AEW UK Real Return Fund increases focus on the social care sector


The AEW UK Real Return Fund is pleased to announce the purchase of Hestia House, a residential accommodation block in Birmingham, for £1.9m. The acquisition is the latest in a number of transactions the fund has undertaken in the social care sector.


Hestia House comprises 23 self-contained rooms and studios and is let on a 20-year lease to Spring Housing Association. The 11,400 sq ft property is located on Old Walsall Road in the residential area of Hamstead, Birmingham and benefits from its close proximity to the local train station. The building is used to provide supported housing for young people with a variety of needs. The purchase of the building equates to a net initial yield of 7.3%. Income from the property is linked to RPI, collared at 1% and capped at 5%.


This follows a number of social and care home acquisitions in 2017. The fund acquired a supported living block in Bolton for £2.8m in July 2017. The property comprises 27 two-bed apartments and are let to My Space Housing Solutions and provide support to vulnerable adults with a range of needs such as mental health issues and learning disabilities. Elsewhere, the fund completed the acquisition of two Leicester care home sites in November 2017 for £11.7m. The sites comprise a total of five properties and are let to the care services provider Prime Life.


Ian Mason, Portfolio Manager at UK Real Return Fund, commented: “We continue to diversify the fund and have made a particular focus on increasing exposure to the social housing sector, in areas where there is a need, anywhere in the UK. In the last quarter of 2017 we increased our weighting to care homes and supported living by 14%. We know that the provision of modern quality facilities for healthcare, affordable housing, assisted living etc. all lie at the heart of local authority communities, but local projects might not necessarily have the scale to attract the major capital providers. It is often suggested that Local Authority pension schemes could fund such projects, although this presents potential conflicts where the investor and operator could be part of the same entity. However, opportunities as small as £2m are ideal for this Fund as it looks to build a diversified portfolio of this type of social infrastructure, as a significant part of the strategy”.



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