Locust Point Capital closes $ 428 million senior housing debt fund

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Locust Point Capital is bracing for a post-pandemic lending landscape.

The Red Bank, New Jersey-based senior lender and investor announced on Monday it was closing its second senior housing debt fund with $ 428 million. The fund exceeded its target and includes commitments from pension funds, endowments, foundations, insurance companies and wealth advisers.

Almost 75% of the fund’s commitments came from American investors, the balance coming from European investors.

Locust Point’s new fund will continue the lending strategy of its previous offering – providing subordinated debt, preferred shares and opportunistic senior mortgages to owner-operators of housing and senior care facilities in the United States. United. has grown in popularity over the past year, with national and regional banks limiting their loans to existing customers with a proven track record during Covid-19.

Other lenders, including private equity firms, have rushed to fill the void left by the big banks. And Locust Point has been very successful in getting into debt during the pandemic. Transaction volume and loan applications increased 60% to 70% last year, compared to 2019, Managing Director and Founding Partner Dan Contardi mentionned last month during Senior Housing News’ Capital Quarterly webinar series. And the company is finding opportunities to partner with growing owner-operators on more of the capital stack, especially for new construction.

This could prove to be a growth opportunity for the future. As banks return to the lending environment, they demand more recourse from borrowers. Cash-strapped owner-operators may be attracted to private funds offering debt without recourse, at rates ranging from 75 basis points to 100 basis points higher than the interest rates that banks offer with recourse, said Christie Jordan, Regional CFO of Alliance Residential – East Coast. during the webinar.

Locust Point launched its first fund in 2016, with $ 312 million in commitments. Since then, the total value of funded transactions in which the company has participated has exceeded $ 2.25 billion.

“Our pace of new investment reflects the huge opportunity we see today in housing and senior care,” CEO and Managing Partner Eric Smith said in a statement.

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