APW - Guide to Care Home Investments

A GUIDE TO CARE HOME INVESTMENTS

A Guide to Care Home Investments2
Contents
1. Introduction
2. An Ageing Population
3. The Current UK Care Market
4. The UK Care market industry performance
5. Maximising investment returns from the UK healthcare market
5.1 Considerations
5.2 Opportunities & Risks of the UK Healthcare Market
6. Future proof care home investments [infographic]
7. Investor opportunities
7.1 Manor Park
7.2 Ridgeway House
7.3 Butterhill House
7.4 Pontypridd Care Home

Introduction
Care Home investments can offer an alternative buy-to-let property opportunity that can be highly profitable – offering annual returns of 10% or more, as well as the
opportunity for capital growth.
Driven by the rising life expectancy of people within the UK, investments in care home properties have become increasingly popular as an alternative way of
generating a passive income.
Care Home investments provide an investment opportunity in an ethical sector that now allow individuals to capitalise on the strength of the healthcare property
industry which has traditionally only been available to institutionalised investors.

An Ageing Population
The UK has an ageing population. The proportion of people aged over 65 has
increased over the past 30 years – a trend that is predicted to continue. This
trend will place added pressure on the UK’s health care, social care, housing and
the economy.
According to the Office for National Statistics (ONS), the UK is at its oldest ever.
In mid-2014, there were some 11.4 million people living in the UK aged 65 and
over – making up 17.7% of the population, up from 11.1 million the previous
year. The ONS predict a quarter of the population will be over the age of 65 by
2044 . Furthermore, the number of people aged 75 and over has increased by
89% over the period, now making up 8% of the population.
A rapidly ageing society means an increased number of older people, living
longer – often with chronic, long-term health care requirements. As a result, it
is predicted there will be an 80% increase in demand for health and social care
for people with dementia in the years 2010 – 2030 . According to the House of
Lords “Ready for Ageing?” report, the UK is currently ‘woefully underprepared’
for ageing and there’s significant implications that will result without urgent
action.
The need for this transformation in the UK is given additional urgency by a
challenging financial backdrop. The King’s Fund released a report in 2014 that
states “The NHS and social care have reached a critical point. The service faces
enormous challenges over the next 18 months…” The report goes on to state
“There is considerable agreement about the vision for a more integrated service
that provides better care in community settings, and that this vision can deliver
both lower costs and better outcomes. However, these ‘transformational’
changes are not costless to implement.”
Source: Office for National Statistics, National Records of Scotland, Northern Ireland Statistics
and Research Agency
Proportion of people at older ages, UK population mid-1974 onwards.

The Current UK Care Market
In July 2015, there were 5,627 registered nursing homes in the UK equipped to dementia
standards, and 12,311 residential homes. To appropriately support people, the housing
market needs to change in order to deliver the specialist housing and care required by
the elderly.
According to Age UK, more than a third of people over the age of 65 think Britain has
become a worse place to live in the last year . Between 2005/6 and 2013/14 there was
an 18% reduction in spend on older people’s social care – whilst the number of people
aged over the age of 65 significantly increased.
The healthcare industry remains one of the fastest growing markets across the globe
and with a wealth of new property investment opportunities available, the sector offers
unprecedented growth potential. The returns profile of this asset class is also capturing
the attention of the wider investment community.
KnightFrankundertookaspecialistpropertysurveyinJanuary2015of69leadinginvestors,
developers and lenders. The survey aimed to understand the attitudes towards specialist
investments. When asked “If you are planning to increase your exposure to specialist
property, which sectors(s) will you be targeting?” A substantial 70% of respondents
stated they would look to target the UK healthcare and student markets.
If you are planning to increase your exposure to specialist property,
which sector(s) will you be targeting?
The survey indicated an increasing appetite for specialist property
investors, of which, Knight Frank predict that the UK care home sector
will likely be the strongest performing segment due to structural
undersupply and increasing demand.
The availability of good quality care homes is still limited, creating
extraordinary levels of demand for profitable facilities. In response
to this demand, UK healthcare property is now widely regarded as a
mainstream asset class with many individual investors turning to this
income stream to diversify their
portfolio. The strong, index-linked income, provides both short and
long-term benefits, and as a result is attracting growing numbers of
private investors to purchase within this sector.
Source: Knight Frank, Specialist Property The Core Markets, 2015

