The report, UK Alternatives Investment Index: H1 2019, provides an overview of current yield trends on prime and secondary investments across various subsectors. The report finds that the average yield on prime investments across UK alternatives, as a whole, ranged from 3.5% to 7.5%, with the care sector demonstrating yields of 3.5% to 5% for super-prime/prime and 5% to 7.5% for secondary investments.
Christie & Co’s report highlights that the strongest yields are attributed to high demand, particularly from institutional investors, for a limited supply of super-prime assets in the market, which is driving record yield compression of below 4%. Prime and secondary assets are also very attractive, Christie & Co notes, with considerable activity in these markets with increasing demand for new builds and a wider range of operators taking leases.
A key incentive for investors to take on leases is the inclusion of step-in rights agreements and full visibility of trading information to mitigate risk, which Christie & Co has seen with a recent uptick in demand for performance monitoring services.
As a needs-based sector which only looks to grow, with an increasing base of service users and a population with an increasing range of health conditions, Christie & Co finds that elderly care will continue to be attractive to investors and experience strong yields.
Michael Hodges, Managing Director – Care Consultancy at Christie & Co comments, “The elderly care market presents an excellent opportunity for investors and, over the course of the last 18 months, we have seen a notable increase in activity and interest from a wide variety of funds, attracted by the strong demand drivers which underpin the sector.”