Pre-election inertia stymies English senior housing sector

England’s planning regime is currently one of the major challenges for the country’s seniors housing market according to research from consultant Knight Frank and law firm Irwin Mitchell. Nearly a third of local authorities remain unprepared to provide suitable housing for the ageing population.

The report, Unlocking Potential for Seniors Housing Development, concludes that this “significant shortcoming in the level of planning for seniors housing” is particularly worrying given the UK’s demographic profile. Forecasts indicate that the number of people aged over 65 will increase to over 15 million by 2043 – or one in four of the population.

Similar research carried out in 2017, 2020 and 2022 ranked local authorities between A and D according to the provisions in their local plans towards seniors housing. Authorities with an A rating had clear policies indicating details of the required number of dwellings and care home beds and how to achieve that, together with specific site allocations for development. D-rated authorities had neither a clear policy nor site allocation. 

Oliver Knight.

This year only 75 local authorities out of 326 local authorities (23 %) were graded A, while 100 (33.7%) were graded B, 47 (14.4%) were graded C and 104 (31.9%) were graded D.

“While previous research has shown significant progress, our latest analysis suggests that over the last two years, the pace of change has stalled,” Knight Frank partner and head of residential research Oliver Knight said.

“Some 34 [local authorities] have moved backwards over the last two years. The appetite from investors and developers to deliver more age-appropriate housing is clear and growing. A more consistent and supportive policy environment will unlock more supply, more propositions, and more choice for seniors.”

Irwin Mitchell Planning partner Nicola Gooch stated that this policy inertia is disappointing, but not surprising. “We have seen a decline in the number of new local plans as several local authorities have either delayed or withdrawn their local plans as they try to get to grips with ever moving and changing government policy.”

Nicola Gooch.

Gooch said: “This year’s survey is released in the run up to a general election and at the end of a period of unprecedented political turmoil. Since the last report was published there have been two changes of Prime Minister, three Secretaries of State at DLUHC and six Housing Ministers. We have seen the Levelling-Up & Regeneration Act 2023 enter the statute books, major amendments made to the NPPF, and the publication of more than a dozen consultations on a wide variety of proposed reforms to the planning system.”

Despite the inertia a sense of urgency seems to be taking hold: The Older Person’s Housing Taskforce is due to report later this year; the Government’s support for senior housing has been recognised in the National Planning Policy Framework and also in the Levelling-Up & Regeneration Act 2024.

The introduction of National Development Management Policies – which sit alongside and, in some cases, override a Council’s Local Plan policies – also have the potential to make a substantial difference to the sector.

Author: Paul Strohm

Source: Real Asset Insight

Mariehjemmene Soro in Denmark, one of Northern Horizon’s assets

Northern Horizon invests €648m in 47 care homes

Specialised healthcare real estate investor Northern Horizon’s fourth Nordic aged-care fund has been fully invested, deploying €648 million and bringing the portfolio to 47 top-tier assets across the Nordics, of which three are under construction.

Mariehjemmene Soro in Denmark, one of Northern Horizon’s assets
“We are pleased to have exceeded expectations since the fund’s final close in December 2022,” said Kasper Wehner, co-fund manager for Aged Care IV and investment director, Denmark, Northern Horizon. “While the real estate transaction volumes in general have been very low in the Nordics in 2023, we have seen many opportunities in the healthcare segment which have allowed us to be selective to fully benefit from the current market situation.”

Aged Care IV invests in modern, fit-for-purpose care homes and similar residential care assets in the Nordic countries. The fund’s strategy addresses the structural shortage of care homes and senior living concepts as a result of an ageing population in the Nordics, while at the same time helping to solve a societal challenge by providing good quality living conditions for the seniors. The buildings are leased to private and public care operators on long-term leases.

Among the fund’s most significant transactions are: the acquisition from eQ of a portfolio of 15 prime healthcare properties in Finland in December 2023; that of a portfolio of six care homes, two kindergartens, and 23 senior living units in Denmark from NREP in March 2023; and that of a portfolio of four Swedish aged-care properties from SBB in July 2022.

Following the fund’s last acquisition of a care home under construction in Hørsholm, Denmark, the fund’s portfolio is diversified across three countries, 31 municipalities, six segments, and 24 tenants. The fund has ambitious ESG requirements for its asset portfolio, and more than half of the assets already have, or are expected to achieve, BREEAM or similar certification.

