Aegon buys first eight care homes for £50m

AEGON Asset Management has bought eight care homes for £50 million and is poised to acquire a further three through a specialist property fund after agreeing a £25m debt package with Royal Bank of Scotland.

Edinburgh-based Aegon is hoping to build its "Healthcare Property Unit Trust" into a 300m fund targeting new-build end-of-life care homes and those serving people with dementia.

Jon Dadswell, head of property development at Aegon Asset Management, said the fund has so far raised 45m of equity from several institutional investors, plus the 25m debt facility from RBS.

He said care homes offered a good alternative property investment as they would be immune from the forthcoming public sector cutbacks.

"For this type of end-of-life care, the government has a statutory obligation to ensure it is in place," Dadswell said. He also pointed out that there was likely to be plenty of growth in the sector given Britain's ageing population.

The care homes bought so far include one in Preswick but the majority are situated in the north of England.

Stuart Heslop, RBS's head of real estate finance in Scotland, said the bank would be keen to extend the 25m debt facility.

"We expect that the 25m will be an initial tranche," he said. "There was appetite among a number of banks to provide funding to that deal."

Despite reports that UK banks are reducing their exposure to the commercial property market, Heslop said RBS agreed three deals towards the end of last year and expects to do a similar number in the first quarter of this year.

Among last year's deals was a 160m refinancing of a fund owned by Scottish Widows Investment Partnership, focused on airport industrial assets. The bank also extended 8m to a developer seeking to build a hotel in Inverness.

Heslop admitted appetite to fund deals had changed substantially since the financial crisis, and banks now paid closer attention to the type and quality of properties in the schemes they lend to.