Northern Horizon buys Danish aged care home portfolio

Northern Horizon buys Danish aged care home portfolio

Northern Horizon is acquiring a portfolio of six care homes and linked assets from NREP in what will be Denmark’s largest care home transaction to date.

In addition to the care homes, the portfolio includes two kindergartens, 23 senior living units and the assets are a mix of new space and buildings under construction.

“The acquisition is a prime example of our investment strategy,” said Northern Horizon co-fund manager and investment director Denmark Kasper Wehner. “The assets are modern and well-located in Danish growth cities, long lease agreements ensure stable cash flows and, being new, the assets respond well to the high sustainability targets that we have set for the fund’s portfolio,” he added.

The acquisition was made on behalf of the Northern Horizon-managed Aged Care IV fund, which has a total investment capacity of €648 million and already has 17 care homes in the Nordics.

Its previous largest acquisition was a portfolio of aged care properties in Sweden, acquired from SBB in 2022. With this transaction, the fund is 75% deployed.

The latest assets are located in Holte (pictured above), Odense, Sorø, Greve, Helsinge, and Kolding and have a total lettable area of 39,502 sq m. Most of the assets will be taken over in 2023 but possession of the last asset is expected in May 2025.

Since 2007, Northern Horizon has acquired more than 130 care homes across the Nordics.

Author: Paul Strohm

Source: Real Asset Insight

One of the healthcare properties just acquired in Flanders

First healthcare acquisitions in Benelux for BNP Paribas REIM

BNP Paribas Real Estate Investment Management Belgium announced yesterday it has acquired from Baltisse Real Estate five healthcare properties in Flanders with a total area of 33,000 sq m and a combined capacity of 510 beds.

One of the healthcare properties just acquired in Flanders

Four of the properties are located close to three major cities – Brussels, Antwerp and Ghent – while the fifth is in Maasmechelen, not far from Maastricht and close to the Dutch border. The acquisition was made on behalf of Healthcare Property Fund Europe (HPF Europe), managed by BNP Paribas REIM, which aims to provide diversification in the healthcare sector in Eurozone countries.

“HPF Europe continues to expand its healthcare portfolio via this off-market transaction, which is the fund’s first acquisition in the Benelux region,” said Casper van der Woude, director, BNP Paribas REIM Belgium. “This acquisition fits perfectly with the fund’s strategy to diversify geographically in the Eurozone. We are extremely pleased to have purchased this nursing home portfolio that meets the needs of the continuing ageing population in Belgium.”

The nursing homes are being operated by renowned and reliable specialists. Triple net agreements were concluded for all assets, of which the average remaining term is approximately 20 years. They are all fully indexed on a yearly basis.

BNP Paribas REIM’s strategy is based on three main pillars: investing in different types of healthcare real estate, having a wide geographical exposure in Europe and establishing a long-term partnership approach with operator tenants.

After investing in the healthcare real estate sector since 2011, the group has a portfolio of around 80 properties in Europe. Ten health establishments are currently being built or extended in Spain, Germany, Italy and France, with a view to developing the healthcare offer.

HPF Europe, which was launched in March 2020, has reached two milestones: €1 billion in inflows and €2 billion in investments and disposals.

2022 was a strong year for the fund, with around 30 new acquisitions of healthcare facilities in Spain and Italy in the long-stay nursing home segment; in France, in short and medium-stay clinics and hospitals and in the long-stay nursing home segment; and in Germany, in the medium-stay clinics and long-stay nursing home segment.

 “We are keen to develop our healthcare portfolio in 2023 and to continue building resilient and sustainable investment strategies in Europe, notably through HPF Europe,” said Paul Darribère, head of fund management, BNP Paribas REIM France. “Our expertise and conviction in this market also makes it possible for some of our funds to diversify into the healthcare sector, which looks to be one of the most resilient, given its fundamental and a-cyclical features.”

Author: Nicol Dynes

Source: Real Asset Insight

Belgian firm Care Property Invest acquired a facility at Skibbereen, Ireland, in January.

Irish care sector jumps hurdles to post record 2022 volumes

The Irish Nursing Home market saw record investment in 2022 despite the challenges faced by the operators in the sector, according to CBRE research.

According to the report, Irish Nursing Home Market Owners, Operators, Investment, these challenges included steeply rising energy costs, rent increases linked to CPI, alongside growing labour shortages and staff costs. 

