Don't invest unless you are prepared to lose all the money you invest. These are high-risk investments and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

Don't invest unless you are prepared to lose all the money you invest. These are high-risk investments and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

Care Homes

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Specialist team

10 investment professionals.

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£32.5m

£32.5m raised through 9 bonds since 2016.

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£328m

over £328m invested by the team from all Downing funds since 2012.

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Track record

39 investments made and 22 exited since inception.

Investing in care

As demand for long-term care in the UK is projected to increase, this sector offers attractive, asset-backed investment opportunities.   

An ageing demographic, a wealthier older population, long-term demand and robust property performance are several key drivers of the care home industry that make it an attractive industry to invest in.  

Downing’s specialist Healthcare Development Capital team deploys funds raised from both retail and institutional investors, across a range of products and structures. The team now has a solid 10-year track record, with over £200 million deployed across 32 investments and 15 successful exits.   

The team has a time-tested approach and targets attractive returns with strong downside protection. 

Note that some care bonds are restricted to High Net Worth Individuals, Sophisticated and Professional investors only.

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What do I need to know?

  • Key drivers of the care home industry

    1. Ageing demographic 

    In more developed and affluent countries the number of elderly people and retirees has been growing steadily and is set to continue. The UK is no exception. Between 1980 and 2020, life expectancy has increased by over nine years for males and over six years for females, reaching 79 years and 82.9 years respectively.1 However, healthy-life expectancy has not seen the same level of improvement. ONS data puts healthy-life expectancy at 62.8 years for males and 63.6 years forfemales. 

    The percentage of pensioners to the rest of the population has been increasing steadily since the 1980s. The Office for National Statistics projected that in 50 years’ time there is going to be an additional 7.5 million people aged 65 years and over in the UK - a population roughly the size of present-day London.2 

    2. Wealthier ageing population  

    There is a growing wealth divide between generations. Older generations are growing richer while younger ones are becoming less wealthy. 

    Baby boomers, often known as the wealthiest generation, have reached this position through ‘soaring property prices, inheritance and the prevalence of final salary pension schemes’. 4 While the total wealth in the UK has increased on average by 51%, individuals between 25 and 54 have only seen their wealth increase by 9%, which is only a tenth of the increase enjoyed by the over 65s. 

    Through investing in elderly care homes, our product is automatically targeting the wealthier ageing population. Not only is there a rising need for care homes in older generations, but they can also afford them.  

    3. Long-term demand  

    On average in the UK, there is a relatively large disparity between people’s good health and their life expectancy, which creates a huge demand for care in a person’s later years. This, combined with the wealth concentration in the UK’s ageing population, means there is an increasing demand for premium private care. It is forecast that an additional 350,000 people will need elderly care by 2050, with a shortfall of 58,000 beds predicted by 2035. This extreme excess demand for care homes needs to be met with an equal supply.5  

    4. Robust property performance  

    Occupancy rates in care homes are among the highest of any property class, typically close to 90% with a constant stream of demand for beds. Private operators typically have pre-tax profit margins of 25- 35%. This is supported by increasing fee rates, high occupancy and an emerging number of efficiently run independent operators.6 

    Note that some care bonds are restricted to High Net Worth Individuals, Sophisticated and Professional investors only. Once you log in to your account, you will be able to see those bonds that are available to you.

     

    1 ONS, Health and life expectancies, UK, (2018-2020), January 2022.  

    2 ONS, Overview of the UK population, January 2021.  

    3 The Telegraph, May 2019.  

    4 Financial Times, one in five UK baby boomers are millionaires, January 2019.  

    5 Care Home Professional, Knight Frank predicts 30% rise in care home costs in 2022, Jan 2022  

    6 Knight Frank, European Healthcare 2020. 

  • Some care bonds are classed as speculative illiquid securities

    The Financial Conduct Authority (FCA) has restricted the promotion of some bonds to restricted investors from 1 January 2020.  

    These rules apply only to what the FCA term 'speculative illiquid securities' (SIS). This basically means unlisted debentures or preference shares issued by a company that then uses the funds raised to lend to or invest in other companies or to purchase or develop property that is not for its own use. 

    Some of our care bonds are classed as speculative illiquid securities and will therefore be restricted to High Net Worth, Sophisticated and Professional Investor only. Once you log in to your account, you will be able to see those bonds that are available to you.

    You can find out more about the FCA ruling here.  

  • Meet the team

    The team is led by Mark Gross. Mark is a Partner at Downing LLP. With over 18 years of private equity experience, he has originated, transacted and managed over £1 billion of equity and debt capital. Since joining Downing in June 2014, Mark has worked across a number of sectors and has been spearheading the expansion of our healthcare activities and the wider development capital team. Consequently, the team have been recognised as Private Equity Investor of the Year at the HealthInvestor Awards 2020. 

    He has experience of investing in private and quoted companies with knowledge of operating businesses and real estate investment. Mark joined Downing from the UK mid-market private equity firm, Caird Capital LLP. Prior to that he performed principal investment and leveraged finance roles at Bank of Scotland. In 2021, Mark was recognised in HealthInvestor’s Power Fifty as one of the industry’s 50 most effective, inspiring and influential leaders across the health and social care market. 

  • What are the risks?

    As with all investments, investing in a care home bond has risks that you should be aware of and comfortable with before you invest.  

    Capital is at risk – A company that issued a bond may not be able to repay the bond and / or interest at the end of the term. Repayment of the bond and interest can be dependent on the performance of a care home, the construction of a development site and subsequent operation and sale or refinancing being available to the company. Should any construction not complete or a home perform poorly it may not attract buyers or not provide sufficient income to allow for the company to refinance and exit any bond. 

    We recommended you spread your funds across a number of investments to diversify risk and not place too much capital in a single investment. 

    These bonds can be higher risk than some other Downing bonds as they are often secured on one or a limited number of asset.  

    Development and construction risk – There is a risk that development works could overrun on cost and / or time. Should this occur it could impact the borrower’s ability to repay any bond. 

    The Financial Services Compensation Scheme (FSCS) for deposits does not apply to Downing Bonds. There may be circumstances in which investors can claim up to £85,000 of compensation where Downing LLP is unable or unlikely to honour legally enforceable obligations against it (e.g. claims for fraud or misrepresentation). However, investors will not be able to claim under the FSCS simply because a bond fails to repay capital or pay interest. 

    For a full list of risks please see here. 

We're here to help

To see what bonds are currently on offer please log in to your account, or if you are not yet a member of Downing Crowd you can sign up here

If you need any help or more information you can email us at crowdfunding@downing.co.uk, use the chat function or give us a call on 020 7416 7780.