Locust Point Capital is launching a private debt fund with a $250 million target that will focus on the healthcare sector, according to a market source.
The Locust Point Private Credit Fund is expected to reach its first close on up to $50 million by the end of September and aims to raise $100 million by the end of the year, this person said. A Locust Point representative declined to comment.
Locust Point Private Credit Fund will focus on providing second-lien, subordinated mortgage and mezzanine loans to support investments in senior housing and long-term care, with an additional limited focus on preferred equity investments.
The fund will support providers of skilled nursing, assisted-living and independent-living facilities as well as investments in campus-style settings that combine those needs-based approaches.
The firm has been focusing on raising capital from existing contacts with family offices, endowments and insurance companies. Locust Point expects to select a placement agent to assist with the remainder of fundraising by the end of next month.
Recent years have seen a rush of investments into the healthcare and senior housing sector, as the increasing number of Americans reaching retirement age propels what is expected to be recession-resistant industry in the years to come.
The market source said that while significant construction over the past two to three years has brought supply of certain types of senior housing ahead of demand, another development boom is likely once that supply is absorbed. That cycle is expected to repeat several times over coming decades.
Locust Point was founded a year ago by former executives of Contemporary Healthcare Capital, a firm that provides senior mortgage, mezzanine and asset-based loans to small and mid-market healthcare providers. Leadership of Red Bank, New Jersey-based Locust Point have worked on seven previous healthcare funds that have provided more than $1 billion in loans in 300 separate transactions.