According to Maureen Bayley, director of the healthcare team at CBRE Ireland there was significant pressure on smaller nursing home operators in particular and 16 closures were noted in 2022, nationwide.

She pointed out that investment deals in Ireland’s nursing home sector continue to originate from European operators, backed by real estate investors seeking to increase their foothold in the market. 

CBRE said that due to the limited availability of good quality standing stock, “investment into the development of purpose-built, future-proofed homes will prove an increasingly popular pathway to bed acquisition”.

However, Ireland lacks healthcare developers, the firm said, and any that test the market with initial schemes require substantial capital in order to overcome barriers to economic development such as exceptionally high build costs and high land prices.

Projects located outside Dublin have “weak viability” owing to the mechanics of the Fair Deal rate system, Bayley added.

However, investor appetite for forward funding and forward purchase opportunities, coupled with yield compression in 2021 and early 2022, did see some new schemes completed, she pointed out.

“Looking into 2023, we expect continued investor interest in the sector, given its defensive nature, however elevated construction costs and the increased cost of capital, alongside yield expansion, could prove a challenge to executing forward-structured transactions.”

Author: Paul Strohm

Source: Real Asset Insight

assisted living development in Saarbrücken

Saarbrücken assisted living buy broadens spread for AIF fund

Alternative investment fund specialist AIF Capital Group has acquired an assisted living development in Saarbrücken, Germany from the developer, IFA Gesellschaft für Immobilien.

The planned residential quarter, known as Am Anger, has been bought for the open healthcare fund AIF Fürsorge I which now has nine assets. AIF stated that the acquisition will diversify the fund’s spread of locations and operators. IFA Gesellschaft für Immobilien specialises in commercial and healthcare real estate.

The property occupies a 4,400 sq m site and consists of three buildings with a total rental area of around 6,300 sq m. It will provide 84 apartments ranging in size from 45 sq m to 170 sq m.

Construction will be according to the KFW Efficiency House 40 standard. Completion is scheduled for 2023.

Daniel Wolf, managing director of AIF Management said the acquisition will further diversify the healthcare portfolio. “Demand for the assisted living segment is increasing. The living conditions of the older generation and the individual need for support are very heterogeneous. The various housing and care offers for seniors will therefore be further differentiated in the future.”

AIF Capital was legally advised on the transaction by Mayer Brown and on technical due diligence by CBRE. The price was not disclosed.

Author: Paul Strohm

Source: Real Asset Insight

Skibbereen Residential Care Centre which Care Property Invest acquired earlier in January for €7.5 million.

Care Property Invest share offer raises €111m enabling growth

Begian listed healthcare property investor Care Property Invest has raised almost €111 million after a public offering of new shares and a private placement of scrips.

The €12 per new share issue price represented a 20% discount to the €16 closing price on 10 January 2023.

Investors subscribed to more than 5.9 million new shares, which represented 63.9% of those offered. The remainder were sold as scrips. The net proceeds of the offering are estimated to be more than €108 million.

The objective of the issue was to enable Care Property Invest to fund developments while maintaining a maximum debt ratio of 50%.

The company has developments on its balance sheet requiring the investment of €45.7 million and it has €15.9 million-worth of other investments on the stocks. The company expects to acquire a number of new healthcare properties in the countries where it operates, with €20 million allocated to property in The Netherlands and Belgium, about €15 million to Spain and €6 million to Ireland.

Author: Paul Strohm

Source: Real Asset Insight

Axa IM Alts makes Spanish healthcare debut in Zaragosa

Axa IM Alts makes Spanish healthcare debut in Zaragosa

AXA IM Alts has made its first investment into the Spanish healthcare market. The debut investment, on behalf of clients, comprises the development of a healthcare complex in Zaragoza, Spain.

The planned project (CGI pictured above) will create a 12,600 sq m state-of-the-art health facility in Zaragoza, which is the capital of Spain’s Aragon region. The asset will comprise 270-beds in total across a nursing home and mental health clinic, alongside a separate daycare centre.

Grupo Lar has been retained as developer and will also support in sourcing suitable land for further opportunities, as well as pre-leasing approved schemes to leading operators and managing the completed developments.

The asset is due to be completed in Q4 2025 and has been pre-let on a long-term lease to elderly care home operator Grupo Mimara.

