Fundamental, Senior Care Development to Form $1 Billion Skilled Nursing Joint Venture

Alternative asset management firm Fundamental Advisors LP on Monday announced the formation of a skilled nursing-focused joint venture, with an eventual goal of snapping up $1 billion in skilled nursing assets.

The other half of the billion-dollar partnership will be Senior Care Development, a developer with a historic focus on continuing care retirement communities (CCRCs) as well as certain skilled nursing assets. Some of the Harrison, N.Y.-based firm’s projects include a turnaround effort at The Clare, a high-end senior living facility in downtown Chicago, and the ground-up development of the Meadow Ridge independent and assisted living community in Redding, Conn.

This isn’t the first partnership between the New York City-based Fundamental and Senior Care Development. The two firms recently paired up to restructure the debt held by the 41-facility Tandem Health Care chain in Florida, Pennsylvania, and Virginia, among other collaborative deals over the last decade.

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The two firms also partnered on the stabilization of Sedgebrook, a CCRC in the Chicago suburbs that recently landed a $51 million recapitalization facility.

This new joint venture will focus on “best-in-class skilled nursing operators in high-barrier-to-entry markets,” Fundamental said in a statement announcing the new initiative.

“With the current dislocation in the skilled nursing space, enduring and committed capital is needed to stabilize nursing homes that would otherwise struggle without it,” Fundamental chairman and CEO Laurence Gottlieb said in the statement. “We look forward to continuing to work closely with the SCD team to build on our shared success in the skilled nursing arena by providing the resources these facilities need in order to supply comprehensive critical and resident care in their communities.”

Requests for comment sent to Fundamental Advisors and Senior Care Development were not returned as of press time.

Fundamental’s $1 billion skilled nursing play marks another infusion of capital into the marketplace from outside the major publicly traded real estate investment trusts (REITs). Private equity is having something of a moment in long-term health care, with Fitch Ratings pointing out that these sources are “dominating health care acquisition activity” in an August report.

Just last month, Locust Point Capital announced a $312 million fund aimed at skilled nursing and senior housing assets, with founding partner Eric Smith telling Skilled Nursing News that REIT sell-offs in recent years has opened a significant opportunity for private equity to fill the void.

“When you go to the national conferences … you’re seeing more and more private equity show up,” Smith said. “You’re just seeing more and more private equity participation within the industry. And we think that’s a great thing, as the industry becomes more institutional.”

Part of that interest has come with more of a long-term view on skilled nursing as an asset class, and not simply a troubled product in need of a quick turnaround and sale.

“At SCD, we are dedicated to taking a long-term approach to providing unmatched support and value to the senior care and skilled nursing facilities we invest in,” David Reis, CEO of Senior Care Development, said in the joint venture announcement statement. “We are pleased to announce this joint venture with the team at Fundamental, who shares these values and whose aim is to improve the facilities and communities we work with both operationally and financially.”

Written by Alex Spanko

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