Investment and asset manager CORPUS SIREO is in the process of preparing its second nursing home fund, CORPUS SIREO Health Care Fonds II”. The target volume for the German specialist fund is 300 million Euros, of which 150 million Euros represent equity capital. Based on a projected average purchase price multiple of 13.3, the fund will target an annual distribution of 6.5 percent. The pool of segregated assets will be launched through an investment service company no later than Q4 2011.
Investment and asset manager CORPUS SIREO is in the process of preparing its second nursing home fund, CORPUS SIREO Health Care Fonds II”. The target volume for the German specialist fund is 300 million Euros, of which 150 million Euros represent equity capital. Based on a projected average purchase price...
For the past five years, CORPUS SIREO has gathered experience in this market segment through its No.5 SICAV-FOS (“CS Health Care Fonds I”) real estate fund, and is the biggest German investor in this asset class. The fund is fully placed. It includes 46 facilities, and is defined by classic in-patient care units with some assisted-living and specialised components thrown in. During the past two years, a total of 12 new buildings or project developments were created and added to the fund portfolio. The fund volume approximates 430 million Euros. Since its inception, the fund has generated secure and steadily increasing rent revenues, and simultaneously shows a stable cost structure. Both the distribution performance and the market value performance of the portfolio are going according to plan.
Purchase Criteria of the Fund Management
The CS Health Care Fonds II will invest in nursing homes in Germany, and will break down into new buildings (75 percent) and buildings ten years or younger (25 percent). Acquisitions will focus on the West German states. The decision for a given investment location will hinge on a positive demand and competition analysis. At least five different operators are earmarked for altogether 30 nursing homes, give or take. Preconditions for the fund eligibility of an operator include a positive operator profile, based on a sound credit rating, a relatively young age, and an above-average utilisation of the portfolio, a demonstrably high quality of care, good grades from the MDK health insurance medical service, as well as a sustainable expansion strategy. The leases provide for a minimum term of 15 years for existing buildings and of 20 years for new buildings. The property size ranges from 80 and 140 slots. Investments will focus on in-care adult care, complemented by additional concepts such as e.g. dementia, young care, and long-term care. The target portfolio will be strongly diversified by location, operator, and care concepts. The sustainability of the investment and management approach is underlined by the strongly performance-oriented remuneration of the fund manager.
Said Marc-Philipp Martins-Kuenzel, Fund Manager of CORPUS SIREO Health Care Fonds: “The modern and competitive healthcare property represents the largest intersection of interests of the market players, especially on the part of operator, residents, and investor. A high sustainable utilisation of nursing homes tends to be achieved only if, on the one hand, the property is of high quality, modern, and state-of-the-art, and if, on the other hand, the professional operator takes on a flexible property that would sustain more than one care type without requiring major conversion measures. This includes energy savings that involve renewable resources, and the reduction of operating costs through an efficient floor plan and a sustainable rent rate.”
The fund will be managed by an experienced CORPUS SIREO Health Care Team of nine. The team will include buyers, commercial and technical asset managers, as well as specialists for advisory, financial management, and fund controlling.
Adult Care Market Growing Steadily
Long-term care insurance figures in Germany suggest a steady increase in the area of in-patient care. According to the Berlin-based Pflege e.V. employers’ association of healthcare institutions, the number of adults in need of care will rise to three million over the next ten years, and to an estimated 4.7 million by 2050. The number of in-patients will prospectively rise to 1.57 million nursing home residents by 2050. While 800,000 employees work in long-term healthcare today, that number will have climbed to roughly 1.8 million by 2050. Between now and 2020, Germany will need another 250,000 nursing slots in order to accommodate the steadily increasing demand. This translates into an investment need of approximately 18 billion Euros. At the same time, around 3,000 nursing homes in Germany will have to be redeveloped at a total cost of seven to ten billion Euros. This goes in particular for homes of the first three generations.
ABOUT CORPUS SIREO
CORPUS SIREO, based in Cologne, has 14.5 million square meters in commercial and residential real estate with an aggregate value of more than 15 billion Euros under management, and is thus Germany’s biggest provider of asset management services.
The company with a staff of around 560 professionals at eleven German locations and one in Luxembourg is also the market leader in regard to the number of managed asset classes: Serving seven asset classes (office, residential, retail, logistics, healthcare, production/technology, others), CORPUS SIREO offers the broadest spectrum of all German asset managers.
Accordingly, even rival companies rate CORPUS SIREO as the chief competitor on the market. (These are the findings of the “Real Estate Asset Management Report 2011" by Bell Management Consultants.)
To investors, banks, and companies with proprietary real estate portfolios, CORPUS SIREO offers investment management and asset management services along the entire real estate supply chain. Moreover, the company acts as broker and project developer for owner-occupiers and investors.
For more details go to: www.corpussireo.com
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