Axa IM Alts said it aims to build a Spanish healthcare portfolio, responding to a clear gap in the market.

“The healthcare asset class in Spain is highly fragmented with low volumes of institutional participation and acute undersupply. We see an opportunity for AXA IM Alts to leverage its track record in the sector to become a leading investor in this market,” said Esther Escapa, head of transactions and development Iberia at AXA IM Alts.

Author: Paul Strohm

Source: Real Asset Insight

Osaka: One of Japan’s four largest cities. [Image: Nomadic Julien/Unsplash]

Axa IM Alts makes €156m first foray into Japanese care homes

Axa IM Alts has made its first investment in the Japanese care home market with a €156 million portfolio acquisition.

The company has acquired a portfolio of 15 nursing homes located in Tokyo, Osaka and Aichi, three of Japan’s four largest cities, with significant aging and affluent populations. Axa IM Alts paid €156 million (¥21.9 billion), including acquisition costs for the portfolio, which has a total of more than 800 beds. Fourteen of the homes were constructed after 2013.

The portfolio is let to five established operators and leases have a weighted unexpired average term of 19 years.

Axa IM Alts explained in a statement that the Japanese care home sector is characterised by a shortage of good quality stock, with the demand/supply imbalance expected to widen as Japan’s elderly population increases. Numbers of over 65s are forecast to grow by 20% over the next 20 years but the sector has strong support from the government, which has committed to increase elderly resident capacity from 2.5% to 4% by 2030.

This deal is Axa IM Alts’ fourth acquisition in Japan this year and increases its assets under management there to about ¥511 billion (€3.5 billion). It was also part of Axa IM Alts’ long-term strategy to invest into residential asset classes.

“This is a rare opportunity to acquire a modern and diversified portfolio of care home assets with an attractive trading history, in a fast growing but still highly fragmented use class,” said Laurent Jacquemin, head of Asia-Pacific, real assets at Axa IM Alts. “Establishing long-term relationships with leading operators will allow us to quickly scale our platform, in a sector we view as highly defensive and benefitting from the tailwinds of compelling long-term demand supply dynamics.”

Author: Paul Strohm

Source: Real Asset Insight

Senior housing & healthcare session at Expo Real

EXPO Real: Interest rate hikes halt Senior housing deals

Demographic fundamentals underpin future demand but current market conditions have brought transactions to a standstill, experts agreed at Real Asset Media’s Senior Housing & Healthcare briefing, which took place yesterday at the International Investors Lounge at EXPO Real.

“Investors are not able to pay the same prices, as rising interest rates are making financing more expensive”, said Nikolai Schmidt, Managing Director, Transaction Health Care, Swiss Life Asset Managers. “The main challenge over the next twelve months will be finding an equilibrium between the price situation on the market and our yield expectations”.

It will take a while to find this balance, and in the meantime there are likely to be very few transactions in the market.

“In my experience transactions are either on hold or have been cancelled”, said Stefan Voss, Partner, CMS.

The market situation is particularly challenging for project developers. With high financing costs, high construction costs and high land costs, something’s got to give.

“The challenge for developers is accepting that land values will have to come down, a haircut is inevitable”, said Marcus Roberts, Head of Europe, Savills Operational Capital Markets.

Investors are increasingly anxious, said Yeliz Bicici, Chief Operating Officer Offices & Real Estate Development, Cofinimmo: “There is a growing uncertainty about pricing and the evolution of the operational business model, but on the other hand it is clear that the need for care is increasing”.

The top seven countries in Europe (UK, Germany, France, Italy, Spain, Belgium, the Netherlands) already have 75.5 million people aged over 65, and that number is set to increase significantly.

Rising demand will continue to drive the market, while he counter-cyclical characteristics of the healthcare and senior housing sector have driven returns, which have been higher than in other real estate sectors, according to Savills data.

“Total investment has risen significantly over the past few years, with €5.7 billion invested in 2021 in the top seven European countries, compared to an average of €2 billion a year between 2013 and 2018”, said Roberts.

Author: Nicol Dynes

Source: Real Asset Insight

Dr. Stefan Voß, Partner, CMS

CMS overview of the auditing institutions at the senior housing and healthcare sector in Europe

As part of our governance research, CMS, the SHHA member, did a deep dive into auditing institutions in key European markets.

