ICG-Longbow backs UK retirement housing with £200m loan

The alternative lender sees strong demand for senior living facilities due to rapidly aging population.

A shortage of retirement accommodation for the rapidly aging UK population has encouraged ICG-Longbow to write a £200 million (€222 million) refinancing facility for high-end bungalow developer Royale.

The five-year facility, with a loan-to-value ratio of 80 percent, has enabled Royale, which specialises in permanent homes for the over-50s, to consolidate loans from 11 borrowers into one facility. The move will allow it to “institutionalise” the business, said Royale’s director Robert Bull.

The financing backs a sector with “significant” potential in the UK due to the underlying demographic, which is due to grow at twice the rate of the wider population over the next 10 years, argued Kevin Crowley, director at ICG Longbow.

“The need for supply of affordable retirement accommodation in the UK for the over-50s, which is the country’s fastest growing part of the population, gives us the conviction this sector will perform,” Crowley explained to Real Estate Capital, adding that, at this point of the cycle, it is sensible for a lender to back assets supported by demographic trends.

Meanwhile, older people are getting wealthier. JLL estimates that almost 80 percent of over-65s in the UK could be classified as mid- to high-affluence by 2025, largely based on house-price wealth. At present, this population segment has as much as £1 trillion of combined housing equity. This key component of wealth means the older population can pay for retirement housing.

Royale develops luxury bungalow accommodation set within secure gated communities targeted at the over-50s. Each location has a host of amenities including indoor and outdoor pools, club houses, gyms and saunas. There are more than 30 locations, mostly situated in Southern England such as Herne Bay, the New Forest, and Christchurch Marina and Ringwood.