Wednesday, October 2, 2019

Carlyle to Shakedown Active Seniors?

The Carlyle Group sees dollar signs around America's aging population.  From California trailer parks to North Alabama medical office buildings, active senior housing to Atlanta luxury apartments Carlyle wants rent/lease money.

Senior Housing News reported:

Seasoned players in the active adult market — including private equity giant The Carlyle Group — say that it is a product where average lengths of stay are more than two times the average of independent living, and at profit margins that outperform senior housing. 
Active seniors would be wise to consider Carlyle's ownership of nursing home giant ManorCare.  It ended in bankruptcy after Carlyle bled ManorCare with management fees, dividends and asset sell offs. 

NY Post reported on ManorCare's demise:

The stumble could sully Carlyle’s reputation, it may escape the investment with a profit thanks to a dividend in the wake of the real estate sale-lease back deal, sources said.
Active seniors might wish to understand Carlyle's handling of tenants in a California trailer park.

The Real Deal reported last month:

Carlyle, one of the country’s largest private equity firms, made a splash in 2015 when it bought a manufactured home community in Silicon Valley for $152 million.

Tenants in the area soon complained of exorbitant rent hikes and a deterioration in management responsiveness — sparking new calls for statewide rent control in California. The D.C.-based investment group recently flipped the complex, selling it to Chicago-based Hometown America for $237.4 million this August, according to California property records.
How does one charge massively more in rent and reduce management responsiveness?  It's the private equity underwriter (PEU) way.  

Addendum:  PEUReport did many pieces on Carlyle-Manorcare over the years.