Investec Wealth & Investment said this week that it has redeployed around 20% of its real estate exposure – equivalent to £200 mln (€240 mln) – from conventional property investments to a range of non-traditional property vehicles owning the freeholds of GP surgeries, student accommodation, care homes and theme parks.
IW&I believes that these property sub-sectors have become increasingly attractive for income-seeking retail investors because they are exposed to less economically sensitive areas of real estate and invest in stable assets with good cash flow profiles and the prospect of capital growth as rents increase over time.
'Property as an asset class is primarily a source of rental income and, post-Brexit, projections of a cut to UK base rates will offer support,' commented Chris Hills, Chief Investment Officer at Investec Wealth & Investment. 'However, fears of a slowdown in the UK economy have meant that many traditional real estate investments have been hit by rising risk aversion. Many investors are looking for a healthy level of income without taking on too much economic risk in terms of voids or tenant defaults, and these non-standard property plays are ideally suited to this objective.'
IW&I is now one of the largest external shareholders in medical REITs Assura, Primary Health Properties and Medicx, which invest in UK primary health property leased principally to GPs, NHS organisations and other healthcare users.
In terms of student accommodation, IW&I said it has invested more recently in two quoted student accommodation funds, Empiric and GCP while in the care home sector it has invested in Target Healthcare, which owns over 30 freehold assets in the UK.
The firm has also invested in Secure Income REIT, which owns a freehold portfolio of 26 health and leisure real estate assets producing a net initial yield of 5.3%. Its portfolio comprises 19 private hospitals and six leisure assets including three visitor attractions such as Thorpe Park and Warwick Castle.
