Schroders and Octopus Real Estate's retirement fund defies Covid-19 challenges as it attracts further capital

Schroder Real Estate and Octopus Real Estate are pleased to announce the second close for their UK Retirement Living Fund (“ReLF”) with an additional £40m of investment, taking aggregated equity commitments to date to £140m.

Schroder Real Estate, the property investment arm of the global investment management group, is working with Octopus Real Estate, part of the Octopus Group and a significant investor in healthcare facilities throughout the UK, to invest in the development of new retirement villages.

ReLF’s investment strategy leverages demographic trends and the evolving lifestyles of the baby boomer generation to develop retirement communities in the UK. ReLF partners with the UK’s leading developer operators to deliver retirement communities that provide security and social engagement, high-quality communal leisure, and dining facilities, as well as bespoke care packages if required.

ReLF was launched in partnership with Octopus Real Estate which has a dedicated retirement living team with considerable experience in this specific sector. The Fund has already invested in four new retirement communities.

The closed-end private real estate fund underlines Schroders’ and Octopus Real Estate’s commitment to becoming leading players in the provision of sustainable impact investment strategies beyond mainstream environmental, social and governance initiatives, while delivering attractive risk-adjusted returns.

Robin Hubbard, Head of Real Estate Capital, Schroders, added:

“In an uncertain real estate market where value is hard to find, investors have been attracted to this mid to high-end segment of the UK retirement sector which is highly undersupplied, but underpinned by undeniable structural demand drivers such as demographics, more active and higher quality lifestyle aspirations and probably the wealthiest cohort of retirees that there ever has been or will be.”

“From an impact perspective, downsizing retirees will free up larger family homes and breathe life back into elderly neighbourhoods, while reducing the loneliness of the retirees who will typically lead a mentally and physically fitter life in a retirement community, thereby deferring and/or reducing the healthcare burden on the NHS.”

Kevin Beirne, Director Retirement, Octopus Real Estate, added:

“This second close for the Fund is a confidence boost for the future of retirement communities, which has been resilient in the face of the difficult conditions presented by the pandemic. We have seen the underlying strength of retirement communities and they will likely continue to show real resilience in the future.

“We are delighted to be working alongside Schroders in a rapidly growing sector that will create an impact on both a fund level and a social level. We are working on a strong pipeline and are looking forward to delivering more communities in the coming months and years.”

Schroder Real Estate forms part of Schroders’ private assets business which is a key strategic priority for the firm. This capability includes private equity, infrastructure, microfinance and impact investments, insurance-linked securities and securitised credit and has combined assets under management of £45.3 billion.*

*As of 30 June, 2020