Originally published by Senior Housing News on February 28, 2022
Bridge Investment Group Holdings (NYSE: BRDG) has partnered with global private markets investment firm StepStone Real Estate — part of StepStone Group (Nasdaq: STEP) — on a $75 million program to acquire, develop and operate senior living communities.
StepStone and Bridge have already co-invested in two communities, and the companies intend to co-invest in future opportunities to grow the platform, StepStone Real Estate Head of Investments and Partner John Waters told Senior Housing News.
With 21 offices worldwide, StepStone had $548 billion in total capital allocations and $127 billion assets under management as of Dec. 31, 2021. The firm has invested in senior housing in the past, and Waters continues to see the sector as attractive for the firm’s co-investment strategy.
“The pandemic introduced a lot of challenges specific to the sector but the long-term demographic trends and fundamentals are still there,” Waters said.
He anticipates opportunities at attractive valuations as the market continues to recover, he added. That view is shared by Bridge, Robb Chapin, CEO and Co-Chief Investment Officer for Bridge’s senior housing vertical, told SHN.
Bridge and StepStone are targeting independent living, assisted living and memory care communities. StepStone in particular likes having a continuum of care in place, although the firm is not tied to having all three levels of care in every property, Waters said. And the venture will consider development as well as acquisition opportunities.
Bridge boasts an integrated platform, as the investment manager also has an in-house operating arm, Bridge Senior Living, formed in the wake of acquiring Somerby Senior Living in 2019. StepStone views Bridge’s ability to operate as a “merit,” which drove “conviction” in the partnership, Waters said.
Bridge went public last summer, and at the time its senior housing portfolio numbered 100 communities across 30 states, with total senior housing assets under management of $4.5 billion. The company invests across a range of property types, including multifamily and logistics.
In early 2020 — just before the Covid-19 pandemic swept across the United States — Chapin spoke about the need for senior living owners and operators to innovate and create differentiated products, rather than relying on demographics to drive business success.
“I think relying on the demographic imperative for the success of our business is a recipe for failure, ultimately,” Chapin said on SHN’s Transform podcast. “Pushing the threshold of delivering the very best quality of life to our senior population is really at the core of how we think about success.”