Age care investment firm Aviiid Third-age Living warns of excessive valuations in property assets.

"We have spent the past two years conducting an exhaustive analysis of the market and what we found are too many operators failing to stack-up in terms of valuations, reporting, compliance,  governance and budget forecasts," Aviiid managing director Scott Marinchek said.

Marinchek said many operators were clinging to pre-crisis valuations and property growth forecasts, which were at unrealistic highs, while being also over-leveraged.

"When we do proper and detailed due diligence on some of these assets it's crystal clear that by any reasonable measure the present value of risk-adjusted cash flows on which they are working is hopelessly inadequate to justify valuation expectations," he said.

"It's all about realisable cash flow and not retrospective NTA (net tangible assets)," he said.

Marinchek is in the process of establishing an aged care property fund for institutional investors, but had to delay the launch of the fund due to unrealistic price expectations of operators.

"Some of the operators we have been speaking to pulled out sheets of paper with valuations of 18 months ago," he said.

But in recent months, vendors have been more willing to enter into discussions, he said, and Marinchek is optimistic to still launch the fund this financial year.

"Hopefully, it will be before Christmas," Marinchek said.

Last week, Australian Unity launched a retirement property fund, which has stakes in 15 retirement villages.

Despite his reservations on property valuations, Marinchek welcomed the establishment of this fund.

"It's great, because it shows more insto [institutional] demand for retirement investments," he said.