Octopus Healthcare has completed a record deal valued at over £60 million with New Care, part of McGoff Group, to acquire four new care homes incorporating c.300 future-proofed beds across the Midlands and North West regions. The value of the deal breaks the previous record for the growing Octopus Healthcare Fund and signals the move towards long-term partnerships being the model of choice for future investment in care homes. New Care were supported in completing the deal using expertise from the Knight Frank Healthcare advisory team.
Two assets in Nottingham and in Chester will immediately be leased to New Care who will continue as the operator. A further two properties located in Formby and Bramhall will be acquired by the Octopus Healthcare Fund at practical completion. The Formby development will be completed in Spring 2019, with Bramhall being delivered towards the end of 2019, both developments being delivered by McGoff Construction.
The properties have been developed to the highest standards of care home design and construction, with exceptional levels of fit-out that represent boutique hotel styling with carefully chosen interiors. The care homes will change the face of elderly care in their markets.
Freddie Richards, Investment Director at Octopus Healthcare, said: “The Octopus Healthcare Fund has had a busy twelve months, having committed £198m into UK care homes since the fund was set up a year ago. This latest deal is particularly exciting as it demonstrates our partnership investment strategy in full swing. New Care’s experience in both care home development and care delivery is enviable and they are very straightforward to work with; they’re our kind of people. We want to invest in exceptional healthcare facilities, like these, that we would choose for our loved ones. For us it’s a very personal commitment.”
Julian Evans, Head of Healthcare at Knight Frank, said: “New Care are the rising stars of the UK care home arena, operating exceptionally high-quality assets. Their partnership with Octopus Healthcare provides the perfect platform to enable further growth.”
Dominic Kay, Chairman of New Care, said: “What makes New Care so unique is our excellent relationship with McGoff Construction, as this allows us to design and build bespoke care facilities that feature the very best specification and interior design and offer exceptional care services. In a similar way, we have established strong working relationships with both Knight Frank and Octopus Healthcare, both of which are commercial, pragmatic and a pleasure to deal with.”
The UK is currently suffering a care crisis as care homes continue to close due to the continued impact of the National Living Wage on an already constrained labour market and ongoing staffing challenges including an acute shortage of qualified nurses. In addition, many buildings are not fit for purpose and there is insufficient funding available for the refurbishment of existing care homes. Combined with building material inflation costs this has served to restrain new care home development.
Knight Frank predicts that the UK requires in excess of £15 billion to upgrade existing beds in order to future-proof the industry, and that approximately 6,500 care homes are at risk of closure over the next 5 years, which equates to 140,000 beds.