44 / 220
1
Source: Eurostat.
2
The double net equivalent rental yield allows for an adequate comparison with the office segment yields.
Fair value of
€1,228 million
Since its entry in this sector in 2005, Cofinimmo has gradually diversified its healthcare real estate
portfolio by investing not only in nursing and care homes for elderly people but also in psychiatric,
revalidation and acute care clinics in Belgium and in France. Since 2012, the Group also has a foothold
in the Netherlands.
With a portfolio spread over three countries and 127 properties comprising 13,201 beds, Cofinimmo is
one of the foremost healthcare real estate investors in continental Europe.
The main advantages of this sector are:
•
A favourable legal environment: acute and long-term care
establishments are governed by very strict authorisation systems,
creating strong barriers to entry;
•
A significant growth potential due to the growing and ageing
population in Belgium and its neighbouring countries. The number of
people over 65 will rise by more than 51% between now and 2060
1
;
•
Long-term leases with operators: the leases with the operators have
an initial fixed term of 27 years in Belgium, 12 years in France and
15 years in the Netherlands;
•
The rents, which are indexed annually, are fixed and are not tied to
resident occupancy rates. In addition, almost all lease agreements
provide an option to extend the lease for two consecutive periods of
nine years in Belgium, nine to twelve years in France and ten years in
the Netherlands;
•
The large majority of the leases state that maintenance costs,
including structural maintenance costs, are the responsibility of the
tenant;
•
Rental levels that reflect the economic potential of each project;
•
Favourable locations making it easier to redevelop the properties:
even if the leases are not extended, Cofinimmo can tap the
redevelopment potential of these properties to the full, mainly as
residential accommodation.
Cofinimmo invests exclusively in establishments that have been approved
by the authorities and granted the necessary licences. To do so, the com-
pany signs long-term leases with the major players in the Belgian, French
and Dutch markets.
Acquisitions in this sector all undergo prior due diligence to assess the
profitability of the project as well as the solvency of the operators. This
solvency analysis is repeated annually, with the operators undertaking to
provide regular financial reports on the evolution of the operations.
With an occupancy rate close to 100% and leases being signed for an ini-
tial term of minimum 12 year, investments in healthcare real estate provide
a profile of stable and long-term rental income.
Cofinimmo is well-placed vis-à-vis operators in this market. Thanks
to its multidisciplinary team, and in particular its experienced Project
Management team dedicated to healthcare real estate, Cofinimmo can
offer operators a global solution comprising access to financial, property,
architectural and environmental expertise.
ACQUISITIONS
In July 2013, Cofinimmo acquired a former office building located in
Rijswijk, in a suburb south of The Hague (Netherlands), for €3.1 million,
in line with the value determined by the real estate expert. The asset is
being reconverted into a modern eye and skin care clinic. Works should
be finalised during the first quarter of 2014. The reconversion is financed
entirely by the Dutch group Bergman Clinics. The clinic is now being
rented by the seller, under a 15-year long lease with a ten-year exten-
sion option, which must be exercised by the long lease holder the tenth
year of the contract (2023). Under the terms of the long lease, the holder
is responsible for the maintenance costs and the taxes (triple net type
lease contract). The initial rental yield is 7.83% in double net equivalent
2
.
The rent is indexed annually to the household consumer price index. The
renovated property covers 2,133m
2
, comprises 25 parking spaces and is
fitted with consultation rooms, medical diagnostic facilities, operating
theatres and recovery rooms.
In December 2013, Cofinimmo also acquired a former office building in Ede,
in the Gelderland province (Netherlands), for €3.5 million, in line with the
value determined by the real estate expert. The asset will be reconverted
into a private eye clinic. The reconversion is being financed entirely by the
Dutch group Bergman Clinics. The delivery of the works is scheduled for
the end of April 2014. The clinic will be rented by the Bergman Clinics Group,
under a 15-year long lease with a ten-year extension option, starting from
the provisional delivery of the works. The initial rental yield is 7.79% in dou-
ble net equivalent
2
. The rent is indexed annually to the household con-
sumer price index. The renovated property will cover 2,663m
2
, comprise
60 parking spaces and will be fitted with consultation rooms, a polyclinic
and operating theatres.
HEALTHCARE REAL ESTATE
Management Report /
Healthcare Real Estate
38
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