Where to invest: elderly or specialist care?
The recent frenzy of activity in the elderly care home sector, driven in the main by larger private equity funds, has developed care homes into a mainstream investment asset. The sector is readily understood, comprising as it does solid property assets, most places supported if not wholly financed by State funding, and driven by demographics of an increasingly ageing population. The 2001 census showed nearly 4.5 million people over 75 and 5.5 million between 65 and 75. It is facts like these that have understandably made the sector an attractive investment proposition. A closer look leads us to believe that future investment may require some caution. Elderly care home businesses are now attracting all time high prices and several factors indicate that getting into this sector at the current time is a risky proposition. First, one needs to be certain that acquisition multiples in the sector will hold up over the course of the investment period. Some argue that the recent high prices are driven by the banks’