For future retirement village investments, the fund would aim to co-invest with the operators of villages to achieve an alignment of interests. One way to achieve this is to ensure that fund managers have financial “skin in the game” to ensure decisions affect investors and the fund manager in a similar way. Sicilia says time horizons for these investments are very, very long: between 20 and 30 years, and the assets are highly illiquid, buy-and-hold deals. The fund’s first investment in retirement villages began with $100 million in January 2008 – believed to be in Retirement Villages Group – with a further commitment since then, but Sicilia will not give the full amount, due to “commercial and related issues”. Investment in retirement villages is part of the fund’s direct property allocation, whereas campus accommodation is part of its infrastructure asset class, “as the nature of the cash-flows generated differs”, he says. While longevity bonds are still in the too-hard basket, Sicilia says a collective of funds can provide a “sufficiently large asset and member base in which to pool the risks associated with the provision of longevity bonds”. Funds are natural providers of this type of product, he says, and this would also be consistent with the concept of providing financial services to members from cradleto- grave.

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