As a pioneer in Nordic healthcare real estate, Northern Horizon has established itself as a manager of choice for institutional investors looking to invest in healthcare assets, the group said. Its healthcare real estate investment strategy has consistently delivered strong returns and successful portfolio exits, and the company sees further potential.

“We are very well positioned to create value for investors in this segment, and also in the future,” said Lars Ohnemus, chairman of the board, and acting CEO, Northern Horizon. “We have proven access to the best off-market opportunities. We are optimistic about the value proposition of investing in social assets going forward, and we continue to see a lot of opportunities.”

Author: Nicol Dynes

Source: Real Asset Insight

Fernhill House in Worcester.

French Clariane sells UK care homes to Elevation for £207m

Paris-headquartered care specialist Clariane – formerly known as Korian – has sold its UK activities and assets to UK investment fund Elevation Healthcare Properties for £207 million (approximately €243 million).

Clariane’s UK interests comprised 805 beds in 12 care homes acquired between 2020 and 2022 and which, with one exception, it owned outright. The platform generated sales of £55 million in 2023 with an EBITDA of £12 million.

The homes were operated by Berkley Care, a company acquired by Clariane in 2021. Berkley Care’s leadership has simultaneously acquired the company from Clariane and Elevation has leased back 11 of the properties to Berkley on inflation-linked, long-term leases.

Elevation said that the deal cements and expands EHP and Berkley Care’s existing relationship.  Berkley Care is a highly-regarded operator of 12 modern award-winning prime care homes across England comprising 805 high-quality beds.

“We carefully select operating partners who are proven to create best-in-class care home environments, have an excellent record in care and can evidence a positive impact on their respective local communities,” Elevation managing partner Andrea Auteri said. “We are delighted to extend our relationship with Berkley Care who are a certified top employer and are committed to continuously evolve and improve their environments and practices for staff, residents and communities.”

The deal, which will close within weeks, as part of Clariane’s plan to strengthen its financial structure and is part of a program of disposals of operating and real estate assets and capital partnerships intended to release €1 billion to reduce debt and leverage.

The full net proceeds from this sale, after repayment of the real estate debt lodged in the UK of £38 million and the €90 million of real estate partnership with Predica in form of bonds redeemable in shares, will be used for the repayment of approximately €100 million of the Group’s outstanding debt.

A provision of -€40 million for impairment has been recorded in the 2023 financial statements in corresponding to the difference between the sale price and the acquisition value of the assets

Clariane CEO Sophie Boissard said: “With this first transaction, and the sale of six property assets in the Netherlands announced on 5 February, we are demonstrating our ability to rapidly implement actions to reduce our debt in order to strengthen our financial structure.”

EHP, which owns 40 UK care home properties providing over 2,700 beds and operated by nine different operators, was advised by CBRE, Akin Gump, Pinsent Masons and Deloitte on this transaction.

Author: Paul Strohm

Source: Real Asset Insight

What a retirement village can look like. [Image: ARCO]

Extra core capital needed to deliver more senior housing

There is something very unusual about the retirement home sector, delegates heard at Real Asset Media’s SHHA In-Depth: Best Practice From the UK – Integrated Retirement Communities webinar, which took place online recently.

“We welcome competition in this sector,” said Honor Barratt, chief executive, Birchgrove. “We need more operators and we need more activity to persuade institutional capital to invest. We don’t deliver as many units as we should.”

Competitors are actively invited to join in, because the sector has to grow and acquire visibility in order to attract the investment it needs to meet current and future demand.

“We encourage other companies to create more product,” said Nick Sanderson, CEO, Audley Group. “We need to create more to attract more, and it helps us if there’s more than one offering in the same location.”

The fundamentals work in the sector’s favour: supply is low and demand is set to grow, as demographic trends are clear and the baby boom generation is joining the seniors’ ranks.

“Need is only going to grow in the next 10 or 15 years,” said Sanderson. “In the UK and elsewhere, people want to maintain control of their lives as they age, but want to be able to get support when they need it.”

The way forward is cross-border cooperation, exchanging views and experiences and learning from best practice.

“We need to be part of a global conversation, because this trend is happening all over the world,” said Michael Voges, executive director, ARCO. “Demand for this type of product is high everywhere, and every development is oversubscribed. The need is such that it’s an imperative to get it right.”

Demand is high everywhere, but local markets and conditions are varied across Europe. France is a very mature and well-developed market, while Italy is a nascent one and requires a lot of upfront investment. Denmark and other Nordic countries offer opportunities, especially at the premium end of the market, because more affluent people are not satisfied with the state-provided retirement homes and want an alternative.

