European healthcare operator Korian has signed a long-term investment partnership with funds from pension fund BAE Systems to jointly own a portfolio of 23 long-term care and healthcare properties and one greenfield development across France, Germany and Spain.
Under the partnership, Korian will be the asset and property manager in the real estate structure and will continue to consolidate the structure in its accounts.
BAE Systems Pension Funds will invest around €100 mln of equity into the portfolio which includes nursing homes, post-acute and mental healthcare clinics, four of which are being redeveloped.
The portfolio has a net equity value of around €200 mln and a LTV (loan to value) of around 38% as of December 2021. Further capex investment into the greenfield and redevelopment sites expected between 2022 and 2024 will bring the overall gross value of the portfolio to around €320 mln.
The partnership, which has a minimum lock up of seven years for BAE Systems Pension Funds, will generate a remuneration of around 4.5% per annum for Korian.
‘This new agreement confirms the group’s capability to leverage its attractive and liquid existing portfolio and to raise equity financing on a regular basis in order to match the real estate investments related to its sustained development momentum, while keeping a prudent loan to value rate (55% or below),’ Korian said in a statement.
Korian’s real estate strategy, launched in 2016, has increased three-fold the value of its real estate portfolio to €2.9 bn as of 30 June 2021. It is expected that the real estate portfolio will reach €4 bn by 2023.