Morgan Stanley Real Estate has launched a $1.1bn (£541.9m) joint venture to operate retirement homes in the UK.
The US investment bank’s property arm has teamed up with care home operator Sunrise Senior Living to make its first UK investment in the asset class.
Morgan Stanley will acquire 15 “assisted living” communities, totalling 1,244 units, which are all either developed or under development by Sunrise.
It takes over the funding commitments from Prudential subsidiary Pramerica Real Estate Investors less than eight months after Pramerica raised the capital.
The bank said it would consider buying further sites if the new venture performed well.
“The care home business is growing ahead of inflation and that is likely to continue in the short to medium term,” said Toby Phelps, head of UK investing at Morgan Stanley. “We see this asset class becoming more acceptable as investors understand the relative risks and rewards of it.
“It is still a new asset class in the UK. As such, we think we have an edge on pricing and, therefore, returns.”
Morgan Stanley will own 90% of the new venture, with the balance to be retained by Sunrise, which will operate the assisted living homes under 30-year management agreements.
