ING Real Estate launches EUR 800m healthcare fund

ING Real Estate has become the latest property company to venture into the healthcare sector. The company is launching a fund that will enable institutional investors to gain indirect exposure to the sector on a pan-European basis. In recent years a number of listed property groups have invested directly in healthcare properties,

The property arm of listed Dutch financial group ING announced the launch on Tuesday of the EUR 800mln ING European Healthcare Property Fund. The fund will target a balanced portfolio of cure, care and commercial healthcare assets, primarily in Germany, France and the Netherlands. Opportunities in Italy, Spain, Austria, Belgium and Sweden will also be considered.

ING Real Estate said in a statement that demand for healthcare is expected to continue to rise as European populations age, providing investors in the sector's real estate with abundant opportunities. While the majority of the continent's estimated EUR 400bn worth of healthcare property remains owner-occupied, changes in legislation and government funding have resulted in a growing number of transactions.

The fund is open to institutional investors and has an IRR of 8-9%. The fund's management team will be led by Wietse de Vries, fund manager and Ingrid Hulshoff, portfolio manager, with the support of local experts in the various target countries and by ING Real Estate's global healthcare property platform. In the Netherlands the fund will also draw on the expertise of Medinet, ING Bank's knowledge centre for the healthcare industry.

De Vries commented: 'We have introduced this innovative investment strategy based on demand from the investor community. We are proud to be able to offer institutional investors the opportunity to invest in this sector on a pan-European basis. While expected investment returns are on par with other core real estate strategies, the correlation between healthcare and economic developments is virtually non-existent. This makes healthcare property an excellent diversifier of risk. Moreover, the sector is characterised by stable, long-term cash flows, providing investors excellent inflation-hedging potential.'

Several listed property companies are active in the healthcare or care home segment. Swedish listed property company Kungsleden is an active investor in retirement and care homes in its home market, and it expanded into German retirement homes in 2006. Care and retirement homes now account for 42% of Kungsleden's total property portfolio valued at EUR 2.7bn.

Brussels-based Cofinimmo - 46th in PropertyEU's ranking of the top 100 European listed proeprty investors - owns 59 nursing homes, totalling 261,000 m2, in Belgium and France. The segment makes up 8.1% of its total portfolio that was valued at EUR 2.9bn at end-2007. While office properties in Belgium account for 77% of the company's portfolio, it is also a pub landlord in Belgium and the Netherlands. Pubs make up just under 15% of Cofinimmo's property assets.

French listed property giant Gecina spun off its healthcare specialist Softco last year and the listed unit, rebranded Gecimed, is an active investor in care homes, hospitals and medical clinics in France.