Cindat, one of the investors behind the GBP525m QHotels deal completed in late 2017, has teamed up with a US REIT to swoop on a range of senior living assets in the UK for GBP167m.
The deal follows one of the biggest healthcare property deals of recent years which saw Circle Health take over operation of a portfolio of private hospitals, while splitting off the real estate to a new owner.
The effective takeover of BMI Healthcare has been jointly arranged with US investor Medical Properties Trust, one of the world’s leading investors in hospitals, which will acquire the BMI properties in a GBP1.5bn deal.
Privately owned UK group Circle Health took over operator BMI Healthcare, and will manage its 52 UK facilities, including those acquired by MPT.
MPT CEO Edward Aldag commented: “We are confident in the growing opportunities for private hospital operators in UK healthcare. We look forward to advancing our relationship with our UK operators in contributing to improved facility efficiency, quality of care and health outcomes for all hospital patients throughout the United Kingdom.”
Back in July 2019, MPT spent USD434m on eight UK hospitals, acquired from Secure Income REIT. Those eight are operated by Australian group Ramsay Health Care, itself the fifth largest operator of private hospitals globally. Ramsay is present across key Asian markets, and has a European presence in France, the UK, Sweden, Norway, Denmark, Germany and Italy.
Circle, meanwhile, which was founded in 2004, has grown to be a major player in UK healthcare. In 2011, the company listed on the UK’s AIM market, raising GBP45m, subsequently attracting a number of private equity investors. One of these backers, Toscafund, took the company private in 2017 with a GBP74m buyout.
Circle has grown its operations, including a foray into running a National Health Service hospital in 2011 – a contract it subsequently exited from in 2015.
Elsewhere in the healthcare market, further consolidation continues in care homes. The new year saw Chinese investor Cindat Capital Management team up with US Reit Omega Healthcare to buy a GBP176m portfolio of 67 senior housing properties across the UK. The deal was for a 49% stake in the portfolio, with Cindat having previously purchased the 51% interest a year ago.
Omega told Hotel Analyst: “We are always looking to increase our investments in the healthcare real estate market in the UK with the right operators in the right locations at the right price. We hope to be able to continue to grow both with our current operator base and by judiciously adding additional operators to the portfolio.”
“With solid fundamentals driven by aging demographics and the supply-demand imbalance, coupled with a temporary dislocation in the market created by the political landscape, we believe the UK’s senior care sector represents an attractive long-term investment opportunity,” said Allan He, senior partner at Cindat Capital Management.
And UK listed Reit Impact Healthcare continues to build its portfolio of care homes, starting the new year by spending GBP3m on a further addition. As at the middle of 2019, Impact had gathered a portfolio worth GBP271.6m across 81 sites, with funding for further acquisitions in place. Its total NAV return for last year was 4.39%.
HA Perspective [by Chris Bown]: In some parts of the UK’s National Health Service, news of Boris Johnson’s election win in December meant long faces, as doomsayers predicted the slicing and dicing of the treasured national institution. But whether or not Johnson decides to allow US bidders into the NHS – something he denied he would let happen – that treasured institution is, as ever, in crisis. Badly run by an infighting matrix of managers and medics, and facing ever-growing mission creep, it simply cannot keep up.
Around this growing chasm sit a range of private providers, all eyeing the opportunity. The demographics appear to be on their side, as they pick off tranches of hip replacement operations, or other batched treatments, for a struggling NHS.
One big issue for UK hospitals is “bed blocking”, where patients who have completed acute treatment cannot leave, as their home is not an appropriate place to recover. For care home operators, this transient market is a potentially lucrative market, alongside those requiring long term support.