Hi ouistitis & chimps,
There is this Dev/Operator of senior living in London looking for an Investment Manager. Read this on the job description: "Auriens was recently acquired by a large US private equity firm who intends to build a world leading senior living platform."
- this article that I can't read without paying... https://reactnews.com/article/private-equity-gian…
Definitely a sector with tailwind and keen on exploring this early stage business opportunity if it's properly backed and not struggling to deploy capital (A bit like Riverstone from Goldman or in Logistic Mileway from BX, Mirastar from KKR...)
Any information on this acquisition and on the business plan?
Thanks
Comments (5)
See below for the article.
Oaktree Capital Management is finalising a deal to take a controlling stake in luxury senior living company Auriens, React News can reveal.
Auriens' current backer is South Africa's Zenprop, which will retain an interest in the company following the deal with Oaktree.
The joint venture deal will enable Auriens to push on with its expansion plans. It currently has one operating asset on Dovehouse Street in Chelsea and, with Oaktree's backing, it is expected to press ahead with the development of its second site at Lodge Road in St John's Wood early next year.
The Zenprop-owned Heythrop College site on Kensington Square, which was bought for around £100m in 2017 and had been earmarked for another Auriens development, does not form part of the Oaktree deal and is likely to be sold off separately at a later date.
Auriens has made gradual progress letting up its 56-unit Dovehouse Street development, which opened its doors to residents last autumn. It is thought to be aiming to reach an occupancy level of 40%-50% by the end of the year.
The Dovehouse Street development was part funded with a £185m loan from Goldman Sachs. Now that Oaktree has been brought on board and progress is being made to let out the scheme, this development loan is likely to be refinanced in due course. Debt funding was secured from OakNorth for the Lodge Road site in 2018.
Auriens was co-founded in 2015 by Zenprop and property entrepreneur Johnny Sandelson, who left the business in 2020. It is now led by chief executive David Meagher, who will remain at the helm following the Oaktree deal.
Oaktree's investment into Auriens is another demonstration of the investment manager's conviction in the senior living sector.
Knight Frank and Savills acted for Auriens.
Investment giants line up
In partnership with Pimco, Oaktree is backing Wallacea, a new senior living venture, which is led by Paul Coles, who was instrumental in the development of the Riverstone business in his previous role at Goldman Sachs. Oaktree also funds later living developer Lifestory Group.
A number of leading investors have come into the UK senior living market over the past year, looking to replicate the growth seen in other markets such as New Zealand and Australia.
These include M&G Real Estate, which is backing Birchgrove, a developer and operator that has a rental-only model like Auriens. Other new entrants include Nuveen which is backing Preferred Homes and PGIM Real Estate, which has embarked on two partnerships, with Elevation and Signature Senior Lifestyle.
I know people who looked at this deal but decided not to go ahead with it - will be interesting to see how it turns out.
Any insights you can share on why not?
Sure.
My understanding is that Auriens develop top tier, luxury quality care homes with all the gizmos and amenities you can imagine (restaurants, gym, cinemas, salons etc).
After developing they then rent the units out for ludicrous amounts of money (a one bed in their Chelsea development is £13,500 per month, so £162k per year in rent alone for a single unit) and refinance the existing debt used for development so they can operate and hold the asset.
The main concern I heard from others is that the target market for leasing units at rents that high is very very small. Few people can afford to pay that. I know you have some extremely wealthy people in London, but if one can afford to rent that much it begs the question why they don't just employ full time helpers and live in a nice big house.
Anyway, this leads to two main concerns:
1). How scalable is the business given the small target market?
2). How long would it take to achieve stabilised occupancy?
If the strategy was to sell the units rather than lease them then the above would obviously not be as relevant.
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