The UK Care Market Industry Performance
With £4.5bn worth of deals occurring in the healthcare market in 2014 (Source:
CBRE UK Healthcare Marketview, Q1 2015), the UK healthcare market continues
to attract investors due to long rental leases, and RPI index-linked annual rental
increases. Subject to asset quality, business attributes and location, there is
increasing evidence that banks and lending institutions are prepared to invest
and
support operators across the healthcare spectrum, due to the strong, supporting
demographic argument.
According to the IPD’s Healthcare Index, UK healthcare property outperforms
all other UK commercial property with total UK returns across all UK healthcare
property increasing over the last 12 months from 5.6% at the end of 2013, to
9.0% at the end of 2014. Compared with only 1.5% p.a. for all UK property, the
care industry is a significantly more profitable and secure option.
Furthermore, the market has demonstrated robust returns from a stable
marketplace since the index was launched in 2007, demonstrating an impressive
risk-reward profile in comparison to other UK property sectors.
John Hearle, Chairman and Head of Healthcare, Aitchison Raffety states,
The secondary healthcare sector and specifically care homes is a rapidly growing
part of the healthcare market. The increasing demand for suitable elderly
care is a key driver. Currently, up to 80% of the UK’s care home stock is below
‘institutional’ quality – providing a clear case for investment in future-proofed
care facilities.
The new healthcare investor sees major opportunities in acquiring real estate
that takes advantage of the long-term demographic movement, combined
with the medium-term benefits of real estate investments and the short term
availability of high-quality stock with relatively low demand.
“Healthcare property is a solid, long-term, secure investment showing steady
growth and a lack of volatility. Some people may see the sector as ‘comfortably
boring’ but certainly for Primary Healthcare, that is what the investor wants.”

Maximising Investment Returns From The UK Healthcare Market
According to Knight Frank, healthcare properties are predicted to be the best performing asset in the healthcare sector and offer substantial returns for investors,
however it’s important to consider all the risks and rewards involved to ensure investors maximise their returns.
1. Specialist management, with a commitment to excellence
As the operational success of a care home property relies heavily on the
reputation and management of the property, it is important to work with
properties committed to excellence and a first-rate attitude to providing
premium care and superior management. Managers and staff should all be
welltrained and informed of all industry guidelines.
2. High quality facilities that are patient driven and offer significant
treatment advances
Progressive technology and forward-thinking facilities will ensure both
residents and care staff alike benefit. Unlike traditional or refurbished care
homes, futureproof facilities will ensure the longevity of your investment and
the success of the individual care property. Aspects such as hygiene, catering
and activities offered should all be considered when evaluating the quality of
the property.
3. Solid business models & financial positions
Ensuring a sound business model that consistently brings profits into the
business is of course the foundations of any successful investment.
4. Competitive differentiators
Professional associations and guidelines are in place to ensure the duty of care
is maintained in the UK. It is important to assess the quality service provision
against industry guidelines from the CQC (Care Quality Commission).
5.1 Considerations
“The future for healthcare real estate investments is looking more
positive than at any time in the last five years”

