Rosewell Care Home is situated in a rural setting with stunning views and benefits from being in close proximity to High Littleton village. Bath and Bristol are both experiencing a major undersupply of care homes, meaning Rosewell Care Home can take advantage of the current undersupply. The development will comprise of 50 luxurious, en-suite care studios with high quality fixtures, fittings and communal areas.
When the luxury refurbishment works are done, each property is relaunched with comprehensive regional online/offline marketing campaigns, and operated by an experienced care services business, 5 Star Care Home Management. With their luxurious interiors and premium-level fees, the care communities are clearly positioned as the premier care accommodation within their region, and targeted at self-funding, high net worth individuals and couples who can choose to either lease of buy their care studio.
Rosewell Care Home - Investment Highlights
- Increasing demand for luxury care home accommodation
- 10% rental returns guaranteed for 10 years
- Monthly rental income payments
- Hands free investment, fully managed
- 125 year lease
- 110% buy back guarantee in year 5
- 125% buy back guarantee in year 10
- Extremely high demand within local area
- 24/7 concierge service
The Exit Strategy
Key to the appeal of the Rosewell care home investment is its clearly defined exit strategy, which allows investors to exit the investment with a guaranteed increase of 10% on top of the original unit purchase price. This buy back option is key to the strategy of the developer, and as such they are motivated to purchase the unit back from the investor within a short to medium time frame. This buy back option is exercised by the developer when they sell the unit on to the end user (tenant). A working example of a typical investment is included below:
Investor purchases care home unit for reduced price of £76,965
From exchange of contracts, the investor starts to earn 10% net rental income, paid monthly.
Although the developer can purchase the unit back at any point after exchange of contracts (for a guaranteed 10% increase on the investor's purchase price), we have used an example time frame of 12 months below:
12 months rental income at 10% = £7,696.50 already received
Original purchase price of £76,965 + 10% uplift = £84,661.50
£84,661.50 plus £7,696.50 = £92,358.00 total, a return of 20% in twelve months.
Why Invest In Care Homes?
Residential care home sector is currently worth £15.9 billion and is currently struggling with the high demand of elderly people needing home. For the first time the amount people in the age group over 60 (14 million) is now outnumbering the under 16 age group (11.5 million).
Between 2012-2032 the population of over 85s (the primary users of care homes) is expected to increase by 106%, and the total number of older people with care needs is expected to increase by over 60%. This would therefore mean there is growing demand for modern, fit-for-purpose care homes, funded by private investment.
The UK has an ageing population. The proportion of people aged over 65 has increased over the past 30 years – a trend that is predicted to continue. This trend will place added pressure on the UK’s health care, social care, housing and the economy.
According to the Office for National Statistics (ONS), the UK is at its oldest ever. In mid-2014, there were some 11.4 million people living in the UK aged 65 and over – making up 17.7% of the population, up from 11.1 million the previous year. The ONS predict a quarter of the population will be over the age of 65 by 2044. Furthermore, the number of people aged 75 and over has increased by 89% over the period, now making up 8% of the population.
Rosewell Care Home - FAQ's
Q. Why should I invest in the UK care sector?
A. With the number of elderly people with high care needs expected to increase significantly over the next 20 years, there is growing demand for modern, fit-for-purpose care homes, funded by private investment. Between 2012-32 the population of over 85s (the primary users of care homes) is expected to increase by 106%, and the total number of older people with care needs is expected to increase by over 60%.
Q. What is a care studio?
A. A care studio is a well-proportioned en-suite living space in our refurbished homes, designed to make life easier for the resident and take away the everyday hassles associated with living at home in later life. With interior design by leading care specialists particular attention has been paid to ensuring that safety features are incorporated, and consideration given at all times to the needs of those with mobility issues. Studios are provided fully furnished and ready to occupy, with a selection of colour schemes giving each space an unique look and feel, complemented by high quality furniture, fabrics, prints and accessories. All studios also feature a fridge, plasma TV, WiFi, nurse call system and tablet.
Q. How is the sector performing at present?
A. Homes which concentrate on privately funded residents, mainly in more affluent areas of the UK such as the south-east and south-west of England (where around half of all residents are self-funding) are performing well. Research by Knight Frank identified over a third of care homes assessed generating EBITDARM as a percentage of income in excess of 30%, with 9% generating profit margins of 40% or more. In contrast, poorly performing homes - generally more reliant on local authority funding which has reduced in real terms in recent years - are generating EBITDARM of 10-15%.
Q. How does the investment work?
A. You purchase the 125-year leasehold of a care studio within our care home portfolio, at a discount on its full retail price. We will then lease-back the care studio over 10 years from you for a price equal to 10% of your purchase price per annum. We will also market your care studio for residential sale, and buy-back the care studio for a 10% premium when we have secured a buyer, giving a quick, healthy return on investment.
Q. Why should I invest in refurbished traditional properties rather than new build?
A. Typically, our projects are traditional Victorian period properties that have retained many of their original features and generous proportions, and have operated as care homes for many years. We renovate them to a 5-star luxury standard - typically within a 3-4 month timescale - and relaunch them as luxury homes for fee-paying residents who then buy or lease their care studio, care and support from us. As we are refurbishing well-built, vacant properties we are able to get them back on an operational footing and fee-generating in a fraction of the time of a new build development, usually without lengthy planning applications. There are an estimated 80,000 units in current care home stock that are reaching obsolecence1, so refurbishment opportunities are plentiful.