July 23, 2021, Steve Monroe, The SeniorCare Investor - If you believe that the worst of the pandemic is behind us, and that after all the distress of the past 15 months opportunity abounds, then you want to be an investor in seniors housing. That is just part of the thinking of the partners in a new $300 million fund, Scarp Ridge Real Estate Partners, that will be looking at value-add, opportunistic and distressed real estate investment opportunities in seniors housing and hospitality. We hope it is more on the seniors housing side.
The fund will acquire non-performing loans to help both the lender and provider move a project along, and will purchase individual properties and portfolios. Partner Rick Shamberg has a few decades of experience in seniors housing, including operating communities and even living in them. He can not only talk the talk, but can walk the walk with operators because he has been in their shoes.
As an investment partner with them, he can feel their pain and know how to help them fix it. Lenders should be very interested in the prospect, as most equity investors do not have the operating experience, which will be crucial as we emerge from the pandemic.
In addition to Rick, there is Greg Rush, who has 30 years of big-time real estate investing experience across all areas, including some history in seniors housing. Rounding out the group is Kari Schmidt, who had a 23-year career at Brookdale Senior Living, where she was president of the Central Division from 2012 to 2018, as well as SVP of Strategic Operations. We assume she has seen it all, and can use that knowledge with Scarp’s investments.
The fund will be managed by Scarp Ridge Capital Partners, and they will be looking at investments across the independent living, assisted living and memory care spectrum, but with a focus on the continuum and a bias towards independent living. The sweet spot for an investment size is $10 million to $50 million, so they can look at individual properties as well as portfolios of 10 to 12 properties.
Perhaps their differential advantage is their core understanding of the business and being able to bring solutions where lenders, providers or even other equity investors don’t have the answers. In today’s somewhat chaotic seniors housing environment, that can be huge.
Perhaps the greatest opportunity to use their expertise would be a lender with a struggling new development they financed, and bringing them on as an investor, possibly to pay down part of the loan, and help the parties involved bring the community to stabilization and realize the full value. That’s an important, and maybe decisive skill to bring to the table.
Because they are new, they are looking for their first investments, and in the second half of the year there should be plenty as not everyone is posting 100-basis point monthly census increases. But they are there to help as well as invest, and that will be key. And about that Scarp Ridge name. Check it out, just outside Crested Butte, Colorado, especially if you like hiking.