“We will see the integrated retirement community model develop in many more countries in the next few years,” said Voges.

The UK market is based on sales and the rental market is almost non-existent, although that is now changing. In Europe it is the other way around.

M&G Real Estate is one of not many institutional investors that have taken the plunge. “Having a single tenure rental focus model works very well for us,” said Freddie Wonnacott, director, fund management, M&G Real Estate. “It feels like a resi block of flats, with a different management style. It is easy to leave, but our buildings are full because people like living there.”

Retirement communities match the needs of the customer for care on demand, for flexibility, companionship and a sense of community, with the needs of investors for steady returns.

“So far we have focused on the UK and on the for sale market,” said Domas Karsokas, investment director, Octopus Real Estate. “But now we are actively seeking opportunities in Continental Europe and having discussions with operators there. The vast majority of retirement homes in Europe are for rental, while in the UK the vast majority is for sale, but the product itself is very similar.”

Author: Nicol Dynes

Source: Real Asset Insight

Max Eiting, Savills

Political shift needed to end German care home hurdles

Healthcare operators are under financial pressure due to lack of staff, lack of storage and rising costs. “So we are seeing that a lot of operators and investors are going more from care to senior living and assisted living,” said Savills’ associate director, operational capital markets – healthcare, Max Eiting.

“We see opportunities in the value-add sector. Manage to ESG is a big topic here,” he continued.

However, he stated that there needs to be a change at the political level so that operators are no longer under pressure due to the staff shortages. Furthermore, negotiation and renegotiation of costs with long-term care insurers takes too long. “That’s a huge problem,” Eiting commented.

“In Germany we have we have 16 federal states with 16 federal laws regarding care homes. We have some elections so maybe there will be a change in some federal states. But we will see that it’s not a federal state topic. It needs to be discussed in Berlin too and we hope that that will happen soon.

Author: Paul Strohm

Residence for seniors in Villeneuve d’Ascq

La Française adds Lille project to senior housing portfolio

La Française Real Estate Managers has acquired a serviced residence for seniors. The residence, which is located in Villeneuve d’Ascq, on the outskirts of Lille, was acquired off-market from Icade and Groupe Duval.

The asset was acquired on behalf of Crédit Mutuel Nord Europe and its real estate investment company.

The residence has access to medical and commercial amenities as well as the city’s cultural offer. The asset, which is expected to be completed at the end of the first quarter of 2026, will provide 6,200 sq m on four floors and will include 130 one to three room apartments. Amenities will include a dining room, fitness room, hairdresser, multimedia lounge and environmentally friendly garden. The residence will be operated by Groupe Duval’s Happy Senior brand on a long-term lease. Happy Senior Residences provide day-to-day services and support for independent, healthy seniors.

NF Habitat HQE Niveau Très Performant certification will be sought which attests to the quality of the housing. Facilities will include a solar hot water production facility.

La Francaise REM’s director of institutional real estate investment and development Leslie Villatte said the asset is “perfectly in line with La Française Real Estate Managers’ sustainable approach and presents all the fundamentals necessary to preserve its value over time.”

La Française REM was advised by Cheuvreux, Reed Smith and Theop.

Author: Paul Strohm

Care home project in Hørsholm, Denmark

Northern Horizon fund fully invested with care home buy

Specialised healthcare real estate investor Northern Horizon’s fourth healthcare fund is now fully invested following the acquisition of a care home project in Hørsholm, Denmark, from SPD.

Danish developer Scandinavian Property Development will complete the project (CGI pictured above) in the summer of 2025 and the care home is expected to achieve DGNB Gold certification. Attendo will operate the care home.

The new 4,500 sq m private care home will provide 60 apartments designed to meet the latest standards.

The fund, which has a total investment capacity of €648 million, has already committed to 47 assets in Sweden, Finland and Denmark. Previously, the fund’s most recent acquisition in Denmark was a portfolio of six care homes which, according to Dagbladet Børsen Ejendomme, was the 3rd largest real estate transaction in Denmark in 2023.

Northern Horizon said in a statement that the  elderly population is increasing rapidly in all the Nordic countries but in Denmark alone, the population of people over 80 years is expected to increase by 39% towards 2030. As a result, many Danish municipalities are struggling to keep up with the increasing demand for care beds.

The company’s strategy is to acquire modern aged care assets in attractive locations which are let on long-term leases to strong private or public sector operators.

