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- April 1, 2018: Vol. 12, Number 4

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UK pension funds to increase allocations to care homes

by Marek Handzel and Andrea Zander

UK pension funds are increasingly diversifying their real estate portfolios by moving into the healthcare sector, as they remain under pressure to match their liabilities against long-dated income.

In its Healthcare Capital Markets — 2018 report, Knight Frank has outlined how this will translate into pension money supporting the development of new care homes in the UK, which suffers from a chronic undersupply of healthcare accommodation for the elderly.

The company’s consultancy division has said that fixed-income deals will dominate care home provision in the short– to medium–term, with a surge in propco [property company] transactions. “We will subsequently witness more companies splitting their models into propcos and opcos [operating companies],” says Knight Frank.

“This will harden if a few talked about opco sales at healthy multipliers gain traction. Opco values are tangible but the UK still awaits a pure opco to transact and set a prec

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