£400 billion in housing wealth still to unlock from over 60s

A 70% increase in people aged over 65 by 2037 is driving consumer demand for retirement housing. As evidence of the growth potential, Audley Retirement has completed refinancing of its debt facilities to secure an additional £65 million with AIG; while MAREF, the fund created to acquire Audley in December, has raised an extra £30 million from existing investors on top of the £170 million announced in December 2015. This means Audley has a war chest of £600 million to invest in the next five years, from a combination of equity, development income and investment debt.

The new funding will be used to accelerate Audley’s five-year growth plans and secure its path to listing on the stock exchange, according to a company statement. It will be used to accelerate the existing development programme and the acquisition and development of new Audley retirement village sites, including satellite sites close to main villages.

Nick Sanderson, CEO of Audley said, “The older population increasingly recognise the quality of life on offer in the burgeoning retirement village sector in the UK. The market is still a long way behind Australia and US, so there is massive potential for growth. Over 60s in the UK have record levels of housing equity to pay for this new way of living too. Investors are recognising the opportunity. To have raised a further £30 million in just three months from our existing investors is a mark of their confidence in the future prospects. This, coupled with the new credit facility will help us unlock a new wave of development and double in size over the next five years. Already this year we have announced a new village site at Romsey in Hampshire, and the new satellite site in Leamington Spa.”

In March, Audley exchanged contracts on its first satellite site near Audley Binswood in Leamington Spa for approximately £2 million. This falls on the site of former residential care home Homewood, and Audley is now in the process of consultation to develop a planning permission application.

The combination of demographic trends including longevity as well as increased consumer wealth have created strong market conditions for Audley. In total, more than 2,000 new units will be complete within the next five years with turnover forecast to reach £100 million in 2016, having grown more than tenfold between 2009 and 2015, from £4.2m to £42.9m. EBIT will increase from £10m in 2016 to £15m in 2015, and by 50 per cent per annum for the remainder of the business plan.

Audley’s new credit facility with AIG will fund the development of eight villages through a combination of debt capital and sales proceeds.

In addition, Audley has new arrangements with Bank Leumi which has agreed a £27.5 million development facility for Redwood and a £3m term loan for Willicombe Park has been secured.

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