Asset management
We work with our tenants to identify and implement projects that benefit the tenant, residents and our shareholders.
How we add value
Active asset management helps us to increase our income and grow net asset values over the medium term. The returns for our shareholders are usually better than investing in standing assets, while taking only limited risk.
Asset management video
Asset management often involves extending a home to add new beds. As well as increasing capacity, this may enable the tenant to command higher fees by offering new services, such as providing care for people living with dementia.
Asset management can also mean improving the existing building or enhancing the communal space, to ensure the home offers a consistently high standard to all residents.
A tenant-led approach
Our tenants are best placed to understand the demand for beds and the services their residents need. We therefore require our asset management projects to be tenant led, with the tenant coming to us with a specific plan for improving the asset and filling any additional space. We look for reasons to say yes to these proposals, rather than no. Once we have agreed to a scheme, the framework agreement with the tenant gives us the option to fund the works.
However, we will not fund speculative development, which is explicitly excluded by our investment policy on page 126 of our Annual Report 2023.
Generating returns from asset management
We appoint our own quantity surveyor to oversee the work and make sure it is in line with the plans we approved. We then pay the contractors’ fees as they fall due and accrue our return on what we fund. On reaching practical completion, we turn that accrual into a rental increase. This generates a very attractive return for our shareholders.
The risks associated with asset management are limited. We only look to enhance 5% to 10% of the portfolio at any one time and the marginal cost of adding rooms can be relatively low, given that we already own the land and the supporting infrastructure such as offices, kitchens and laundries, will already be in place.