The healthcare real estate market is evolving rapidly, both in terms of supply and transparency. The new legislation is now in place and the impact this will have is much clearer, certainly with regard to the separation of housing and care and the demand this is likely to create. Healthcare providers are now in a much better position to decide on the direction they want to take in terms of their own corporate real estate management. Many will choose sale and lease-back, which will create opportunities for institutional investors. Given these developments and a growing number of Dutch and international investors looking to invest in real estate, we expect to see a marked increase in investor appetite for healthcare real estate.
For 2016, the Fund has a budget of € 67 million for transactions, of which € 34 million is cash-out. In line with our target portfolio allocation, the focus of the acquisitions will shift towards the mid-segment Assisted Living and Intramural Care.
The Fund has a clear growth strategy and due to high acquisition costs for the immediate future, the Fund’s return is likely to lag the target return of 6.5% over the next three years, while we build the portfolio. However, we are confident that we will be able to achieve our long-term target once we have achieved the desired scale.
The outlook for acquisitions is very positive, as more healthcare providers decide to lease property, as opposed to ownership. However, we also see increasing activity from both domestic and foreign investors which puts pressure on prices. Nevertheless, we are confident that we will be able to achieve our long-term target and provide a sound investment for the Fund’s shareholder.
Amsterdam, the Netherlands, 14 March 2016
Bouwinvest Real Estate Investment Management B.V.
Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments