Moorfield weighing future of £400m Audley
News
by
David Hatcher and Amber Rolt
Moorfield Group is to sell a stake in its £400m later living business Audley Group and raise more capital to fuel its growth.
The UK fund manager is expected to appoint Rothschild imminently to raise around £250m of fresh equity as well as explore the exit of some existing investors in the platform.
Audley typically utilises debt at a loan-to-value ratio of just over 30% which will mean that once the additional equity is secured the company will have more than £350m of fresh powder to deploy into the market.
Moorfield Group is to sell a stake in its £400m later living business Audley Group and raise more capital to fuel its growth.
The UK fund manager is expected to appoint Rothschild imminently to raise around £250m of fresh equity as well as explore the exit of some existing investors in the platform.
Audley typically utilises debt at a loan-to-value ratio of just over 30% which will mean that once the additional equity is secured the company will have more than £350m of fresh powder to deploy into the market.
This is in addition to a £125m, five-year debt facility it secured last year with HSBC and Bank Leumi.
The business includes a portfolio of 19 retirement villages across the country which when fully developed will include at least 2,000 homes and flats. Audley typically buys sites, develops and operates them and then sells the units on 125 year leases with access to facilities and flexible care if needed by the occupant.
The company focuses on luxury retirement villages which it operates under the brand Audley Villages. In addition, in 2016 Audley launched Mayfield Villages to tackle the demand for mid-market retirement villages which has a pipeline of a further 500 homes.
Moorfield had considered an IPO for the business and a complete sale but has ultimately decided that it wants to be involved in Audley longer term because it plays to the demographic fundamentals of an ageing population.
Audley was initially set up using equity from Moorfield’s MREF II fund in 2009. MREF II was due to liquidate in 2015 at which point its only remaining investment was its investment in Audley.
As Moorfield wanted to continue with the development of the business it set up a special purpose vehicle, the Moorfield Audley Real Estate Fund into which around half of the investors in MREF II rolled into with the remainder bought out by a Danish pension fund.
MAREF was set up to have a six year life and target opportunistic returns of 15-20% and an equity multiple of 1.5. It subsequently raised a further £85m to expand the business and its growth drew pre-emptive bids, leading to Moorfield considering its options around Audley.
Some investors wish to remain in the structure for the duration initially envisaged whilst others, having seen the growth in interest in the sector, are tempted to take cash off the table and secure a healthy return.
The directors of Moorfield, including chief executive Marc Gilbard, are investors in Audley.
Nick Sanderson, chief executive of Audley Group, said: “Audley Group has led the evolution of retirement living, a market rapidly scaling due to demographic trends and recognition of the urgent need for high quality property for the older population.
“Against this backdrop, we have been through a series of successful rounds of fundraising, most recently with HSBC and Bank Leumi to add to the equity raised by the Moorfield Audley Real Estate Fund, and in securing our first site of the year we now have 19 sites across the Audley Group.
“Recent acquisitions in the sector also demonstrate strong investor sentiment across the wider market. The business is now in a position to build on its proven model and capitalise on these conditions by securing additional capital. For this process, we will take on an adviser and will announce the appointment in due course.”
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