Primonial in further acquisition of German senior housing portfolio

Another big move into the German senior housing market for expansive French group Primonial – this time a sale-and-leaseback deal for a portfolio of 12 senior residences on behalf of one of its funds.

The seller is care home operator Advita Pflege. The portfolio comprises 513 assisted living apartments, 290 beds in residential communities and 398 day-care places for a total surface area of more than 57,550 sqm space across 12 residences. Five newly-built residences are already in operation, while another seven are undergoing redevelopment or construction.

The assets will be fully leased for a 20-year period to the operator, a German private provider of elderly care services. Few other financial details were divulged.

The properties are located in Saxony (7), Thuringia (4) and Saxony-Anhalt (1), with five of the assets currently operation, and a further seven being sold as part of a forward deal, while being currently renovated and converted from other uses.

According to Matthias Faensen, Advita’s CEO, “We have developed the concept of the advita house with assisted living, housing communities and day care under one roof, in order to allow residents to preserve their self-determination and comfort levels in terms of independent living, while maintaining ties with the community and having access to all the services they might need.”

Advita was founded in 1994, and currently has 30 branches, mainly in the eastern German states, and 2,200 employees.

Primonial has become a sizeable player in France, managing €37bn of assets for investors, including life assurance and equities, with a strong focus on commercial real estate. It is still currently owned by UK private equity group Bridgepoint, but has been put up for sale by its owners Bridgepoint. First bids are expected by early summer, and are likely to top €1.5bn, making it one of France’s largest private equity deals of the last five years. Bridgepoint is thought to have likely doubled its investment since buying Primonial in 2017.

Players such as Primonial are attractive to private equity groups, who like the steady flow of recurring fee income that can be used to repay loans used to pay for the business.

Last year Primonial bought €800m of German healthcare assets in one deal, the biggest healthcare deal of the year in Germany.

The company bought a 50% stake in a German real estate portfolio managed by Alabama-based healthcare REIT Medical Properties Trust (MPT) for institutional investors in Germany. The portfolio comprised 71 properties with a combined total value in excess of €1.63b. MPT retained a 50% interest in the portfolio with one of its affiliates continuing to manage the facilities.

Primonial is betting big on healthcare, its deputy CEO of real estate, Laurent Fléchet, told REFIRE at the time: ‘Our goal is to invest between €1.5bn and €2bn in healthcare assets in Europe per year, in markets such as Germany, France, Italy and Ireland,’ he said. ‘The healthcare market is already pretty mature in France and has moved a lot in Germany in the past two years. We think we’ll see more consolidation in the sector going forward.’

Primonial had been quietly ramping up its exposure to the European healthcare sector over the past two years. In July 2016, it acquired a portfolio of 66 healthcare facilities in France from Gecimed for €1.24bn all-in cost. The portfolio, since renamed Immocare, consists of 66 healthcare facilities run by ten operators (8,220 beds) with full occupancy.

In the same month, Primonial acquired the Panacea portfolio in Germany for €994m. That portfolio consisted of 68 healthcare facilities across 13 German states, run by 28 operators and (8,614 beds), with an occupancy rate of 92.5%.