aim is about $10 million. Murphy mentioned the construction would come with a 90%-10% or 95%-5% funding construction alongside capital companions in upcoming acquisitions.
Though $10 million is a comparatively small sum for a progress fund, Murphy mentioned the plan is to step by step ramp up future funds after the primary one is accomplished.
“The thought is that we may elevate the primary fund, execute that out shortly, and instantly hop by to the subsequent fund and work out the processing of issues in order that we will elevate the scale of that second fund,” he mentioned. “I believe making an attempt to take a giant chunk out of the apple is a bit of aggressive, so we’ll begin small.”
By constructing a car for co-investment alongside current capital companions, Petras mentioned PLC will acquire “extra cohesiveness in our contracts” and “traction” that enables the third-party administration firm to share in a few of the worth it’s creating for its respective senior residing possession teams.
Additionally, PLC staff will be capable of spend money on the fund as much as a sure threshold to reap future monetary advantages for the worth they assist create within the firm’s success as a third-party operator.
The brand new fund will assist Precedence entry alternatives corresponding to new acquisitions in joint ventures or partnership alternatives with capital companions. Future acquisitions may additionally come within the type of “strengthening regional density” between current communities, Petras mentioned.
Petras mentioned her previous as a profitable funding banker had given her cues that now was a superb time to launch a fund to assist with progress for the long run. That’s not solely to do with the present funding panorama but additionally the wall of demand going through the business in only a few years time.
“We really feel that that is the true property cycle to essentially spend money on, and we don’t know the way giant the window goes to be,” Petras mentioned. “This is a chance to co-invest and be alongside our nice capital companions, and having a bit of pores and skin within the recreation, it’s a extremely thrilling subsequent section for us.”
The brand new fund is a progress milestone for Precedence Life Care. Just a few different senior residing operators have grown in comparable methods, together with Baltimore-based Brightview Senior Residing, which is getting ready to launch a brand new fund that has a greater than $200 million funding goal.
Upward progress trajectory
Precedence Life Care has reached this level in its firm historical past by “wholesome” alignment with capital and possession companions that embrace Ventas (NYSE: VTR).
All of the whereas, the corporate is reshaping its portfolio of senior residing communities for a brand new technology of shoppers through the use of new know-how and information. For instance, earlier this yr, the corporate launched a brand new program known as Embrace meant to higher onboard residents and enhance the standard of their companies through the use of digital information.
“The rationale we really feel snug and assured in constructing this fund as we speak has all the things to do with what we’ve constructed and spent the time popping out of Covid,” Petras mentioned.
Precedence Life Care has been on an upward progress trajectory, culminating in what Petras known as a “breakout yr” in 2023, with the operator increasing its portfolio by including over a dozen communities.
Final yr, Ventas transitioned administration of eight impartial residing communities in Florida operated beforehand by Atria and Vacation Retirement.
The corporate’s progress just isn’t ending there. Later this yr, the operator plans to announce a brand new partnership with a capital associate whereby Precedence Life Care would be the designated operator to supervise, flip round and finally put together on the market communities which have fallen into receivership.
“It’s a really totally different scenario,” Petras mentioned of serving to stabilize struggling senior residing communities. “You must make it possible for we’re capable of alleviate folks’s fears. Our monitor document is there, and we’ve performed it in any respect several types of communities.”