In the UK there are four jurisdictions with different regimes in place to regulate and monitor the safety and quality of healthcare and social care/care home services. Although the overarching aims and objectives are very similar, each regulator’s processes and procedures are nuanced and in practice dealings with them can be varied.

In Austria each Federal State operates its own Care Home Supervisory Authority. They are responsible for the supervision of institutions that primarily provide long-term care, while medical service by doctors is limited to a case-by-case basis.

In Belgium The ‘Care Quality Commission’, an independent regulator of the health and social care system in England is responsible for auditing the care institutionst. However, Belgium does have the ‘Service Public Fédéral (SPF) santé, sécurité de la chaîne alimentaire et environnement’ to monitor the health care system.

In Germany each federal state has established a care home supervisory authority which supervises and advises care homes (including housing for senior citizens, short term care, hospices, nursing homes, assisted living (in some federal states)) with a main focus on protecting the interests and needs of the occupants. Additionally there are 15 regional medical services (“MD”) in Germany which have various responsibilities in the health sector. MD assists the health and nursing care insurance companies with medical and nursing care-specific matters.

In The Netherlands The Ministry of Public Health, Wellbeing and Sports (VWS) is the coordinating government body concerning matters of health and eldercare in The Netherlands. The VWS delegates it’s responsibilities concerning healthcare to a number of internal subdivisions and external affiliated institutions.

Norway has no supervisory authority relating specifically to the care home sector. However, all care service providers in Norway, including care home operators, whether operated publicly or commercially, are subject to supervision and government by the Norwegian Board of Health Supervision (Helsetilsynet), a national supervisory authority organized under the Ministry of Health Care Services.

To learn more download the full CMS report with details regarding selected countries.

Interview with Raoul Thomassen, Chief Operating Officer, AEDIFICA

Meeting the demographically driven demand for healthcare real estate

Interview with Raoul Thomassen, Chief Operating Officer, AEDIFICA

Aedifica has had an intensive time in terms of its development in several European markets, while at the same time it has stepped up its sustainability ambitions by developing a new CSR framework. Can you tell us about the context of the new strategy?

We have structured our strategy around three pillars – our portfolio, our partners and our organisation. Within each of these three pillars, there are several actions that help us – as a future-proof organisation – to have a future-proof portfolio

When we talk about our portfolio, we talk about our ambitions to achieve net zero emissions by 2050.

When we talk about our portfolio, we talk about our ambitions to achieve net zero emissions by 2050. Aside from our intrinsic drive, this externally demanded by governments shaping regulations to achieve that goal, as well asfrom it from the investor side – investors expect us to develop a sustainable portfolio. We have been actively working on that, including by making our reporting more transparent.

We need to make sure that we are and remain an attractive employer in all eight countries in which we operate.

Another important aspect of our new framework concerns HR. As our portfolio grows, so does the number of people working in the company. We need to make sure that we are and remain an attractive employer in all eight countries in which we operate. To monitor that, we conduct an employee satisfaction survey every year to see if our staff identify with Aedifica and feel happy with us.

When it comes to our partners, we are talking first of all about the operators of our care properties who provide care services to residents. We work closely with them to make sure our buildings are of excellent quality when we deliver them and are well maintained throughout their lifespan.

Because we work with many partners, we have designed supplier charters that allow us to clarify what Aedifica expects from its partners and vice versa – what an operator or developer can expect from us.

Other key partners for our growing portfolio are developers. Because we work with many partners, we have designed supplier charters that allow us to clarify what Aedifica expects from its partners and vice versa – what an operator or developer can expect from us. These include CSR aspects, which range from ensuring that no child labour takes place within the entire supply chain, to environmental aspects when using detergents or cleaning materials in order to ensure that they are not hazardous to the environment. All these aspects are covered by our three-pillar strategy.

What is the nature of the relationships between each of the groups you mentioned and what role does each group play in the value chain?

The future needs of the elderly will increase significantly from 2025, when the baby boomer generation will be over 80. In particular, we are actively working with operators and developers to see how we can anticipate this increased demand. At Aedifica, we have a three-party agreement: we work with both developers and operators – the future tenants of our buildings. They will rent and operate that building for the next 20 to 30 years, so we want to make sure that when something is built, it fully meets their requirements. This is one of the most tangible ways in which these three elements work closely together from the start.

