PSPI acquires German care home portfolio

Guernsey-based real estate firm Public Service Properties Investments has acquired a portfolio of six German care homes from a subsidiary of an undisclosed German bank for EUR 36.3mln. The portfolio comprises 403 care home beds and 154 assisted living places in cities such as Berlin, Bremerhafen and Büren.

The homes will be leased to listed German care home operator Marseille Kliniken Group for 20-years, with renewal options for an additional five or 10 years. The aggregate initial rent has been set at EUR 2.65mln, reflecting a net initial yield of 7.3%. The rent will increase every four years by 70% of the German Consumer Price Index, according to PSPI.

Following this acquisition, PSPI now owns a portfolio of 14 care homes across Germany, consisting of 882 beds, including the assisted living services. Since the end of last year, the firm has invested around EUR 57mln in German care homes, which provide an aggregate initial rental income of EUR 4.2mln per annum, according to Ralph Beney, director of RP&C International, which manages PSPI's investments.

'We're interested in German care homes because of the high yields of 7% to 8% that they offer. We would like to invest up to EUR 150 mln in additional care homes in Germany this year, if we find the right opportunities. Going forward, we will also consider similar homes in Austria and in Benelux countries, where residence fees are supported by the government,' Beney said.

PSPI already has a portfolio of 39 care homes in the UK, with a combined value of around £175mln, he added. It also owns a care home in Zurich and 140 post offices across the US. The group's global investment real estate portfolio is valued at approximately £220mln today, Beney said.

Healthcare facilities are garnering a lot of attention in the wake of a rapidly growing elderly population around the world. The population aged 65 and over in the EU-25 is expected to double between 1995 and 2050, according to Eurostat, the EU's statistics office. In 1995, just 15% of the population in the EU-25 was aged 65 and above. In 2050, that figure is expected to leap to 30%, says Eurostat.

As a result, investors have started to wise up to the sector’s potential. Morgan Stanley Real Estate made its first assisted living investment in the UK last year in a $1.1 bn joint venture with Virginia-based Sunrise Senior Living. RREEF, the global investment management arm of Deutsche Bank, has set up a healthcare fund to acquire rehabilitation homes in Germany.