Morgan Stanley Closes $305M Deal for 3-Property MorningStar Senior Living Portfolio

Investment funds managed by Morgan Stanley Investment Management have collectively acquired a three-community portfolio from private equity group Kayne Anderson for $305 million.

Morgan Stanley Real Estate Investing (MSREI) manages the investment fund, and the portfolio comprises 463 units in three communities near Denver. MorningStar Senior Living will remain the manager of the properties after the sale to the funds controlled by MSREI.

Morgan Stanley Real Estate Investing Head of U.S. Investments Will Milam told Senior Housing News on Thursday that the company’s investment thesis in senior housing has been “consistent” over the last four years, targeting “high-performing properties with best in class operators.”

“This transaction fits in with MSREI’s investment strategy of partnering with best-in-class operators to acquire high quality communities with a continuum of care and modern amenities,” Milam told SHN.

Since 2022, MSREI has partnered with three senior living operators and has invested in 30 senior living communities, according to Milam. Its typical investments include independent living, assisted living and memory care, or assisted living and memory care services, Milam noted.

“Demand for each type can vary by market and the needs of the local resident base, but we do find that independent living is a helpful feeder into assisted living/memory care services and provides a smoother transition into a higher level of care for the residents,” Milam said.

Dynamics driving MSREI’s latest activity in the sector include continued demographic demand and the lack of new construction, which Milam said supports “outsized top line growth, and attractive valuation levels [that] provide compelling return potential,” for investors.

Looking ahead to 2026, Milam expects attractive investment conditions “to persist” into 2026.

In December of last year, MSREI acquired an eight-community portfolio from Brightview Senior Living and Harrison Street, as the company at the time had been “actively investing in senior housing since the sector was dislocated during the Covid-19 pandemic.”

Earlier in 2024, Morgan Stanley Smith Barney (NYSE: MS) created a non-traded real estate investment trust (REIT) aimed at commercial real estate investment. While senior housing is not a core objective, North Haven Net REIT included senior housing investment in a range of sectors for future potential transactions.

In a statement on Thursday, MorningStar President and Chief Investment Officer Jamie Ranzan said the company remains committed to partnering with “like-minded organizations” like Morgan Stanley, as the recent transaction marks an “exciting new chapter for both parties.”

This year, MorningStar has been “strategically refocusing” and “deepening” its relationships with existing capital partners to align with “large institutional groups that share our ambition to be the premier operator in every market we serve,” Ranzan said.

“Our approach to partnership is highly selective, and we are honored to expand our relationship with Morgan Stanley through this milestone transaction,” Ranzan added.

In 2023, SHN SHN profiled MorningStar’s efforts to move from pandemic-era challenges to stabilization and improved operating performance, focused on “threading a needle between costs and revenue if they hope to be successful in the post-pandemic age.” Last year, MorningStar also opened MorningStar at The Canyons, a new senior living community in Las Vegas.