UK - A listed healthcare property fund that has the £1.6bn (€1.86bn) East Riding local authority pension scheme as its third largest investor last week acquired a primary care health centre development for £5.7m.
The development, in a London suburb, will combine a National Health Service medical centre and a pharmacy, both with 25-year leases subject to three-year rent reviews based on the open market. The complex is scheduled for completion in September 2011.
The £196m fund - £94m of it debt - comprises 52 primary healthcare assets, one of which is under construction and a further four in the planning stage. Combined, the assets yield annual rent of £12.2m.
Mark Lyon, head of investment at the East Riding pension fund, said the scheme had invested in the asset class because of its inflation-linked leases, long lease terms and low vacancy rates. "You're unlikely to have a health centre go empty," he said.
However, the pension scheme remains positive on social infrastructure as an asset sub-class from a purely risk-return perspective. "I'm interested in investments with those types of characteristics," Lyon said. "I'm not overly concerned whether it's in the social infrastructure category or not."
The pension fund's infrastructure investments have so far been exclusively in the UK but Lyon did not rule out future cross-border investment. "We have nothing similar overseas but we're not precluded from having it," he said.