Author: Paul Strohm

senior living

SHHA briefing: US shows that seniors need more options

The ‘active adult’ sector is fast emerging, experts agreed at the ‘Senior Living – What we can learn from the US’ market briefing, organised by the Senior Housing and Healthcare Association (SHHA), which took place online yesterday on Real Asset Live.

“There’s an increasing demand for choices other than traditional senior living settings”

Jennifer Dixon, Founder & CEO, JD Solutions Group

“There’s an increasing demand for choices other than traditional senior living settings”, said Jennifer Dixon, Founder & CEO, JD Solutions Group. “New options are becoming available that are choice-driven, rather than needs-driven, new asset classes that require different types of operating platforms”.

Older people no longer want a stark binary choice between living in their own home or in a care home.

Caryn Donahue
Head of Senior Housing Transactions, Healthcare & Senior Living, Savills, United Kingdom

“We’ve seen a shift in the US to more independent and assisted living products, giving people more choice.”

Caryn Donahue, Head of Senior Housing Transactions, Healthcare & Senior Living, Savills

“We’ve seen a shift in the US to more independent and assisted living products, giving people more choice”, said Caryn Donahue, Head of Senior Housing Transactions, Healthcare & Senior Living, Savills. “Europe is not there yet and often nursing homes are the only option”.

The biggest challenge to a similar evolution in the UK and Europe is “the scale and quality of operators”, she said, and the fact that investors see the light-touch services model as a riskier asset class.

But given people’s preferences, the direction of travel is clear.

Elizabeth White
Founder, NuuAge Coliving, United States

“Seniors are not one homogenous group. People in their 60s are very different from people in their 80s and have different needs and expectations.”

Elizabeth White, Founder, NUUAge Coliving.

“Seniors are not one homogenous group”, said Elizabeth White, Founder, NUUAge Coliving. “People in their 60s are very different from people in their 80s and have different needs and expectations”.

In the US the average age of people in a care home is 84-85, three quarters of residents are women and many have some kind of memory impairment.

“People are living longer than ever before, but public perception has not kept up with these changes”, said Dixon. “We need to educate people on what the various options are in later life. Even in the US there’s a long way to go to make people understand the difference between senior housing and assisted living”.

Whether it’s independent or assisted living, co-living or a rental model, older people need to be given a variety of choices on how to spend their later years.

“We’re seeing an emergence of renting, which suits some people but not everyone, as it can be a cultural barrier for people who’ve always owned their home”, said Donahue. “Needs differ, so it’s important to give seniors options”.

There are differences between age groups but also differences between States in the US.

“The most successful investors and operators have realised that there’s a lot of market research to be done”, said Dixon. “Something that works in the mid-West will not fly in Washington DC, so you have to do your due diligence”.

The same applies to countries in Europe, where people’s preferences and cultural attitudes can be very different.

“It is definitely a challenge”, said Donahue. “It makes it very difficult for investors to have a Pan-European strategy”.

Author: Nicol Dynes

Source: Real Asset Insight

New senior care guest house by SevenAges impact investor

New senior care guest house concept opened in Amsterdam

Netherlands-headquartered SevenAges impact investor that finances and develops senior living real estate, is today unveiling its new concept, a senior care guesthouse.

“Demand is really high. Throughout the Netherlands, we see that people need these kinds of solutions. We are trying to find and develop more locations as soon as possible. In the coming years, SevenAges Care Hotels will also be established in other places, both in Amsterdam and elsewhere in the country. We already have a number of locations in the pipeline.” Naboth van den Broek, one of the managing partners of SevenAges.

Tolstraat 75, Amsterdam’s first SevenAges Senior Care Guesthouse, is described as a new and innovative place for the elderly or others who need extra help and care on a temporary basis, from one night to a few weeks, “whether it’s the absence of a caregiver during vacation, the illness of the caregiver himself, a (small) renovation at home, recovery after a hospitalisation, or just to be able to take a break, alone or with a spouse or partner,” said general manager Sylvian Nijhuis.

The facility, located on Amsterdam’s Tolstraat, is designed as “a hotel with care, or a care facility that feels like a good and nice hotel”, and is the initiative of SevenAges along with Stichting Logeerhuizen Amsterdam, a non-profit foundation that aims to provide (temporary) guest care, SevenAges, Cordaan, the largest healthcare organisation in Amsterdam and the surrounding area, and the City of Amsterdam.”

