US: PGIM Real Estate has shifted its senior housing investment strategy from closed-end funds to an open-ended model.
PGIM managing director Steve Blazejewski said the move is because investors in the space have grown more savvy as the product type has become more mainstream. He added the company’s senior housing investment strategy must develop a “more perpetual structure”.
“We have over $30 billion invested in various open-ended fund structures,” said Blazejewski. “There is an opportunity for the senior housing sector to move in that direction.”
Open-ended funds are different from closed-end funds in that there is no limit to the number of shares they can issue or redeem with shareholders. While the company’s investment strategy is changing with the move, Blazejewski said it would not impact the way the company works with its operating partners.
He said the new structure gives investors “semi-permanent exposure with liquidity, taking away so-called ‘vintage risk.’”
“We think it’s time for the industry to have permanent capital available to operators to capitalise their communities and their projects that is not a publicly-traded real estate investment trust and is not subject to public reporting requirements,” he added. “We’re at a point where there is sufficient size and liquidity within seniors housing to be able to create liquidity for an investor if and when they want to exit that investment.”
PGIM is the real estate asset management component of life insurance company Prudential Financial. It has invested almost three quarters of the $996 million it raised for its last close-ended fund for senior housing. In 2021, it invested $1.6 billion in senior living.