1. Under-supply of good quality stock in the UK – currently there is only one
dementia care home bed for every four that are needed. Rising demand
coupled with limited supply indicates the cost of care and value of facilities
can only go up.
2. Continuing need to upgrade & replace – Many existing inappropriately used
and sub-standard properties need upgrading and significant investment,
despite the massive investment that has already been made in medical
facilities over the last 15 years.
3. The demand is driven by structural, demographic changes – rather than
cyclical change or new demand. All evidence proves we’re living longer and
whilst we all want to live in our own homes for as long as possible, mental
and physical deterioration in the elderly can make this impossible.
4. Relatively high-yielding. High-quality, primary healthcare facilities are seeing
transactional yields of 7 per cent or better (Source: Colliers) and offer
more stability in periods of weak financial markets and reduced consumer
spending.
5. Long-term occupancies & long leasebacks – Investing in a long lease
property can offer attractive long-term cash flows, with the added benefits
of stability, security and potential capital gains.
1. Demanding management with specialist nature – The multi-tenanted and
operational nature of some specialist properties requires an intensive
management structure and relies on the success of the individual operator.
The specialist nature of the properties should be considered as properties
completed to dementia standards offer limited scope to change the use, as
well as to add value.
2. Reputational Risk – The mistreatment and misconduct of residents and
relies entirely on the operator responsible for the care homes. The key is to
invest with your eyes open and perform full due diligence on the operators.
3. Higher potential costs – high quality providers may also operate with
higher costs due to investments in quality facilities and services within the
enterprise.
4. Poor business models – it is important to understand where the income is
comingfromandthenatureofthosepeople.Istheincomecomingfromlocal
authorities, private wealth or foundations? The mix of these determines the
achievable rents for the operator.
5.2 Opportunities 5.3 Risks
Maximising Investment Returns From The UK Healthcare Market

Future Proof Property Investments
The need for suitable UK care homes is inevitably increasing and there is significant need for practical living and accommodation solutions
for the elderly. One in five care homes in England are failing to meet set national standards for safety and care, which is driving a passion for
developing this asset class from both businesses, banks and individuals.
One in Four
people above 90 are living in
communal care homes.
There are
12 million
over 60s in the UK alone.
Care for the elderly is worth
£14.5 billion
each year.
Demand will grow
60% by 2023,
increasing to
150% by 2043.

Investor Opportunities
Healthcare real estate can accommodate mainstream investor requirements.
Structured rents where the investor is insulated against fluctuations in operator performance and income
bring healthcare into the residential investment market.
Unitised care home opportunities provide an affordable, profitable and ethical investment proposition.

Manor Park Nursing Home
Green Street, Holt, Wrexham LL13, 9JF
PROPERTY HIGHLIGHTS
Near a sleepy village called Holt.
Direction:
From Wrexham look for the A534
to Nantwich known as the Holt
road. After leaving Wrexham you
will pass the Wrexham Golf Course
follow this road for 3-½ mile and
you will reach the left turn to Holt
village. On entering the village you
will pass Bellis Brothers garden
centre. Continue along the main
road passed the village square with
the War memorial, and on reaching
the Peal O Bells pub on the right
hand side with the church directly
behind it. The village Green will be
on your left hand side and Manor
Park directly behind it.
Parking:
On site Parking
OPPORTUNITY
HIGHLIGHTS
8% - 10% Assured Net
Returns Per Annum
Guaranteed Buy Back
(3, 5, 9, 15 & 20 Years)
Paid Quarterly
Returns Per Annum
A Hands-Off Investment
Fully Managed Care Home
INVESTMENT DETAILSINVESTMENT STARTING FROM £64,999
Local Authority / Social Services: Wrexham County
Borough Council.
Type of Service: Care Home only (Residential Care)
– Privately Owned , Registered for a maximum of 28
Service Users
Registered Care Categories*: Dementia • Mental
Health Condition • Old Age
Specialist Care Categories: Alzheimer’s • Challenging
Behaviour
Admission Information: Ages 65+.
Languages Spoken by Staff (other than English): British
Sign Language, Welsh.
Single Rooms: 28
Rooms with ensuite WC: 9
Facilities & Services: Day Care • Respite Care •
Physiotherapy • Own GP if required • Own Furniture if
required • Pets by arrangement • Close to Local shops
• Near Public Transport • Minibus or other transport •
Lift • Wheelchair access • Gardens for residents • Bar/
Cafe on premises • Phone Point in own room/Mobile •
Television point in own room
Actual UK Sterling Sum
Invested
Assured Returns
Year 1 Year 2 & 3 Year 4 & 5
£75,000 8% 9% 10%
£100,000 9% 9.5% 10%
£125,000 9.5% 10% 10%
£150,000 10% 10% 10%
Invested
Guaranteed Buy-back
In 3 Years In 5 Years In 9 Years In 15 Years In 20 Years
£75,000
9%
£81,750
15%
£86,250
23%
£92,250
30%
£97,300
40%
£105,000
£100,000
9%
£109,000
15%
£115,000
23%
£123,000
30%
£130,000
40%
£140,000
£125,000
9%
£136,250
15%
£143,750
23%
£153,000
30%
£162,000
40%
£175,000
£150,000
9%
£163,500
15%
£172,500
23%
£184,500
30%
£195,000
40%
£210,000
PAYMENT SCHEDULE
Paid quarterly directly to your bank
Review Score
from 5 Reviews
JAN
31
APR
30
JUL
31
OCT
31
9.6
EXIT OPTION 1 OPTION 1
STRATEGIES Guaranteed buy back options from RB
Carehomes (3, 5, 9,15 & 20 years).
Selling at your own discretion to any
third party.
Recession-proof / Ethical investment
• No maintenance & ground rent
• Assessed care is inevitably required
• Room variants depending on investment levels (£64,999 and up)
• High Demand for beds / locations.
• Expected to exceed 40,000 by 2020
• Specialised fit-for-purpose buildings & equipment
• Qualified & experienced management teams with skilled &
trained workforce
• Multi-faceted specialist service offerings (resi-dential, nursing,
dementia & mental health, and learning disability)
• Fully assessed and bespoke care packages designed for Dementia

