24 January, Espansione
REAM SGR Spa, the asset management company specialised in the incorporation and management of close-end alternative property investment funds, has launched in April 2017 the Fund GERAS with the acquisition of an assisted living facility in Rivoli, west of Turin. In addition, in June the company concluded two investments in Milan for a total of 67 million euro, while in October it acquired another assisted living facility in Genoa for 7 million. The GERAS Fund got the interest of banks, social insurance funds and pension funds. The fund’s objective is to invest in assisted living facilities located in various regions of Italy. The completion of the pipeline is expected for the third quarter of 2018 with the acquisition of 3 healthcare facilities for a total investment of approximately 32 million. The fund aims at reaching assets for 120 million euro. “In the next years, says Oronzo Perrini, REAM SGR General Director, the demand for social and healthcare services and the related public spending are destined to grow considerably, especially for what concerns long-term care. Hence, the assisted living market has a lot of potential thanks to the increase of demand in extra-hospital facilities (the available figures referred to 2007-2015 confirm growing profits despite the economic recession)”.
In Italy, it is estimated to be about 4.1 million citizens that are not autonomous, 3.5 of which are elderly people. The quota of people older than 80 years will go from 7.7% of the population, as it was in 2005, to 15.5% in 2060, as estimated by Istat. The gap between the trend of the population aged over 65 and that of people aged between 0 and 14 continues to widen. In Italy, the need for healthcare facilities is estimated to be around 496 thousand beds. There are currently not enough beds to fulfil such a demand, and home care is delivered to approximately 527 thousand elderly people, against a need of about 870 thousand patients.
The long-term care sector allows investors to diversify their portfolios with an asset class characterised by low volatility and a reasonable premium for the risk in comparison with Government bonds of the same duration. Therefore, they’re an ideal investment for who wants to invest with a long-term perspective adopting a conservative approach. Thanks to its characteristics, the escort is interesting institutional investors more and more. In a market that has seen its investment volumes reducing, the long-term care segment has registered a significant growth especially from reserved alternative property investment funds dedicated to expert investors (social insurance funds, pension funds, insurance companies), contributing at the creation of a liquid and solid secondary market.
Oronzo Perrini clarifies that “the GERAS Fund is characterised by a buy & hold strategy that privileges the steady and continuous distribution to investors of the income generated with the property management. The little connection with the economic cycle (which has great impact in the other asset classes) together with the gradual growth of beds and the tightening of the access barriers of the market make the returns of investments in long-term care assets little volatile (with a limited standard deviation) and highly predictable (by 6-7% on average). Forecasting a growth of the long-term care market in quantitative terms (eg. number of facilities on the territory, number of properties, number of beds) as well as in terms of figures characterising the market (number of transactions, average dimensions of the transactions, etc.), the operations will have to take into account the factors covered hereby in order to success, with a particular focus on the manager (and/or with the potential instruction in the lease contracts of preventive and replacement clauses”.
Oronzo Perrini stresses how “REAM SGR, noted the success of the GERAS Fund, is already working on a new real estate project (GERAS2) with the aim of continuing the path taken and with the possibility of investing also in the hospital segment. From this point of view, roundtables have already been launched with social insurance and pension funds”.
Translator: Cristina Ambrosi