PGIM Pays $77MM for Senior Housing Asset in Walnut Creek

PGIM Real Estate, Walnut Creek, Bryon Park, Kisco Senior Living, San Francisco, Bay Area, 2016 Northern California MAME Awards,
Image courtesy of Byron Park
Image courtesy of Byron Park

By Jon Peterson

PGIM Real Estate has purchased the 187-unit Bryon Park senior housing property in Walnut Creek for $77 million, according to sources with direct knowledge of the transaction as well as public documents reviewed by The Registry.

PGIM declined to comment on what it had paid for the property. Byron Park is now owned in a joint venture with Carlsbad, Calif.-based Kisco Senior Living. This company had another un-named institutional partner, which PGIM has now replaced.

“This is our first investment in the property in the San Francisco Bay Area in several years. This is a market that has a high concentration of seniors living in the region and one where a large percentage of the elderly can afford to pay for this type of housing,” says Noah Levy, head of PGIM’s senior housing business.

Another factor is the region’s barriers to entry. “The marketplace in Northern California is one where it’s hard to find sites where you would be allowed to build new projects,” said Levy.

The property in Walnut Creek is located at 1700 Tice Valley Boulevard. The units in the property are a mixture of independent and assisted living residences. Kisco had completed a $5 million renovation to the common areas and grounds last year. This complex is located on 7.3 acres.

In addition to renovating the existing apartments, PGIM/Kisco intends to expand Byron Park’s service offerings with the construction of a new two-story building. This will feature 40 residences of purpose-built assisted living and memory care on adjoining 1.22 acres. The new building will include an activity room, dining room, kitchen, wellness center and courtyard. The expansion building is fully entitled and is expected to break ground in mid-2018.

“We are pleased to expand our partnership with PGIM Real Estate, and we appreciate their commitment to continue making capital investments to enhance Byron Park, including the planned expansion building,” said Andy Kohlberg, founder and CEO of Kisco in a prepared statement.

PGIM made the investment in Walnut Creek for its commingled fund, Senior Housing Partners V. The real estate manager had a final closing of its $629 million capital raise in May of 2015. There was a total of 14 institutional investors in the commingled fund.

PGIM has been very active placing capital into the marketplace for the commingled fund. It has either committed to or closed on a total of 18 transactions on a nationwide basis. These include a mixture of existing assets and properties that will be developed in the future.

The long-range goal is to have between 30 to 40 assets in the fund. The leverage component on the fund is projected to be no greater than 65 percent. A typical size transaction for the fund would be somewhere in the range of $25 million to $50 million. It will be investing in independent, assisted living and memory care segments of the senior housing industry. The deals can include direct acquisitions, forward commitments, developments and mezzanine loans.

West Coast Commercial Real Estate News