AEGON to launch innovative property fund
AEGON Asset Management is to launch an innovative property fund for investment professionals, which aims to take advantage of the increasing healthcare needs of the UK's ageing population.
The AEGON Target Healthcare Property Unit Trust will provide investors access to a range of healthcare properties, with an emphasis on care homes.
The closed end fund, intends to exploit the UK's growing need for healthcare as its Baby Boomer generation retires and increasing longevity creates the need for specialist care facilities.
The AEGON Target Healthcare Property Unit Trust marks AEGON Asset Management's first announced new property fund launch since the arrival of its leading property team from Aviva Investors in 2008.
The fund will be managed by AEGON Asset Management's property team led by directors Phil Clark, Gerardine Davies and David Wise. Phil Clark and fund manager Anne Copeland have particular experience in the healthcare sector.
The stock selection will focus on future healthcare demand from high quality operators with largely newly built properties. The majority of investment will be in care homes, but the fund may also invest in sub-markets with positive indicators, such as day surgery units, critical care facilities, dementia care and learning difficulty units. Selected properties will be let to tenants with strong balance sheets, on 25-year plus leases with annual rent uplifts.
The fund aims to raise £300m with a maximum of 50% gearing. It already has commitment of £30m from AEGON Asset Management and two third party property specialists. The fund is open to investment professionals with a minimum subscription of £5m and the fund life will be five years (plus three year wind down period). At the fifth anniversary investors will have the opportunity to vote to continue the fund or wind it up. It will have a target internal rate of return of 14%†.
AEGON Asset Management property director Phil Clark says: ‘There is a growing demand for healthcare facilities in the UK as the post Second World War Baby Boomers retire and their healthcare needs increase. Independent figures show that 20% of 70-74 year olds need some form of assistance with daily living, while for the over 90s this increases to more than 70%. The huge demographic shift in the UK population means that by 2031 there will be 2.85million people aged 85 plus as such the demand for healthcare facilities can only increase over the next 20 years.
‘This fund is well placed to benefit from opportunities as the UK's private healthcare market expands.'