McCarthy Stone, the UK’s leading developer and manager of retirement communities, has today announced that it has entered into an agreement which will secure approximately £200m of total financing for the development of its retirement living rental portfolio. The finance will be provided jointly by John Laing and Macquarie Capital, both of whom are well-known infrastructure investors with a focus on development projects and platforms, including in accommodation and broader social infrastructure. Financial completion of the transaction is expected to take place in the second quarter subject to customary consents.
This investment will enable McCarthy Stone to expand its rental service to a growing ageing population, help meet the under-supply of this important form of housing and provide consumers with another way to access the benefits of retirement living. McCarthy Stone will continue to provide property and estate management and their award-winning care and services provision.
Brigid Investments Limited, a special purpose vehicle formed by John Laing and Macquarie Capital who are both 50 per cent shareholders, will finance approximately 250 purpose-built, completed and let retirement units in the UK, worth approximately £80 million with a commitment to finance around a further 400 units in the UK worth approximately £120 million over the next 12 months.
This investment provides John Laing and Macquarie Capital with the opportunity to develop a scalable platform, working in partnership with the UK’s leading developer of retirement accommodation. In particular, this investment brings strong and long-term, inflation-linked revenue – backed with real assets. The units have been responsibly delivered bringing positive impact to local towns and communities.
Richard Williams has been appointed as Chief Executive Officer of Brigid Investments Limited. Richard brings over 20 years of real estate and property experience at Aldi, as Regional Managing Director with McCarthy Stone, and as Chief Executive of Rangeford Retirement Living & Care.
Demand for rental properties in the UK’s retirement living sector continues to materially outpace supply, with the market historically focusing on the for-sale model. In 2019, McCarthy Stone launched a new rental offering for retired tenants with increased flexibility – the first retirement operator to do so nationally – removing the burden of having to sell the family home and providing an affordable alternative to outright purchase. The new offering has also been welcomed by McCarthy Stone’s customers.
Currently, around 8,000 new retirement units are delivered in the UK each year, and there is potential to grow this to around 30,000 new units per year1. In financial year 2020, McCarthy Stone completed 265 multi-tenure transactions, and so far in financial year 2021 around a third of its transactions have been for rental properties – further illustrating the strong demand and the potential for rental to become a greater share of McCarthy Stone’s business in the future.
John Tonkiss, Chief Executive of McCarthy Stone said: “Partnering with experienced and dependable infrastructure investors such as John Laing and Macquarie creates the platform to fund greater expansion of our rental offering and provides the business with a highly sustainable platform for growth. It also proves for the first time the retirement living rental proposition in the UK market.
“Similar investment vehicles were launched by the student housing market, led by Unite, the UK’s leading student housing provider, which led to a similar increase in delivery. Our customers have jumped at the opportunity to rent. It provides greater choice and more flexibility and allows more people to access the benefits of retirement living, which include increased companionship, peace of mind and independence in their later years.”
Richard Williams, CEO of Brigid Investments Limited commented: “We are delighted to be partnering with McCarthy Stone, the UK’s leading developer and manager of retirement communities, and creating a platform for growth. Retirement living is a market with high barriers to entry and strong fundamentals, underpinned by an ageing population and constrained supply.”
“John Laing and Macquarie Capital are both leading investors in developing infrastructure, with significant prior experience of investing in specialised accommodation and broader social infrastructure. We are looking forward to working with McCarthy Stone to grow our partnership in order to meet the growing needs of an ageing population looking for a sense of community and independence.”