Broadwick Capital blog

Is a rate rise really the answer…

ds@broadwood.capital (Dan Smith, Chief Executive Officer) — Tue, 29 Sep 2026 13:10:13 GMT

The arcane world of the energy market has its own language where terms such as crack spreads, spark spreads and time spreads are all part of the vernacular. I was intrigued to see the first of these mentioned in the Bank of England’s minutes of last week’s Monetary Policy Committee and curious to know why and how this might affect UK interest rates. As many readers will know, it isn't just the oil price that drives the price at the pump, but also the margin earned by refiners turning that oil into petrol and diesel. A wider crack spread means refined fuel is scarce relative to crude, adding to the pump price on top of the cost of the oil itself. Crucially, a squeeze in refining capacity takes longer to clear than a shortage of oil.

Central banks tend to look through one-off energy price spikes. What clearly concerns our Monetary Policy Committee is that this squeeze lasts long enough to feed into wages and wider prices and the minutes show that the Committee doesn't intend to wait too long for evidence of these before acting. It's only one piece of an obviously multi-dimensional puzzle, but as the graph above shows, the market is now pricing in around four quarter-point rises in Bank Rate by the middle of next year.

As I discussed in a post earlier this year, I continue to question whether monetary policy is the best tool to respond to the myriad economic challenges we face. The MPC’s minutes show that of the 1.1% overshoot in inflation, 0.7% is attributable to increases in energy prices, mainly prices at the petrol pump. Interest rate hikes won’t add anything to refining capacity but will instead hit those sensitive to interest rates hardest – those with mortgages and other loans. UK growth has not been stellar over recent years with the Bank of England unable to cut rates further in the face of ongoing inflation pressures and there’s a risk now that the Bank sacrifices the real economy on the altar of the market’s interest rate expectations. These expectations are already flowing into mortgage rates now back at levels last seen in October 2023. This won’t help a struggling residential market burdened by low transaction volumes and high levels of inventory - they say there is a housing shortage, but there’s plenty out there to buy.

The OECD’s Interim Economic Outlook report published on Wednesday suggested that the UK’s Bank Rate is already high enough to contain inflation with limited risks of second-round effects from energy costs. Personally, I’d prefer our government to assume some of the responsibility here and to take tighter control of its own spending which would ease pressure on demand and on gilt markets. This would then give the Bank room to hold rather than hike and help to bring down the UK's cost of borrowing and even possibly to get certain sectors such as housebuilding moving. Perhaps though I’d be better off spending my time figuring out what spark and time spreads are instead…

When it’s your own family, you see social care differently...

ds@broadwood.capital (Dan Smith, Chief Executive Officer) — Tue, 29 Sep 2026 12:57:26 GMT

You could be forgiven for thinking that Andy Burnham and I have little in common. I certainly cut the better figure in a black t-shirt and jacket, his politics sit some way to the left of mine, and I'm definitely no Everton fan.

So I was sorry to hear that his father Roy died this week in a care home after years with Alzheimer's. The prime minister has been open about what it took his family to get his dad the care he needed and how this experience shaped his view of social care in the UK. As he said during his speech in July on social care, when someone in your family is receiving care, you look at everything through new eyes.

I too have experience of the care home sector and from three different perspectives. Professionally I have been involved in arranging and providing finance to get them built for over a decade; my mother has spent the past 3 years in a wonderful private care home near where I live and most recently over the summer I helped my elderly uncle move from his own home via hospital to a private care home.

My uncle’s experience of the social care system coincided with the prime minister’s first major policy announcement on social care – aptly enough on how he was planning to drive reform. My uncle’s journey was a textbook case of exactly what the reforms are meant to prevent: limited help available at the point of crisis, with the NHS an open-ended stop-gap.

My uncle had been living independently alone at home despite ill health and dementia for several years until June this year. He was fortunate to have a strong support network, with four visits a day from a local care agency supplemented by support of friends and family, but as his dementia progressed and his health deteriorated, it became clear that he could no longer stay at home. So he was admitted to hospital where he spent around two weeks and where the staff and care were both outstanding. The well documented strain on the NHS was, however, all too clear. He experienced a lengthy bottleneck in A&E of over 24 hours and once admitted, scans and tests took an age to get done, with his slots frequently cancelled or deferred. A disjointed system of record keeping and communication between departments ensured that any progress through the system was slow.

As the fortnight progressed it became clear that my uncle would not be returning home and I began to discuss local authority care home options with the hospital team. While perfectly feasible in principle, the team told me it could take weeks or months to navigate the system and find a place, during which time my uncle would have to remain in hospital.

