October 31, 2018 Finance

Octopus Healthcare Fund celebrates one-year anniversary with £187m raised from institutional investors

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Fundraise comes on the back of increased demand for healthcare real estate assets from pension funds, insurance funds and multi-managers

Octopus Healthcare, a leading specialist UK healthcare real estate investor, recently announced that it had successfully raised £187m into its UK care home fund on the back of growing demand from institutional investors for the asset class.

The Octopus Healthcare Fund (the Fund) saw investment from both new and existing institutional investors, as it celebrated its first year as an “evergreen” fund.

Launched in 2010, the Fund invests in modern, purpose-built, elderly care homes in the UK. It converted to an open-ended structure in 2017 to capture the opportunity to scale a sector-leading, unlisted real estate fund, following demand from institutional investors to increase their allocation to healthcare real estate.

Ben Penaliggon, Director at Octopus Healthcare, said: “With the population of the over 85’s expected to grow by 64% to 2.6 million by 2031, the UK is facing a severe shortage of suitable housing for the elderly. There is demand for modern, high-quality care homes in the UK, yet supply is limited. There is a huge opportunity for institutional investors to invest in this growing market and provide the capital needed to create suitable accommodation for the ageing population, while benefiting from the long term, inflation-linked income that the sector offers.

“The Octopus Healthcare Fund is driven by these changing demographic trends and a desire to create high-quality accommodation for the elderly. We are a specialist manager and we have the benefit of an in-house development team that provides a proprietary pipeline of deals.”

Hiti Singh, Head of Institutional Investment at Octopus, said: “Institutional investors are increasingly looking for alternative asset classes to expand or diversify their portfolios. Healthcare real estate offers a compelling combination of attractive fundamentals driven by an ageing population and long-term income, together with the social benefit of providing first class and modern accommodation for elderly people needing care”.

The team behind the Fund has a 13-year track record investing in healthcare real estate. Octopus Healthcare has secured over £230m of transactions into the UK elderly care home sector over the last 12 months, through a combination of standing investments, forward fundings and forward commitment acquisitions. In addition to UK care homes, the Fund also has the ability to invest in specialist healthcare facilities.

As well as an in-house development team, Octopus Healthcare also has a clinical assurance team which provides its tenants with access to the latest regulatory information and best practices.

Octopus Group currently manages more than £2.3bn of institutional funds across the group.

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