Northwind Group, a private equity firm based in New York, last week announced a new health care lending platform for providing debt and preferred equity capital to seniors housing and skilled nursing real estate owners and operators.
The offerings will include first mortgage-secured loans for acquisitions, refinancings, and other bridge needs for two- to five-year terms. Northwind will also provide up to 10-year mezzanine and preferred equity financing to operators and owners.
Although they’re relatively uncommon in the marketplace, Northwind sees a certain amount of interest in the latter products from investors, Ran Eliasaf, Northwind’s managing partner, told Skilled Nursing News.
“Because of our structure — we’re not a fund, we invest significant [amounts] of our own balance sheet capital — we can offer products that do not exist right now,” he said.
The group is working on deals in Ohio and Kentucky, and is also looking at other states, including Florida, Georgia, Massachusetts, Pennsylvania and Virginia. Northwind also has an eye on deals in New York in New Jersey, though none are live now, Eliasaf said.
Northwind also announced the hiring of Jonathan Slusher as head of senior living and health care. He previously served at KeyBank for more than 10 years, with the past five as part of its health care real estate team. In that role, he was responsible for relationships related to more than $1.5 billion of KeyBank’s health care financings, including credit facilities for clients investing in various health care ventures such as skilled nursing — and more than $500 million in bridge-to-Department of Housing and Urban Development (HUD) financings.
Last fall, Northwind — which has about $2 billion invested in real estate assets — entered the skilled nursing space with the $182.5 million purchase of a eight-building portfolio in Ohio and Kentucky. The company has a goal of deploying more than $1 billion into senior living and health care properties over the next few years, with a focus on high-quality senior living and skilled nursing assets in “high barrier-to-entry markets, primarily in the Eastern U.S.,” Slusher said in a release announcing his hiring.
While certificate of need (CON) laws for skilled nursing typically form the largest barriers to entry in certain markets, both Slusher and Eliasaf noted that geography could play a role.
“We also look at locations where there is less supply of skilled nursing, maybe for other reasons not related to CON,” Eliasaf said. “It could be cost of land, cost of building. We’re looking at mostly existing buildings, but we’re also looking at ground-up developments … obviously the demand and the demographics are a critical component.”
But the most crucial component by far is the operator, particularly when it comes to skilled nursing investments, both Slusher and Eliasaf emphasized. Good operators need to have a focus on patients and work environment, modern branding with an emphasis on technology, and an eye toward the sustainability of their business in the long term, Slusher said.
“The value of a building is really derived from the ability of the operator to deliver positive patient outcomes, to maintain efficient census and staffing levels, and to generate long-term profitability in that location,” he told SNN.