Tolstraat 75 currently has about 20 rooms but will have 40 by the end of 2024. Other facilities include food and beverage services, adapted rooms, a gym and physiotherapy studio, care facilities if needed, and a lobby for the use of guests, family and friends, and the general public.

“Demand is really high,” says Naboth van den Broek, one of the managing partners of SevenAges. “Throughout the Netherlands, we see that people need these kinds of solutions. We are trying to find and develop more locations as soon as possible. In the coming years, SevenAges Care Hotels will also be established in other places, both in Amsterdam and elsewhere in the country. We already have a number of locations in the pipeline.”

Author: Paul Strohm

Source: Real Asset Insight

Jennifer Dixon, JD Solutions

Senior Living in the US: 50 years and learning

Senior living. Later Living. Retirement Living. CoLiving. Care Homes. Active Adult. Assisted Living. Integrated Retirement Communities. Memory Care.

The list goes on and on, and while the names we use are unique in every country, we are all considering the same important questions: What does life look like as we age? Where do we go? Who will care for us? Where is the place we can call home?

In this SHHA brief, we explore the evolution of the United States’ senior housing market and two trends influencing its future. 

In the US, the senior living industry is about 50 years old, but the history of senior living can be dated back to the early 1800s, when the very first small group homes came into existence. For quite some time, and even today, the culture in the US was of families caring for families. It was expected that younger generations would care for their elders and if they could not that burden often fell to local group homes that had very poor living conditions.

By the mid-1900s women were entering the workforce, people were living longer and many seniors were simply not getting the care they needed in group homes or their own household. Medicare and Medicaid came into existence in 1965 and paved the way for what we now call skilled nursing. These programs allowed local care homes to use federal funds to subsidize the care of those who had acute needs. This is a program that still exists today, but it is faced with increasing regulation, concerns about adequate funding and the ability to operate in today’s economic environment.

In the early 1980s there were several senior living pioneers who questioned the notion that skilled nursing was the only answer for the needs of our aging families. The very first assisted living communities were developed, bringing to life the idea that just because someone had medical or physical limitations, it didn’t mean they had to lose their independence.  

Since then, senior living has undergone a remarkable transformation and has grown significantly to include several different property types: Active Adult, Independent Living, Assisted Living, Memory Care and Continuing Care Retirement Communities. In Assisted Living alone, there are over 30,000 communities that are home to nearly 1 million Americans. It is a unique industry where real estate, health care and hospitality intersect.

A Changing Demographic

According to US Census Bureau projections, by 2030, the baby boomer generation will have turned 65. This means that over 71 million people will be of retirement age and considering their living options for the future.

This changing demographic hasn’t gone unnoticed, with senior living investors, operators and developers preparing for the coming wave of seniors who will have very different expectations compared to previous generations.

The best example of this right now is the fast-growing senior housing category called “Active Adult.”  Active adult developments are purpose-built communities designed specifically for seniors with a strong emphasis on lifestyle and resident-directed programming. They tend to attract a much younger resident (early 70s) and have a lower price point compared to the more traditional independent living and assisted living communities. With home mortgage rates increasing, many seniors find this kind of apartment-style living financially appealing, compared to downsizing and purchasing a smaller home. 

Savvier Consumers

The consumer of today has many faces and often it’s not only the prospective resident considering their options, but also their adult sons and daughters who are influencing their choices. It’s very common to have prospective families looking at five or more options before making a decision. 

Senior living sales and marketing was forever changed during the pandemic and today’s consumer has emerged wanting education, transparency and easy access to answers. Over two thirds of senior living leads now come from digital sources and community sales teams are under pressure to respond faster than ever to these inquiries. As a result, operators have invested in sales enablement technology (video, virtual tours, automation, live chat, etc.) to improve the consumer experience and drive better results.

Forward-thinking senior living companies have realized that the greatest competition they face is not necessarily other communities, but the likelihood that many prospective residents will choose to stay in their homes.  In order for someone to make a significant life change, there must be a compelling reason or clear value to move forward. The consumer journey needs to anticipate their questions, recognize their concerns and help them envision how life could get better, no matter what your age might be.  

At its core, senior living is about selling change. The more we listen to our prospective consumers and meet them where they are in the journey, the faster senior living will grow. 

Author: Jennifer Dixon, Founder and CEO of JD Solutions Group, a sales coaching, training and consulting firm supporting senior living sales professionals, operators and investors.

The article was published in the SHHA report in October 2023