You can imagine that especially in developments, local authorities also play an important role in zoning because of the specific local needs they see. It is very common, or it is becoming more common, for a nursing home to be built not just as a stand-alone facility, but rather as a mixed-use development combining elderly care with child care and independent living, for example.

Senior housing and healthcare is often seen as an operator-driven market, and the reputation of the operator is absolutely crucial. How do you select the operators you work with?

We have a very diversified operator base. We work with some of the larger for-profit operators in Europe, but in specific countries we also work with many non-profit operators. For us, it is important that we can work with a party that is a reliable partner for us – which again can be profit or non-profit – in a long-term business partnership. We are not here for a short-term relationship – we are long-term investors and want to make sure we invest and lease to partners who also deliver quality and have the same time horizon.

We are long-term investors and want to make sure we invest and lease to partners who also deliver quality and have the same time horizon.

Working with smaller operators may mean they need more help or more real estate-specific knowledge. For us, this is not necessarily a downside, as we have that knowledge and are happy to share it, since it is beneficial for all parties involved. One example is making buildings more energy efficient. Larger operators have sometimes already developed their own knowledge in that area, but for smaller players our know-how and help is a great added value.

Interestingly, there is a lot of focus on social aspects. How do you ensure the social impact of your business activities in particular?

The social aspect is something we pay specific attention to when we acquire buildings and especially when we develop them ourselves. Authorities are also tightening their requirements in this area. Consider, for example, the Netherlands, where the authorities already require that your care home, when applying for a permit, has a certain minimum rating that is not only based on energy consumption or more traditional parameters, but also specifically takes those social aspects into account. For example, it is crucial that a care home is easily accessible and not too far from the city centre. So we need to ensure that we have buildings that can make their contribution to the local community. Not only by providing employment opportunities, but also by connecting people and providing a place where people from that community can physically come together. A great example of this comes from the Nordics, where parents can pick up their children from day care and visit grandparents at the same time, as the day care and residential care centre are housed in the same campus.

What are you currently doing to reduce environmental impact?

Buildings in general, looking beyond just our sector, are a big factor in global warming. According to research, carbon emissions from buildings account for up to 40 per cent of total emissions, so there is certainly a big role to play in ensuring that those emissions are reduced. If you ensure that you can significantly reduce those emissions, then you are better positioned as a company than other property owners who lag behind in that area and risk being left with stranded assets. We make a lot of efforts in this area. For example, we have established a specific framework for the sustainable development of new buildings in every country in which we operate, making sure that they do not emit more carbon emissions than a certain level we have set internally. Similarly, when acquiring existing buildings, we do not want to acquire buildings that not only emit a lot today, but may also be difficult to renovate tomorrow. These internal targets are critical for us to achieve net zero emissions by 2050.

We have a large existing portfolio. Some of those buildings are relatively young and already quite energy efficient, but there are also quite a few that are older and in need of renovation. And that’s what we need that partnership with the operators for as well: for a smooth process of making the buildings that are renovated in the next five to ten years more energy efficient. Maybe those buildings won’t even be carbon neutral when the next renovation is carried out, but at least they need to become a lot more energy efficient. That’s where we work together and where a lot of the technical aspects come into play. Implementing solar panels is quite easy, but then if you want to switch to low-temperature heating and replace all the windows, suddenly your residents can’t stay in their rooms while these works are being carried out. If you look at the increased energy prices, the discussion with operators working on energy saving has become more important, but also certainly easier in the sense that the urgency and feasibility of projects has increased significantly just because energy prices are now as high.

You are developing your portfolio in different European markets. What are some of the differences between the markets? How much influence does local knowledge have on your development strategy as you look into each country?

That is precisely why we have local teams. Without local teams, it would be difficult for us to grow the portfolio. Local teams have close connections with operators, with development partners, with local authorities… They are therefore a critical factor for us to grow in the markets in which we operate. Local markets are specific, which means there are differences in what authorities require of us. There are differences in the way the healthcare sector is regulated. In some of our markets, that may be at the national level. But in Germany, for example, it is at regional level and there are 16 different regions with their own regulations. These are not fundamentally or completely different, but there are differences that need to be taken into account. We therefore also work with local partners and developers to ensure that we meet all these different requirements. On the other hand, regulations should also not be overestimated. Yes, we want to make sure we are compliant, but in many cases, especially in terms of ESG, we have to go beyond some of the current regulations, simply because we know they will be tightened again in a year or three. We are not building for the next t