Two big investors in British infrastructure have formed a retirement living platform that aims to address an undersupply of rental homes for the elderly.
John Laing Group and Macquarie Capital have set up Brigid Investments to fund rental housing built and managed by McCarthy Stone, Britain’s biggest developer of retirement homes.
The two investors will each hold a 50 per cent stake in the venture, which will finance an initial 250 homes valued at £80 million. The deal includes an agreement to buy a further 400 completed and let homes, worth about £120 million, over the next 12 months.
Ben Loomes, chief executive of John Laing Group, said that the retirement living market was underpinned by “an ageing population and low supply” and the investment would bring “inflation-linked revenues and strong cash yield from the outset”.
“There is potential for significant value creation both through scaling the platform and as the sector matures and attracts further institutional capital,” he added.
There are about 12.2 million people in the UK aged 65 or over, and that number is expected to rise to about 17.4 million by 2043 — an increase of more than 40 per cent.
The UK’s retirement housing market is dominated by homes for sale, in contrast to the US and Australia, where renting is far more common. “We’re beginning to see that happening in the UK,” Loomes said.
“We expect more deals to build investment platforms over the next 12 to 18 months in areas including energy transition and decarbonisation of transport,” analysts at Peel Hunt said.
John Laing was founded in Carlisle in 1848 and invests in and manages infrastructure projects around the world, including roads, trains and wind farms.
Australia’s Macquarie Capital is a keen investor in UK infrastructure and was part of a consortium that bought the Green Investment Bank from the government for £2.3 billion in 2017.
McCarthy Stone was building and selling more than 2,000 retirement homes a year before the pandemic. It began a shift towards rental properties in 2019 but struggled to find funding in last year’s challenging economic circumstances and was taken private by Lone Star, the American private equity firm, at the start of this year.