A protracted hospital stay clearly wasn’t going to be good for his quality of life – to say nothing of the cost to the NHS of keeping him in a bed. A senior nurse advised me that I should look to get my uncle out of hospital as soon as possible as that would be best for his health. Our only option at such short notice was to find him private care and my uncle was in the fortunate position of being able to afford the expense. We found a place in a recently opened home just a few miles from where he had lived and all the arrangements were made to move him in. Sadly, he died there three weeks later in comfort and dignity, a long life well lived.

Andy Burnham’s reforms are ambitious and aim to treat social care as the support that is integrated into the NHS with an emphasis firmly on the home-and-community end: helping people live at home as independently as possible, for as long as possible, with co-ordinated support that reduces reliance on both hospitals and care homes. From the perspective of social care workers, the aspiration is clearly to build training and progression routes within the care sector to gain parity with staff in the NHS. Social care does not live in its own silo and the health service cannot be restored while this is left as it is.

From what I witnessed over the summer, there is a huge gulf between the service, experience and journey available under the NHS and that under the private system. Quite how our country goes about bridging that gap in any way at all without hiking tax rates (and without keeping the private sector involved) will be an interesting one to watch – all the more so if the PM has to dangle the prospect of a tax rise before the voters shortly before a general election… After countless failed attempts at reform, let’s hope his ambition is equal to delivering the change that the social care sector needs. That’s where Andy Burnham and I do agree: his dad and my uncle deserved better than the system we have today.

Broadwood-funded Uxbridge care home reaches completion

Andy MacLean, Lending Associate — Tue, 29 Sep 2026 12:27:55 GMT

Broadwood Later Living Sustainable Construction Finance (LLSCF) Fund is pleased to announce that the new 81-bed care home developed by Simply UK in Uxbridge has reached practical completion, been registered with CQC and opened their doors to residents.

Broadwood provided the development finance for the purpose-built home, which will add modern, high-quality care accommodation to the local area.

The completion marks another important milestone for the Broadwood LLSCF portfolio and reflects the Fund's commitment to supporting high-quality, sustainable later living developments across the UK.

Delivering High-Quality Care Infrastructure

The completed scheme provides a modern, welcoming care environment designed around the needs of residents and the team that will care for them.

Key features include:

- 81 bedrooms within a purpose-built care home

- A future-proofed design to support evolving care needs

- A well-connected Uxbridge location, adding modern care capacity in the West London borough

The home will expand the choice of modern care accommodation available locally and provide a high-quality setting suited to contemporary care delivery.

Strong Project Delivery

The scheme was developed by Simply alongside an experienced professional team, with a clear focus on quality throughout the design and construction process.

This milestone owes much to the ongoing collaborative relationship between Simply, Broadwood and the project team.

Designed with Sustainability in Mind

Sustainability has been an important consideration in the scheme's design and delivery, aligning closely with the investment strategy of the Broadwood LLSCF.

The design places emphasis on:

Energy efficiency in operation
Modern building systems suited to long-term care use
A durable, future-proofed asset designed for the needs of residents and staff

This completion highlights Broadwood's continued commitment to funding high-quality, sustainable care infrastructure and supporting the delivery of much-needed later living accommodation.

Why Broadwood Capital and the SEND Sector?

James Tarry, Chief Investment Officer — Wed, 08 Jul 2026 09:26:48 GMT

The SEND sector has been much discussed over recent months and the UK Government set out its aims to reform the SEND system in a white paper published in February. Concerns are increasing that the system is not delivering the support that children and young people with SEND need and that the system is coming under increasing financial and operational strain. Every year since 2014, the number of children in England holding an Education, Health and Care Plan has climbed, now standing at 638,700 — and state-funded specialist places simply haven't kept pace. Local authorities are under greater financial pressure, families are left waiting, and the gap between demand and supply keeps widening.

While the UK Government’s proposals are a starting point to address the system’s problems, many of the solutions they offer won’t come through until the middle of the next decade. In the meantime, the sector needs capital together with lenders willing to back the people building solutions on the ground.

That's the thinking behind Broadwood Capital's latest financing: a £19 million loan to fund three new special educational needs schools in Sevenoaks, Bristol and Coventry. The facility, provided to a sector specialist joint venture set up in 2024, will fund the acquisition, refurbishment and conversion of three former school sites into independent SEND provision. All three are expected to be up and running by early 2027, and the loan provides headroom to bring further schools into the portfolio as the platform grows.

Part of a Bigger Strategy

This is Broadwood’s latest step in a conviction-led move into what the firm calls "social infrastructure" — financing sectors where needs-based real estate requires private capital to meet underlying demand growth. The SEND portfolio financing follows Broadwood's first healthcare sector loan earlier in 2026 and sits alongside its ongoing commitment to financing care home construction through the Broadwood Later Living Sustainable Construction Finance Fund.

