AUSTIN-Locally based Virtus Real Estate Capital, known for its equity sponsorship of product in niche commercial real estate markets, has added senior housing to its investment strategies. To that end, Virtus teamed with Detroit-based American House Senior Living Communities to acquire the 156-unit Park Place at Heritage Village in Warren, MI for $20.8 million.

According to Aaron D'Costa, director of Senior Living Acquisitions for Virtus Real Estate Capital, the off-market transaction occurred while Virtus was researching likely Detroit-based senior housing properties in which to invest. Local developer Phil Ruggeri was the seller of the 97%-occupied asset at 29250 Heritage Pkwy.

Built in 2007, Park Place at Heritage Village offers one- and two-bedroom units. Virtus purchased the community in an all-cash transaction for $20.8 million at an 8.25% cap rate, based on trailing 12-month financials.

D'Costa tells GlobeSt.com that senior housing makes investment sense for Virtus, especially given the aging population in America combined with greater life spans. These trends, in turn, suggest a greater need for senior-specific housing.  As for looking in Detroit, "The Detroit MSA is one of the top five markets in occupancy for senior housing," D'Costa says. "We felt it would be good timing for us to get into the business, and to get into it in a market that's one of the strongest in the country."

As such, Virtus' plan is to find senior housing operators similar to American House Senior Living Communities in other geographic regions and partner with them to buy and develop additional assets. "American House just happened to be based in the Detroit market and they're one of the largest senior housing owner-operators in the state," D'Costa says.

With the dust settled on its first senior housing transaction, Virtus is moving ahead on its plan. D'Costa says the company is ready to partner with another senior housing operator based in Dallas, TX, to develop a stand-alone memory care building in Houston.