Marinchek said the fund aims to “conservatively align” investment partners with the long-term best interests of residents and their families, and “have more choices for ‘ageing in place’ by managing an integrated suite of assets across the continuum of accommodation and care”. “We’re at an interesting inflection point in market fundamentals, as projected demand for new and more relevant types of senior housing continues to escalate while the supply of existing accommodation faces challenges of obsolescence,” he said. Marinchek attributed the sector’s somewhat tarnished reputation to a pre-GFC influx of new capital, predominantly from investment banks and property developers, at price levels which assumed record-high property growth forecasts.
In some cases, assets were bought without institutional investment-grade due diligence from speculative developers or passive investors, using unsustainably high levels of debt and often assuming unsustainably low budgets for capital expenditure on established assets. This showed a “lack of alignment between investors, lenders, resident consumers and managers,” Marinchek saed, “and has contributed to poor investment performance, brand damage and currently distressed pricing on otherwise attractive assets”. The A-CARES fund would include independent living properties, residential aged care properties, and transitionary or hybrid types of assisted living properties. There would also be a nominal allocation to related seniors’ community infrastructure including medical centre buildings that were close to residential accommodation holdings. About 25 per cent of the portfolio would be spent refurbishing obsolete assets and developing new accommodation to provide more lifestyle choices.