Ridgeway House
Residential Care Home In Llawhaden, Narberth
PROPERTY HIGHLIGHTS
The Ridgeway House, in Narberth, is a
forty-six capacity care home that strives to
maintain a pleasing and comfortable living
environment for those who have daily care
needs. Carers are available around the
clock and make sure that all care packages
are personalized to suit the needs of the
individual, with some respite provision also
available for the surrounding community.
A well-established home in a rural setting 10
miles east of Haverfordwest but convenient
for Swansea and the M4, Ridgeway occupies
an ancient site with a well-documented
history back to medieval times and can even
boast a visit from Lord Nelson and Lady
Hamilton.
Each of the rooms has a television point
and nurse call system, while residents
enjoy freshly cooked meals that can be
personally prepared for their individual
nutritional needs. Ridgeway has its own
transport for day trips and hospital visits,
while hairdressers, chiropodists and
physiotherapists all visit the home.
OPPORTUNITY
HIGHLIGHTS
Returns Per Annum
Guaranteed Buy Back
(3, 5, 9, 15 & 20 Years)
Paid Quarterly
Returns Per Annum
trained workforce
INVESTMENT DETAILS
INVESTMENT STARTING FROM £64,999
• 41 single and 3 shared rooms (19 en suite).
• Conditions cared for are older people
generally,people with physical difficulties
and dementia
• Care period: Longer stay / Short stay and
respite Facilities available for family or
friends to stay overnight
• Residents may bring their own furniture
• Activities are actively arranged
MARKET ANALYSIS
• The population of Llawhaden is ageing.
• Between 2001 and 2011 the number of
residentsabove the age of 65 increased by
25% (representingalmost 31,000 additional
people)
• The number of residents above the age of
85 hasincreased by 38% (an increase of
over 5,000).
Invested
Assured Returns
£75,000 8% 9% 10%
£100,000 9% 9.5% 10%
£125,000 9.5% 10% 10%
£150,000 10% 10% 10%
Invested
Guaranteed Buy-back
£75,000
9%
£81,750
15%
£86,250
23%
£92,250
30%
£97,300
40%
£105,000
£100,000
9%
£109,000
15%
£115,000
23%
£123,000
30%
£130,000
40%
£140,000
£125,000
9%
£136,250
15%
£143,750
23%
£153,000
30%
£162,000
40%
£175,000
£150,000
9%
£163,500
15%
£172,500
23%
£184,500
30%
£195,000
40%
£210,000
PAYMENT SCHEDULE
Review Score
from 5 Reviews
JAN
31
APR
30
JUL
31
OCT
31
9.6
third party.
Change in population
by age group between
2001 and 2016

