At the moment, we’re forced to make the decision to sell our houses to access it and not be able to go back. So there’s a lot of interesting opportunities for us as a commercial market participant and working with our institution and retail investors to channel capital towards this space.

Amanda White: With that we might flip to Sam or Matina, the insto investors we have with us. Is aged care infrastructure a compelling asset class to you today?

Matina Papathanasiou: Generally our brief from our clients is that they want long term, stable cash flows. And on the face of it you would say that aged care can provide them. The way we’ve tried to approach it is to say what is the risk of an aged care facility? If we invest in an aged care facility where do we get our return from? There doesn’t seem to be a lack of demand.

But then the issue is how do you actually charge someone for providing that service, and how stable is that cash flow stream? I’m not sure how you actually charge.

Deirdre Ashe: There’s two actual assessments. There’s an asset based assessment if they’re coming into residential aged care. We’re required to leave them with two and a half times the single pension rate. And technically we can also charge an accommodation bond up to the value of their assets over the top of that. Out of that at the moment we keep approximately $18,000 which can be deducted over a five year period. And the only earnings that we have is interest on where we invest the bond money. So for the Salvation Army, we’ve been typically concentrating on low socio-economic areas, but with the change in government policy and the need to collect higher accommodation bonds, we’ve probably seen our accommodation bonds quadruple in the last five years, and we’re looking for a greater increase as well.

So that gives us then the money to actually fund high care, because what we charge is prescribed by the Department of Health and Aging. And the only avenue we have of increasing fees, is if we provide a service called Extra Service Placements, and that’s associated with high care. So there isn’t a great deal of avenues to actually increase your funding. A lot of aged care facilities now are looking at co-locating independent living units, so that the income from that can actually cross-subsidise the nursing care side of things.

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