AXA Investment Management - Real Assets (AXA IMRA) invested €800 mln in alternative real estate, including healthcare, in Europe during 2016, setting a new high for the group.
This total includes healthcare and hotels, Hideki Kurata, head of alternatives and special situations at AXA IMRA, told PropertyEU.. 'Overall, we've been attracted to the healthcare sector since 2008, so it's an asset class we know well.'
In December 2016, AXA IMRA completed the acquisition of a portfolio of 17 healthcare assets in Western Germany from real estate funds managed by US private equity group Blackstone for around €310 mln. The investment was made on behalf of AXA Insurance Companies and the two retail funds, AXA Selectiv Immo and AXA Selectiv Immoservice.
The 177,264 m2 portfolio comprises 16 freehold nursing homes and one rehabilitation centre and contains 2,788 beds. The assets are operated under lease contracts with five separate operators, including one of Germany's largest nursing home operators, Curanum, which occupies 13 of the properties.
'We liked the Blackstone portfolio because some of the assets are operated by Curanum,' Kurata said.
Growing market
'We have no absolute maximum deal size. We look at smaller assets in the context of the operator running it and whether the operations can be profitable, despite the size, in order to ensure sustainability of rent. We also will not look at small unitary deals in geographies in which we do not already have a healthcare presence.'
The majority of the portfolio acquired from Blackstone is located in North Rhine-Westphalia, Germany's most populous state, while two homes are in Baden-Württemberg, two in Bavaria and one is situated in Hesse. Based on demographic trends in these parts of western Germany, the market for nursing homes is expected to experience further growth over the coming decade in response to a growing and aging population, enhancing the long-term appeal of such an investment.
Finland
Also in December, AXA IM – Real Assets acquired a portfolio of 11 healthcare assets in Finland for around €65 mln. The portfolio was acquired on behalf of AXA Selectiv Immoservice. The portfolio comprises modern and purpose-built healthcare assets, all of which have been developed since 2012. Two of them are under construction and are due to be completed in 2017.
AXA IMRA is targeting all 14 markets in which it has a presence, including Germany, the UK, Italy and Spain. 'We'd love to do more healthcare deals in the UK. France, however, has become a little challenging from a price perspective. We'd also love to do more deals in Italy and Spain. We prefer markets like these where we have a good understanding of the regulatory environment,' Kurata said.
AXA IMRA had over €70 bn in AUM, including €54.1 bn in direct property and infrastructure and €12.7 bn in real asset finance as of end of September 2016.
