Retirement development home provider PegasusLife is to provide rental accommodation, in a move which may herald the creation of a new asset class.
The company is the first major name to move into the rental retirement market in the UK. It is anticipated to mirror the evolution of the private rented sector in the residential market.
Other operators in the sector, such as McCarthy and Stone and Audley, do not currently offer a rental product and focus on private sale, although other major operators are understood to be considering the move.
Chief executive Howard Phillips said PegasusLife, which targets the mid-to-high end of the market, is looking at widening its previous strategy of selling most homes off-plan.
The first scheme to trial rental homes “pepper-potted across the site” will be Steepleton in Tetbury, Gloucestershire,
where 113 Cotswold farmstead flats are due to be completed in August 2017. There is also potential on a site in Portishead, Somerset.
Phillips said: “If successful, we have another site we might deliver as a build-to-rent scheme. Build-to-rent as a proposition is something we are actively looking at.”
Its site in Sutton Coldfield, West Midlands, capable of providing between 200 and 250 flats could also be offered as a combination of sale and rent.
Retirement operators will be hoping to mirror the success of the wider build-to-rent sector, which has attracted billions of pounds in institutional funding looking for long-term income.
Dan Batterton, fund manager of build-to-rent at LGIM Real Assets, said: “Retirement rental homes, although still relatively unheard of in the UK, represent a natural maturing of the residential sector, where different segments are being more proactively targeted from students to young professionals to families and finally to retirement.”
Ben Rosewall, director of healthcare advisory at CBRE, added: “We know a number of the major operators are considering it. It has long been the view that most of the people at the upper end want to own their own home, but I think some people are now thinking, ‘well let’s give it a try’.”
PegasusLife was backed with £300m of investment from Oaktree Capital in 2013 and has a £455m debt facility from AIG. It has 32 sites with a combined GDV of £1.2bn and is looking for 20 more.
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