Korian continues expansion in Europe

Pan-European care group Korian has signed a long-term joint venture partnership with BAE Systems Pension Funds covering a portfolio of 23 healthcare real estate assets across Europe.

The portfolio consists of nursing homes, post-acute and mental healthcare clinics in France, Germany, and Spain. It includes one greenfield site and four assets which are being redeveloped.

The Paris-headquartered care group says it will be the asset and property manager and ‘will continue to consolidate the structure in its accounts.’

Korian specialises in nursing home care for the elderly and has homes in seven European countries: the UK, France, Germany, Belgium, Italy, Spain, and the Netherlands.

BAE Systems, which invests in real estate, infrastructure, alternative, and other private markets assets globally, in addition to listed equities and fixed income, has invested around €100 million of equity on the portfolio.

The assets have a net equity value of around €200 million including a portfolio structuration fee, based on a valuation carried out by the global commercial real estate services firm Cushman & Wakefield (blended capitalisation rate of c.4.9%) and a LTV (loan to value) of around 38% as of December 2021, Korian explains.

Further capital expenditure investment between 2022 and 2024 will bring the overall gross value of the portfolio to around €320 million.

Following the announcement, Korian’s share price has fallen roughly 2% to €27.90 at the time of writing.

The partnership is a 15-year agreement with a possible extension and a minimum lock-u of 7 years for BAE Systems. The expected remuneration is around 4.5% per annum, with a floor and a cap on the exit yield.

Korian says: “The 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 of 55% or below.”

The group’s real estate strategy, launched in 2016, has multiplied by over 3 times the value of its real estate portfolio to €2.9 billion as of 30 June 2021, for 25% of the operated network across Europe.

To date, Korian is representing roughly 120 projects, using internal expertise and entering partnerships with land developers and investors. It is expected that the real estate portfolio will reach € 4 billion by 2023 consisting of primes assets in key locations across Europe.

Elevation real estate investment manager advised on the deal.

Date published: January 6, 2022

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