DIY Investor Magazine
| August 2017
17
Now for the good news; governments don’t go bust;
Ireland, Iceland, Portugal had to be helped but survived;
Greece is still there, so is Argentina. The moral, look for
investments where there is government involvement.
Perhaps not direct investment into government bonds,
but something where the lease / off-take agreement has
government ‘support’.
There are two areas I wish to highlight; social housing,
and care homes. Both opportunities are, in many ways,
a sad indictment on the society we live in: people
financially and physically unable to house and look after
themselves; the other the result of over-stretched under-
funded health budgets and unfavorable demographics.
People are living longer, and families are smaller,
meaning fewer people are working, supporting more
dependents, and contributing less tax revenues to
governments already running budget deficits.
I have written about social housing before, see
DIY Investor, 21 June 2017, today we
will focus on opportunities investing in Irish care homes.
‘According to a report commissioned by a private
nursing homes group there aren’t enough beds to meet
demand and it is only going to get worse.
Tadgh Daly, CEO of Nursing Homes Ireland, says
there will be a shortfall in nursing home beds if the
Government does not form an action plan and invest in
more infrastructure.
Speaking on
he said that there
is a ‘dramatically ageing population’ and that in the
next
seven years, the population over the age of 85 is to
grow by 46%.
Source:
In response to this the Irish government has created The
Nursing Homes Support Scheme (‘NHSS’), also known
as the ‘Fair Deal’ scheme. This is a scheme of financial
support for people who need long term residential care
services. Under the Nursing Homes Support Scheme,
eligible nursing home residents will make a contribution
towards the cost of their care and the Irish State will pay
the balance.
The NHSS is currently administered by the Health
Service Executive (‘HSE’) in line with the Nursing Homes
Support Scheme Act 2009 and within the resources
made available for the NHSS.
The scheme covers long-term nursing home care only.
The Act defines ‘long-term residential care services’
as maintenance, health and personal care services.
The Department of Health has further clarified that this
includes: bed and board, nursing and personal care
appropriate to the level of care needs of the person,
laundry service, and basic aids and appliances
necessary to assist a person with the activities of daily
living.
There is a set level of funding for the scheme each year,
so there may be situations where a person’s name must
go onto a waiting list until funding becomes available.
The existing care homes have, in the main, been found
to be inadequate, and certainly not available in sufficient
quantity to meet expected demand. We are beginning
to see a number of developers seeking funding,
typically a 100-bed home seems to cost around €10m
to build, but once up and running, and successfully
included within the Fair Deal, capital values rise based
on the government agency support for the care an
accommodation fees.
From an investor’s perspective, there is the opportunity
for an investment that is:
•
secured on property,
•
with the income supported by a
government agency, and
•
yields of circa 6.5%.
And, finally, its September next week, and on the 6th
I leave for 2 weeks holiday in Italy; be afraid, be very
afraid…………..
* Aragonese Consulting Ltd (‘ACL’) is a specialist capital
markets consultancy
IT’S GOING TO BE THE WORST IN YOUR LIFETIME — MY
LIFETIME TOO. BE WORRIED
