The Chicago-based investment firm Chicago Pacific Founders (CPF) recently unveiled its new senior housing platform, CPF Living Communities. CPF intends to use this platform to invest approximately $250 million in senior housing assets over the next few years. While CPF is yet to decide on the precise allocation of these funds, they could include investments in assisted living communities, memory care facilities, continuing care retirement communities, and independent living communities in both the United States and Canada. CPF’s management was motivated to launch this platform by the significant potential it sees for strong returns in the sector. These expectations are due largely to the increased demand for senior housing services driven by an aging population.

CPF Develops its Strategy

Although CPF has not decided how to allocate its entire $250 million investment, it is developing a strategy around targeting undervalued properties. CPF’s management believes the significant amount of senior housing development that took place over the past few years created a situation in which some properties in attractive locations are not operated as efficiently as they could. This gives CPF an opportunity to acquire these properties at below market prices, turn things around, and increase the value of their investment. CPF analogizes this situation with the 1990s construction boom, in which a number of property owners lacked the necessary expertise or experience to operate a facility, and consequently ended up closing up shop. The senior housing sector requires even more expertise and experience because it involves the health and emotional needs of seniors and their families.

CPF feels that some of the operators in the sector lack the required skills to effectively manage the facilities they are operating, and this makes them ideal acquisition targets for the firm. Furthermore, CPF is willing to wait patiently as it searches for these types of properties because it believes that, even though demand for senior housing services has increased steadily for many years, it will increase significantly more as retired baby boomers begin transitioning into senior housing communities. Rich Shamberg, a partner at Cerulean Partners LLC and a consultant to CPF, believes that the senior housing sector will experience high growth for the next 20 years, and CPF will most likely launch additional funds to take advantage of this dynamic.

In addition to targeting properties to which it can add value, CPF is interested in older facilities. The firm’s management is open to purchasing legacy communities that might need some renovations or other work, provided the facility is in a good location and demand for its services are readily apparent in the area.

As the nation’s demographics continue to change, investors such as CPF continue to make aggressive plays for senior housing assets because of the strong demand for their services and the substantial returns they are capable of generating. Other investors in the sector interested in acquiring senior housing assets should contact the Chicago-based financing firm Cambridge Realty Capital to learn more about the many different financing options it offers for acquisitions, sale/leasebacks, joint ventures, and other purposes as well.

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