Broadwood has now funded 650 beds in later living, 360 SEND places, and a healthcare diagnostic centre — roughly £150 million of lending directed at the parts of the built environment that an ageing population, a strained education system and growing demand for healthcare provision actually require.

James Tarry, Broadwood's CIO, frames the SEND sector as a natural extension of that thesis: the firm's experience in operational real estate within care and healthcare translates directly into education, where the imbalance between supply and demand looks set to persist for some time. He also points to something that matters as much as the bricks and mortar — the borrower's ability to deliver high-quality provision at a cost that represents genuine value for the local authorities funding the places. That's the model Broadwood wants to keep backing: real social value, delivered efficiently.

Why It Matters

Founded in 2022 by Dan Smith, Broadwood was built to provide mid-sized, mid-term funding to property investors and developers, with a particular specialism in complex financings, development and alternative asset classes. The SEND loan illustrates clearly what that specialism looks like in practice: a facility structured around a sector that mainstream lenders often overlook, but where the social need — and the underlying real estate fundamentals — are hard to ignore.

Can the care sector attract funding beyond US REITS?

James Tarry, Chief Investment Officer — Thu, 29 Jan 2026 14:06:28 GMT

The UK’s ageing population is intensifying demand for healthcare and later living real estate, and a recent wave of high‑profile transactions is accelerating the sector’s shift toward institutionalisation.

Welltower’s acquisitive push - including its recent purchases of Barchester, HC‑One and Aria - has pushed its share of UK care‑home beds to over 10% (per latest LB figures). That scale matters. By consolidating fragmented portfolios, large capital players create clearer operating benchmarks, liquidity pathways and exit options for developers and smaller operators who have built up local portfolios. For developers, an institutional buyer can be an attractive route to exit and recycle capital; the question is whether viable alternatives exist beyond selling into large US REITs?

The sector’s move toward institutionalisation has been gradual and cautious and still has some way to go. Memories of Four Seasons and Southern Cross failures linger, but market participants increasingly view those collapses as the result of company‑specific failures involving over‑leverage, onerous rent profiles and excessive reliance on public funding, rather than structural market issues. Thematic tailwinds are compelling: ageing demographics, regulatory focus on quality and persistent demand dynamics make care homes a natural match for investors seeking long-dated, inflation‑linked cash flows.

Questions remain over the best routes for developer / operators to exit. Most of this year’s transactions have been via opco or propco sales, according to the latest research from Cushman & Wakefield. Such structures, while logical, do not suit all capital providers and we expect to see the financial markets respond with models that help broaden the investor base.

The pensions risk‑transfer (PRT) market is booming; UK insurers are actively buying pension liabilities. L&G’s acquisition in October of a £4.6bn Ford pension book is a significant transaction in the recent trend for insurers acquiring long-dated liabilities. They do need to match these liabilities with long-term, lower risk assets which provide attractive investment returns; many have looked to diversify their portfolios away from traditional fixed income towards private markets and have increasing appetite in the real estate sector for ground‑rent style investments secured by operating assets such as hotels and student accommodation. Care homes fit this model well, offering long-term, low‑risk, inflation‑linked income secured against an operating, demand‑resilient asset class.

Structuring care‑home finance as ground‑rent or long‑lease investments allows asset owners to recycle capital while retaining operational control. These hybrid structures, which combine long‑term, inflation‑linked ground rents for institutional investors with retained ownership and operating equity for sponsors, can align interests and de‑risk exposures that formerly deterred large investors.

The market now sits at an inflection point. Institutional entrants like Welltower demonstrate scale and an acquisitive exit pathway for developers. With PRT demand and insurers’ search for long‑dated, inflation‑linked assets, ground‑rent and long‑lease models offer a credible alternative route to attract long‑term capital, enabling owners to recycle capital and grow their businesses while keeping operations focused on improving care outcomes. For patient capital willing to engage operationally, there is an opportune moment to consider longer‑term finance into the sector.

Under-bedded... why can't the UK solve the problem?

James Tarry, Chief Investment Officer — Thu, 29 Jan 2026 13:59:36 GMT

With care home development lagging far behind growing demand, we look at the reasons why the UK remains under-bedded, and what can be done to solve this looming crisis.

The UK’s looming care home shortfall is as unsurprising as the maths is inescapable; the UK’s 65+ population is set to grow by more than 25% by 2035 and the 85+ cohort by roughly 50% over the same period (ONS). Yet both built capacity and the development pipeline remain stubbornly thin. Recent Knight Frank analysis warns that net new supply is minimal as current development barely replaces obsolete stock.

With a net increase of just 86 beds in 2024 (source: Knight Frank), we are now facing a structural deficit measured in tens of thousands of beds, with some commentators forecasting a potential shortfall of almost 100,000 beds by 2033.

This issue can be explained in part by the rapid obsolescence of the UK care home stock versus the sluggish pace of delivery of new homes; the demographic trend does of course compound the problem further. So far, pretty much conventional thinking – but this is typically as far as the thinking seems to go. Orthodoxy would suggest imminent strong inflows of capital to reset the supply / demand imbalance. As this doesn’t yet appear to be the case, we can only assume that either the imbalance is illusory or there are other factors at play which warrant further investigation.

Care home development faces similar headwinds to more conventional real estate development: scarcity of land, planning bottle necks and rising construction costs are as much as feature of the care home development market as any other. But where care differs as an operational asset class is in its requirement for specialist management skills, compliance with stringent CQC regulation, high staffing ratios and long‑term operational commitment. That regulatory and operating overlay raises barriers of entry well above those for conventional real estate and deters mainstream developers and investors.

This operational landscape is also complex – ownership and operation of care homes is fragmented, and the top five operators account for only about 13.1% of beds (source: Care England). With few nationally scaled, balance‑sheet‑strong providers, the industry lacks the institutional capacity to underwrite sustained large‑scale development. The obvious policy lever is consolidation or aggregation - but that presents its own risks and requires careful regulation.

Capital is increasingly available as evidenced by the arrival of global REITs and healthcare investors like Welltower in the UK, yet investor caution persists. Knight Frank notes rising investor selectivity amid construction cost inflation, higher borrowing rates and regulatory scrutiny; yields must balance social purpose with commercial return. Meanwhile, public policy responses remain hesitant. Care England has repeatedly called for long‑term funding clarity and incentives to unlock private capital and stimulate specialist development.

Solving the shortage requires a coordinated package: long‑term funding commitments, planning de‑risking for specialist sites, incentives to attract experienced developers/operators, and workforce investment. The market understands the scale of the problem; what is lacking is the political and financial will to remove the barriers. Without rapid, joined‑up action the UK runs the risk of remaining structurally under‑bedded for decades.

With an ageing population, why do care homes still close?

James Tarry, Chief Investment Officer — Mon, 26 Jan 2026 10:57:12 GMT

Care home closures are relatively rare but can be an upsetting and stressful experience for residents and their families, even in instances where the planned closure is known about long in advance.

Care home operators are obliged to maintain the highest care standards and the Care Quality Commission (CQC), England’s social care regulator, monitors, inspects and rates care home services and can de-register care homes when standards are not met. Lancet research shows that most de-registrations are made voluntarily, although there is a significant minority (around 16% of 377 closures in 2023) which de-registers due to CQC action.

Whether closures are voluntary or not, the UK faces a well-documented supply shortfall with care home de-registrations continuing to outstrip new registrations in recent years. Knight Frank research estimates that net care home supply grew by just 86 beds in 2024.

It’s clear that this combination of increasing demand through demographic growth and an ongoing reduction in supply provides a compelling growth proposition for investors in the UK care home market. The arrival at scale of investors such as Welltower™ Inc. (NYSE:WELL) clearly supports this. However, while the case might look clear-cut, we continue to see investors grappling with the reputational risks of a potential care home investment, whether these relate to a care home closure, staffing issues, or regulatory censure.

Many investors are rightly concerned that if one of their care homes fails, then the reputational consequences of putting elderly and vulnerable residents through the stress of finding alternative accommodation can be a bridge too far.

But investors should examine the reasons why care homes do actually close. It is rarely a sudden shock and reasons for failure usually reflect structural issues. Almost all care homes that do de-register (whether voluntarily or otherwise) are no longer fit for purpose.

This shouldn’t come as a surprise - JLL research estimates that two-thirds of existing stock was built before 2000. And around half of this stock was not purpose-built and was typically converted from other uses (often schools, hotels or houses), meaning they were arguably never truly fit for purpose and certainly not future proofed to meet current operational and ESG standards.

Maintaining the highest care standards in adapted facilities as they become obsolete is difficult, costly and operationally inefficient. Operating profit margins become squeezed as increased operational expenses such as energy costs, national minimum wage increases and rises in national insurance cannot be passed on easily to residents. The situation is compounded by older care homes run by smaller, sub-scale independent operators who may not be sufficiently capitalised to make the necessary investment.

Conversely, it would be very rare for a new purpose-built care home developed, constructed and operated by seasoned market players to close shortly after opening its doors or even during the fill-up period. As specialist debt investors funding the construction of new-build care homes, we look closely at the track record of the counterparties we are working with, consider in detail the demand dynamics of the local area and take into account how well the care home adapts to its local market.

Accordingly, we see the risk of an involuntary CQC de-registration and any associated negative reputational consequences as being particularly well mitigated and, as such, very low indeed.