BlackRock bets on UK retirement housing

BlackRock is making a big bet on the growth of retirement housing in the UK, the latest sign that institutional investors’ search for stable income is driving them into increasingly niche corners of the property market.

Through its real assets arm, the world’s largest asset manager is investing £100m for a 75 per cent stake in a joint venture with Audley Group, a retirement village developer.

“We have the benefit of being able to invest in any sector. Historically we’ve targeted offices, but we’ve been more active in ‘beds’ recently,” said Thomas Mueller, portfolio manager at BlackRock. 

“We decided to focus on more defensive, income-focused strategies during the pandemic,” he added. The company is looking at purpose-built student accommodation, the build-to-rent sector and senior living, as well as logistics. 

The investment will fund the development of about 1,000 homes, which the companies estimate will have a combined value of about £500m when complete. The first site in the joint venture is a 255-home development in Watford. 

According to Mueller, there are close to 100,000 people aged 65 or older within a 20 minute drive of the site. Just over 200 retirement homes have been built locally in the past five years, he said.

Big investors have been increasing their bets on retirement housing in the UK, drawn by a growing elderly population and a limited supply of retirement homes relative to other developed economies such as the US, Australia and New Zealand.

Last year, Royal London made its first investment in the space with a joint venture with Audley.

Legal and General set up its own “later living business” called Inspired Villages Group in 2017 and has since been developing projects in towns such as Tunbridge Wells in Kent and Caddington in Bedfordshire.

Axa Investment Management acquired its own developer, called Retirement Villages Group, in 2017. Last year, the Axa-backed group said it would develop 30 new sites in the next 10 years in towns and cities across England. 

Goldman Sachs has raised hundreds of millions to invest in the sector, and is a major backer of Riverstone, a retirement developer with a £3bn pipeline.

FORE Partnership, a boutique property investor, is also pouring £300m into the sector, partnering with retirement housing operator Amicala to develop up to 1,000 homes.

“It’s a coming of age for our sector,” said Nick Sanderson, Audley’s chief executive. “We’ve been one of the lone operators in this space for 25 years, funded by private equity up until now. What is happening now is an appreciation of the need, demand and potential size of the market.”

Separately, BlackRock Real Assets is funding the £362m purchase of 3,000 shared-ownership homes by landlord Heylo Housing.

Interest from the asset manager has helped Heylo garner investment from other large players, according to Andrew Géczy, the company’s chief executive.

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