The Dutch Investment Institution (NLII) has launched a €200m fund for direct institutional investment in healthcare property.
NLII said that SPH, the €9.5bn pension fund for doctors, will be the first investor, taking a €80m stake in the NLII Apollo Zorgvastgoedfonds.
The proposition has been developed together with SPH and care property manager Hartelt Fund Management (HFM).
The fund is to invest in assisted living assets, nursing homes and primary health centres.
Population ageing has triggered a strong growth in demand for healthcare and an increase in demand for small-scale complexes for intensive healthcare.
“As a consequence, the current supply of new care property is insufficient, while the existing real estate often fails to meet the demand,” NLII said.
The NLII said that the financing options for the healthcare sector have also changed, “with housing corporations having to focus on their core task again, and bank lending decreasing due to changes in the way healthcare is funded”.
The required annual investment is estimated to be €1.5bn, rising to €3.3bn in 2030. NLII said studies suggested that the annual financing requirement for for primary care centres alone is approximately €225m.
“There is a clear demand for risk-bearing capital to modernise healthcare real estate,” said Loek Sibbing, pensions industry veteran and chief executive of the NLII.
“Institutional investors can now invest in the sector on an appealing scale.”
The fund applies a minimum investment of €5m for assisted living and nursing homes and €2m for primary healthcare centres.
According to Sibbing, returns from the care property fund are expected to be 7%.
“As the long-term and stable contract matches SPH’s long-term investment horizon, the investment fits well in both our portfolio as well as in our ESG goals,” said Johan Reesink, the pension fund’s chairman.
“Existing property funds often invest in care housing, but not in primary case real estate, because of the sector’s unfamiliarity,” he added.
The pension fund said it might increase its stake in the NLII Apollo Zorgvastgoedfonds at a later stage.
The NLII is a private institution aimed at increasing institutional investors’ long-term funding opportunities in the Dutch economy.