Financial Times: UK Healthcare REIT to launch.
A listed hospital and care home real estate company will be launched next month with a five-year plan to build a £1bn portfolio after securing institutional seed capital.
Healthcare Reit will acquire property occupied by elderly and specialist care providers as well as hospitals.
The company will be launched at a time when the property structures behind healthcare groups are under intense scrutiny given the difficulties at Southern Cross, which has struggled to meet rental payments.
It is being launched by Nexus Healthcare, run by property entrepreneur Harry Hyman, which already manages Primary Health Properties, the listed surgeries group.
Mr Hyman said Southern Cross was an aberration that went into difficulty because its rental commitments were far too high following the separation of its properties.
Healthcare Reit would not acquire assets if the target rent represented more than 65 per cent of the operator’s earnings, he said.
“There is no healthcare Reit in the UK for secondary or elderly care, even though it is a big sector in countries such as the US. Even after the recent travails of Southern Cross, we think – and so do our investors – that the sale and leaseback model is very attractive in that sector.”
Healthcare Reit is still marketing to investors but has raised £40m of seed capital from institutional investors, including Schroders.
It will list initially on the Channel Islands Stock Exchange in July, with the intention to list on the UK main market in 2012 as a tax efficient real estate investment trust.
The initial capital will be backed by debt to acquire a starting portfolio of more than £60m. Singer Capital Markets is adviser and broker.
Healthcare Reit plans to build a £1bn portfolio of assets over the next five years, primarily focused in the affluent south of England. The intention is to have about a quarter of the portfolio invested in private hospitals and the rest in elderly and specialist care property. It is targeting a yield of about 6.3 per cent to return to shareholders.
Mr Hyman forecast that care providers would continue to perform well operationally, driven by long-term demand from an ageing population.
“It is a low-risk asset class with high occupancy rates and long leases to good quality operator covenants such as BUPA, Spire, Priory and General Healthcare Group. Local authority spending underpins much of the operator income.
“In private hospitals, continuing NHS underperformance is pushing more people into self pay and more companies are offering private medical insurance that use these hospitals.”
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