AIB establishes €300m fund for investment in nursing homes

AIB has established a €300 million healthcare fund to support investment in nursing home care.

Speaking to The Irish Times yesterday, Ken Burke, AIB's head of business banking, said the funds would be available to nursing home operators to provide new facilities, expand or refurbish their premises or equipment or to refinance facilities with lenders that have exited the Irish market.

“We would like to get a lot of this away in 2015,” Mr Burke said. “We’re seeing strong demand for funding and we expect that to continue.”

A report commissioned by AIB shows that the long-term (defined as three months or more) care sector is facing “stiff challenges” to meet the demand for beds by 2021 as a result of Ireland’s ageing population.

The number of people aged 65 or older is expected to rise by 38 per cent over the next seven years, which will result in a shortfall of 8,000 nursing home beds in the system.

With every bed costing about €100,000 to provide, AIB’s fund could potentially provide about 3,000 new beds into the system. However, this may not happen as some of the funds will be used to expand existing facilities or to refinance loans.

Some 119 nursing home providers responded to a telephone survey by Ipsos MRBI. Just more than one third said they were planning to extend their premises with almost one in five set to build a new facility and the same number planning to add a specialist dementia unit to their operations.

At present, 80 per cent of homes do not have specialist dementia care units, according to the report.

The long-term care sector employs about 24,000 people across the country who contribute about €185 million to the exchequer in taxation.

“So apart from being an integral part of the healthcare landscape, nursing homes make a significant economic contribution to the communities they serve,” the report says.

In terms of investment in the sector, 46 per cent comes from bank loans with 34 per cent from retained earnings, 16 per cent from personal funds and the balance from external investment.

There are 440 private and voluntary nursing homes operating in Ireland, providing beds for 22,634 elderly people, according to the AIB report.