Strong investor appetite, changing ownership models and growing interest in supported living will continue to shape the future of care ownership, delegates at Care Show Birmingham heard this week.
Strong investor appetite, changing ownership models and growing interest in supported living will continue to shape the future of care ownership, delegates at Care Show Birmingham heard this week.
A panel discussion, chaired by TCHE editor Mary-Louise Clews on the Future of Care Ownership, brought together operator, legal, property and investor leaders to examine the drivers behind consolidation across adult social care, the role of increasing international investment and the implications for providers, commissioners and residents.
Christie's & Co care managing director Richard D Lunn described the current market as highly active, with interest from a wide range of buyers and capital sources.
He said demand continued to be underpinned by demographic trends and the needs-driven nature of care services, while ownership structures were evolving as investors sought new ways to enter the sector.
Mr Lunn highlighted the growth of US REIT-backed models, including senior housing operating portfolios (SHOP) structures in which the investor owns the property while the operating business is managed separately by a third-party provider – but the owner-investor takes on more direct exposure to the operational performance and revenue of the care homes rather than just collecting fixed rental income.
His comments follow the recent £1.1bn acquisition of 45 LNT new home developments by US firm CareTrust REIT, a deal which it said is structured to build a SHOP platform in the UK.
Pressure and opportunity
Care England social care advisor Richard Ayres said operating a care service involved managing both a regulated care business and a significant property asset, creating challenges for smaller operators and new entrants.
He added that investment could help modernise services and improve environments for residents, but warned commissioners would need to understand any implications for supply and cost. He also predicted greater scrutiny of ownership structures and stressed the importance of sustainable finances to support ongoing reinvestment in care quality.
Virgin Money head of health and social care Derek Breingan said consolidation did not necessarily mean the disappearance of independent providers.
Instead, he suggested smaller organisations could collaborate, grow together or specialise in particular markets.
He added that supported living and services for young adults are areas that are likely to attract further investment and consolidation activity over the next few years.
Meanwhile, Hill Dickinson partner Monica Macheng told delegates she anticipated greater transparency and regulatory scrutiny of major care sector transactions, potentially creating opportunities for smaller operators seeking to expand.
