Senior Living REITs are on an acquisition spree in Spain

Spain has become a magnet for senior care property investors backed by an increasing 65+ population combined with a shortage of beds and an obsolete stock. The country’s coverage ratio (average number of residential beds for every 100 people over 65) is 4.3% considerably below European peers like the UK, France, Germany or Sweden which are all above 5%. In fact, Spanish citizens are predicted to have the longest life expectancy in the world by 2040 (IHME, 2018).

A number of local Spanish REITs (SOCIMIs) are investing in the senior property sector including Veracruz Properties (Ticker. YVCP), Am Locales Property (Ticker. YAML) and Almagro Capital (Ticker. YAC1) through varying strategies.

The latest local real estate fund manager to announce a senior living REIT has been Azora who will manage Adriano Care, a new REIT created to deploy €250 million in nursing homes backed by private banking clients of Indosuez Wealth Management and Banca March, who also coinvests along with Azora in the venture.

Adriano Care’s main strategy is the acquisition of nursing homes, which will be managed by tier one operators under long term triple net contracts. The yet-to-be-listed SOCIMI will focus on assets which have potential to be improved through re-positioning and refurbishment.

With this project, Azora continues to follow new investment themes and add value for its investors. This new strategy follows the global ageing mega-trend an opportunity generated by the fact that during the next three decades, the world’s 65+ population will duplicate fueling demand for new accommodation and specialised care.

Another Spanish firm which is preparing a new REIT listing is Healthcare Activos, which was launched by Jorge Guarner and Oaktree Capital Management in 2016. The firm already owns a portfolio of 23 assets, (of which 19 are operational and 4 are under construction/renovation), representing a total asset value of more than €300 million euros. It plans to invest an additional €500 million pre-IPO in 2022.

International players such as Activum SG, Primonial, Eurosic have also purchased properties enabling operators to focus on management and eliminating the real estate risk from their balance sheets. There are also owner-occupiers such as Korian amongst the newcomers to the Spanish market.

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