Specialist healthcare real estate fund manager makes first acquisition in Europe.
ECP European Healthcare Real Estate (Luxembourg) SARL has made its first acquisition of a portfolio of 7 aged care real estate assets in and around Graz, Austria, for c. €50 million. The seed portfolio has a WALE of 24 years and presents a very stable long dated income stream. The transaction is the cornerstone investment in a targeted €500 million European Healthcare Real Estate Fund focusing on healthcare real estate assets in the key European markets of Germany, Belgium, Luxembourg, Switzerland and Austria and is managed by ECP Fund Management.
Healthcare real estate has one of the highest risk adjusted returns and lowest volatilities of any real estate asset class, characterised by long leases and low vacancy rates. Institutionalisation of the asset class is occurring globally, typically resulting in yield compression when portfolios are consolidated into investment grade asset transactions. The Fund presents an opportunity to acquire a stream of stable, very long term cash flows at a significant yield premium over both the cost of borrowing and other similar traded assets.
“We see the sale and leaseback structure and consolidation of real estate within the healthcare sector as a very positive step to release capital to operators, who are continuing to reinvest into the provision of better healthcare services. This is a similar structural industry transition which has occurred in North America, Asia and the UK which has had a positive effect on patient services and quality of care.”
Dirk Grosse-Woërdemann, Fund Manager and Partner, Emerge Capital Partners
The Fund is co-invested by the manager and backed by institutional capital from Australia/Asia. It offers a strong sector and regional focus and will be extended to core European pension funds and investors in a second-round fundraising in Q2 2017.
About the Fund
The ECP European Healthcare Real Estate Fund (the “Fund”) presents an opportunity to acquire core healthcare assets with a stream of stable, long-term cash flows at a significant yield premium over both the cost of borrowing and other similar traded assets.
The Fund targets assets with long leases (WALE 15 – 20 Years+) providing strong income certainty. Assets are typically leased to a single operator with the Fund targeting prime assets leased to government supported / insurance supported entities, not for profit organisations and leading for-profit private pay operators.
The sector offers a highly attractive return with an IRR of 6-8% per annum and a distribution yield of 5-7%. The Fund will outperform the market return through the secured pipeline of off-market transactions via strong operator relationships with a risk adjusted IRR of 8-10% per annum. Target acquisition yields represent a spread of ~500 bps over senior borrowing costs.
For any further information please contact:
Emerge Capital Partners
+49 1 726 744 743