TA EUROPE PROVIDES TECHNICAL APPRAISAL AND DUE DILIGENCE EXPERTISE TO A CARE HOME FUND ON THE ACQUISITION OF 12 SENIOR RESIDENCES IN GERMANY
TA Europe has further extended its impressive track record in providing technical expertise to international investor funds investing in the care home or assisted living sector, through providing Technical Due Diligence advice and Project Monitoring services on behalf of Primonial REIM.
As recently announced in the property press and care sector publications, Primonial REIM announced that it has finalised a sale and leaseback agreement for the acquisition of a portfolio of 12 senior residences in Germany on behalf of one of its funds. The assets will be fully leased for a binding 20-year period to Advita Pflege, a German private provider of elderly care services. Ownership of each of these assets will be transferred as and when the conditions precedent have been met, where TA Europe is involved in an ongoing capacity to assist on the construction project monitoring and involvement as client’s representative on the technical approval processes at handover stages and final completion of the development sites.
The portfolio comprises 513 apartments of assisted living, 290 beds in residential communities and 398 daycare places, with a total floor area of more than 57,550m² across 12 residences. Of these residences, 5 are new as-built homes already in operation and 7 undergoing redevelopment and conversion (from former uses which include central post office buildings with historic monumental protection, a clinic, a school building and a former hotel). The facilities will offer a broad range of services including day care, assisted living facilities and additional services for Alzheimer’s patients in shared housing and/or intensive care.
The residences are located across three Federal States in the east of Germany, with 7 in Saxony, 4 in Thuringia and 1 in Saxony-Anhalt, with all sites easily accessible and located in residential areas or city centres close to local facilities.
As recently reported by Primonial REIM in their press release as the population of Germany ages, there will be a requirement for more care and dedicated structures. The shortage of beds in Germany is currently estimated at over 300,000 units, making this a promising market. Moreover, population statistics for the Federal States of Saxony, Thuringia and Saxony-Anhalt appear favourable as their share of over-80-year-olds will be above the German average, according to reported projections for 2030 and 2060.
Throughout the transaction, the TA Europe technical team in Germany worked closely with the client and their asset management advisor (Element Real Estate) and Legal DD advisor (Clifford Chance), in relation to not only the initial technical appraisals, inspections and data review, but also with regard to the requirements of the future and subsequent ongoing monitoring phases, to set up review and monitoring of progress and quality of the design and construction works, as well as ensure that all potential technical risk issues will be reported and duly assessed to meet all of the client requirements and purchase agreement conditions.
From regular and increasing demand for technical expertise and services from various investor clients in the residential care home sector in Germany in recent years, we have witnessed how the demand for senior assisted living and care home facilities is growing across the country, as it is across many European countries where we are also active and providing technical advice to investors. It is widely recognized that as the ‘baby boomer’ generation reaches retirement, the need for homes specific to the needs of the elderly, with purpose-built and fully barrier-free facilities, along with in-house or nearby services and support on call, is ever increasing.
As part of our extensive work in this sector, it has been interesting to note that a number of care home operator and developer specialists have identified a demand from their clients, senior residents and their families, for apartments in city centre locations, where there is more local activity for the residents and better public transport options, as opposed to the more common concept that care home locations may need to be located in quieter locations, such as lakeside or hillside in the countryside.
We have also noted that our investor clients continually seek long-term stability, where there can be numerous attractions and benefits from care home investments, with possibly higher and more stable returns than many other property asset classes, where care homes often offer far more long-term rental contracts, commonly with lease durations of 20 to 30 years.
TA Europe’s extensive experience in this sector and right across Germany greatly assists international investors who may have been previously unaware of Germany’s Federal State building law regulations having some variations between States, such that not every aged-care home concept may work in every state or region. For example, the codes and guidelines for fire protection and requirements on general home or room sizes may vary from state to state and can be subject to frequent changes, adjustments and extensions.
A trend that we have also noted is that international investors and also operators from abroad are increasingly bringing experience and knowledge gained in their domestic markets to Germany, in what is a relatively new real estate asset class here, but one which is increasingly growing and becoming more competitive with its offering.
If you would like to find out more, we would be glad to provide you with further details of our technical expertise and market-leading experience in technical appraisals and building pathology advice to investors and owners of care homes or other commercial property sectors in Germany or across Europe.