Pontypridd Nursing Home
Residential Care Home In 49 Woodland Terrace, Pontypridd Cf37 1Jg,UK
PROPERTY HIGHLIGHTS
Pontypridd Nursing Home is skilled in
providing mental health-related care
provision, offering personalised support for
adults with dementia and also for those with
a learning disability. Comfort Care Homes
are known for maintaining facilities that
support the personal freedoms of residents,
while being welcoming places to visit, clean,
hygienic and secure. Employees are well
supported with training programmes, with
the provider keen to invest in talent in order
to guarantee the quality of provision over
the long term.
OPPORTUNITY
HIGHLIGHTS
Returns Per Annum
Guaranteed Buy Back
(3, 5, 9, 15 & 20 Years)
Paid Quarterly
Returns Per Annum
trained workforce
INVESTMENT DETAILS
INVESTMENT STARTING FROM £64,999
Facilities & Services
• Palliative Care
• Day Care
• Respite Care
• Physiotherapy
• Separate Dementia Care Unit
• Own GP if required
• Own Furniture if required
• Close to Local shops
• Near Public Transport
• Wheelchair access
• Gardens for residents
• Residents Kitchenette
• Television point in own room
Single Rooms 56
Shared Rooms 1
Rooms with ensuite 22
Invested
Assured Returns
£75,000 8% 9% 10%
£100,000 9% 9.5% 10%
£125,000 9.5% 10% 10%
£150,000 10% 10% 10%
Invested
Guaranteed Buy-back
£75,000
9%
£81,750
15%
£86,250
23%
£92,250
30%
£97,300
40%
£105,000
£100,000
9%
£109,000
15%
£115,000
23%
£123,000
30%
£130,000
40%
£140,000
£125,000
9%
£136,250
15%
£143,750
23%
£153,000
30%
£162,000
40%
£175,000
£150,000
9%
£163,500
15%
£172,500
23%
£184,500
30%
£195,000
40%
£210,000
PAYMENT SCHEDULE
Review Score
from 5 Reviews
JAN
31
APR
30
JUL
31
OCT
31
9.6
third party.

Sources
Age UK; Later Life in the United Kingdom: http://www.ageuk.org.uk/Documents/ EN-GB/Factsheets/Later_Life_UK_factsheet.
pdf?dtrk=true
MSCI: Healthcare Outperforms All Commercial Property: https://www.ipd.com/ about/media_centre/news_archive/2015/UK%20
Healthcare%20Annual%20 2014%20results.pdf
http://realestate.ipe.com/investors-in-healthcare/10001774.fullarticle
1
Ageing of the UK population, Released 25th June 2015: http://www.ons.gov.uk/ ons/rel/pop-estimate/population-estimates-for-uk--
england-and-wales--scotlandand- northern-ireland/mid-2014/sty-ageing-of-the-uk-population.html
2
House of Lords Report: Ready for Ageing?: http://www.cpahq.org/cpahq/ cpadocs/UK%20Parliament%20HOL%2 Ready%20for%20
the%20Ageing. pdf?WebsiteKey=b62c9100-bdad-479a-a8c3-2a484d7c8297&=404%3bhttp%3a% 2f%2fwww.cpahq.
3
The NHS Productivity Challenge, The King’s Fund (May 2014): http://www. kingsfund.org.uk/sites/files/kf/field/field_publication_file/
the-nhs-productivitychallenge-kingsfund-may14.pdf
4
Care Quality Commission: http://www.cqc.org.uk
5
Age UK: http://www.ageuk.org.uk/latest-press/life-in-britain-has-got-worse-saythird- of-over-65s
6
Knight Frank: http://www.knightfrank.co.uk/commercial/healthcare

UNITED KINDGOM
Tel: +44 2038 974284
Address: 88 Wood Street, Barbican, EC2V 7RS, London UK
HONG KONG
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Website: www.a-p-w.uk Email: info@a-p-w.uk

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