Patrizia adds further 5 assets to first care home fund

Rapidly-growing German listed Patrizia Immobilien AG stepped up its commitment to the care home and assisted living segment this month when it bought a real estate portfolio of five care homes, for an undisclosed price from an unnamed Anglo-American investor. The assets are destined for the firm’s Patrizia Pfelege-Invest Deutschland I Fund, which has a target investment of €500m.

According to Jan-Hendrik Jessen, Head of Fund Management Operated Properties at the Augsburg-headquartered Patrizia, “With this acquisition, we are expanding our commitment to the care home real estate segment and leveraging investment opportunities in selected regions with a rising need for care capacity.”

The five homes are in Göttingen, Wetzlar and Erfurt in central Germany as well as Eisenhüttenstadt and Schwedt in the northeast. They have 632 care places and 29 units in the assisted living area. All the facilities, built between 2001 and 2003, and with between 89 and 175 care places eache, are let on long-term leases and have an average capacity utilisation of more than 95%.

Patrizia said Pflege-Invest Deutschland I now owns more than 30 properties and it expects growing demand for care home facilities given an ageing population in Germany, as in many other developed countries. Today there are around 2.5 million people in Germany who require care services, around 30% of whom live in care homes. Around two-thirds of care recipients living at home are looked after by relatives, the others by outpatient services.The proportion of Germans requiring care is expected to rise from 5% to 9% by 2030.

Patrizia’s growth over the past six years since struggling to secure refinancing at the outbreak of the financial crisis has been extraordinary. It now has €13.5bn of assets under management, mainly now for third parties. According to CEO Wolfgang Egger, the focus this year has been on accelerating European expansion, particularly in France, the Netherlands and Finland. The company now manages more than €4bn of property assets outside Germany.

“By the end of the year, we will with great certainty have exceeded our goal of increasing real estate assets under management by €2 billion over the year as a whole,” said Egger. In addition to the European expansion, he added, “We have also expanded our foundation for further growth in Germany. By founding PATRIZIA GrundInvest GmbH, we have set a course for an expansion of the business model. From 2015, PATRIZIA will also offer real estate funds for private investors.”

Patrizia is targeting having only about 1000 residential units left in its own portfolio by the end of this month, which are destined to be sold next year, a remarkable turnaround for a company that for most of its 30-year existence was a developer, improver and trader of small residential portfolios, mainly in its heartland of Bavaria. Patrizia’s current total debt is now only €100m.