Corpus Sireo has further war-chest of €400m for healthcare assets

Investor and asset manager Corpus Sireo, the German subsidiary of Swiss Life, said it had bought twelve healthcare assets for its institutional healthcare funds for €130m, but indicated it planned to invest a further up to €400m in the sector this year.

All three of the Cologne-based Corpus Sireo's healthcare funds are still actively buying properties, with its five-year-old Health Care II fund buying five separate assets in 2016, at yields given at between 6%and 6.7%, bring that fund's total to 17 separate healthcare properties.

The company's Health Care III fund, launched in autumn 2015, bought four assets for its portfolio, which focuses on medical centres, at gross initial yields of 5.7% to 6.7%. The more recent Health Care IV fund, which invests in elderly peoples' homes, bought three properties in Berlin, all from private individuals and all of which are managed by Alloheim.

According to Sebastian Schlansky, CORPUS SIREO’s Head of Acquisitions in the health care segment: “We currently have €400 million available in Health Care Funds for additional transactions, and this amount is set to increase. The focus continues to be on medical care centres, assisted living and care homes across Germany. Demand from investors is high: funds in this segment offer above-average stability and wide risk distribution.”

A new report published by healthcare real estate consultancy Terranus shows that prices for German healthcare properties have risen over the past four years at the same rate as commercial and residential properties, although their absolute prices are much lower. Terranus CEO Markus Bienentreu coments in the report that yields of more than 5% are still very realistic, despite the high demand.

Based on figures provided by the vpd Verband deutscher Pfandbriefbanken, which closely monitors the residential sector, The Terranus report highlights how purchase price multiples for healthcare properties have risen by 26% since 2012, while multiples for residential and commercial properties have risen by 27% and 25% respectively.

In real terms, while investors are paying more than 20-times annual rent for commercial or residential property, core healthcare properties are trading for 16 or 17-times multiples. This has partly to do with the complicated regulation surrounding the healthcare sector, with each of Germany's 16 federal state each having their own stipulations.

This can make it tricky even determining that what you're buying really is a 'core' asset, once you take all the local demands and regulations into consideration – an aspect for the unwary we've frequently reported on in these pages.

Separately, Corpus Sireo reported that it has sold 79 properties with a total lettable area of 85,000 sqm on behalf of Aberdeen Asset Management Deutschland, for an unnamed price. The properties are part of the 'Drive'-portfolio, which Aberdeen managed on behalf of a Eurocastle fund.

The transactions, whose implementation began in 2015, mainly consist of smaller commercial buildings in B and C cities, mainly leased to Commerzbank. The Drive portfolio has a chequered history, stemming from when Fortress subsidiary Eurocastle bought a real estate portfolio with owner-occupied properties from then Dresdner Bank for €2bn. These were managed by Degi, the real estate fund management subsidiary of Dresdner Bank. Degi itself was subsequently acquired by Aberdeen, with Dresdner Bank now subsumed into Commerzbank.

"The sale of the properties throughout the country was challenging because many of the assets were partially owned, or they were part of leasehold agreements," said Benjamin Schreiber, who was responsible for the mandate at Corpus Sireo.