Carlyle acquires senior housing in Japan for $136m

Private equity firms continue to target the country’s aging demographic.

The Carlyle Group has acquired the land and buildings of the Bon Sejour Grand facilities, resident-paid nursing homes, for JPY14.6 billion ($136 million, €92 million) from the Goodwill Group. The investment was made by Carlyle Asia Real Estate Partners.

The assisted-living facilities for the elderly, formerly called COMSN Garden, will be co-managed by Nomura Healthcare, a specialised healthcare asset manager under the Nomura Group. Nursing home manager ZECS Community Residence will be responsible for the day-to-day care of the residents and operations.

The facilities, all located in central Tokyo, comprise a total of 346 units at four residences. They include Bon Sejour Grand Suginami Miyamae (Suginami Ward), Bon Sejour Grand Nanpeidai (Shibuya Ward), Bon Sejour Grand Sakura Shinmachi (Setagaya Ward), and Bon Sejour Grand Yoga-no-Mori (Setagaya Ward).

Carlyle has been actively seeking out opportunities in the senior living sector in Japan, targeting the country’s aging demographic. In September 2007 the firm acquired senior living facility Hyldemoer Sankei-en in Japan. Japan has been experiencing net population loss, due to falling birth rates and almost no net immigration. Because of a baby boom that occurred in the first half of the 20th century it also has a significant aging population, along with one of the highest life expectancies in the world at 81.3 years. Over 21 percent of the country’s population is now 65 or over, the highest in the world.

Carlyle also has significant global experience in senior and specialized healthcare operations. Their other investments in the sector worldwide include a seven-property 629-unit portfolio in New Jersey, an 85-unit senior living development in California, and a 191-unit senior living property in New York.

In December The Carlyle Group also closed a controversial $6.3 billion (€4.3 billion) take-private of assisted living company Manor Care despite labour union attempts to scupper the deal. The Service Employees International Union had convinced several state legislatures to hold hearings on the buyout, and in some cases, delay granting the private equity firm necessary operating licenses. US Senators Hillary Clinton and Charles Grassley had asked the Government Accountability Office to review the deal in October, and in November two congressional committees held hearings examining the effects of private equity ownership on patient care levels. But the House hearing failed to find private equity at fault for substandard care at nursing homes.