THE NETHERLANDS INTRODUCTION

COOPERATION ESSENTIAL FOR NEW SUPPLY IN 2020

The Dutch healthcare market had once again a record year in 2019, for the seventh consecutive year, with total investment volume surpassing € 1 billion for the first time. This is mainly because developers and investors are continuing to broaden and specialise in this sector. Invested capital rose across almost all segments in the market and the total number of transactions went up with 25% compared to 2018. Investors are even showing prudent interest in segments they have previously avoided, such as care for the disabled and mental healthcare.

The Dutch healthcare real estate market had once again a record Moreover, many operators currently face expansion challenges as year in 2019, for the seventh consecutive year, with total they endeavour to meet the growing demand for healthcare. investment volume surpassing € 1 billion for the first time. This is Finding new and suitable locations proves challenging in this mainly because developers and investors are continuing to market and requires cooperation with the right parties. broaden and specialise in this sector. Invested capital rose across almost all segments in the market and the total number of Partly because of this, the need for suitable expansion sites will be transactions went up with 25% compared to 2018. Investors are high in 2020. Vacant social real estate is often a good candidate even showing prudent interest in segments they have previously for such use. Given the ageing population of the Netherlands, it avoided, such as care for the disabled and mental healthcare. is necessary that local authorities formulate a clear housing strategy for those in need of care and develop policy accordingly. An interesting development is the growing number of transactions If they do not yet have these, the time has come now to put them related to independent treatment centres and clinics (secondary down on paper and start taking firm action by, for example, care). We notice that large institutional and international revising land-use plans. investors are now actively seeking out such investment products. For 2020, we expect this trend to continue. Looking at the transactions in this sector over the past year, we see that yields have continued to slacken. But to a lesser extent Even though investment volume has grown exponentially, the than in previous years. Moreover, returns no longer achievable in demand for suitable still exceeds the current supply. As other markets can still be achieved in healthcare real estate. We a result, investors are increasingly focusing on new segments expect a further slight decline in 2020, but with the downward within the healthcare market. They include secondary care clinics, curve continuing to level off. care for the disabled and mental healthcare. The key word for 2020 is “supply”. If healthcare providers, Whether this will change in the coming years is highly dependent governments and market parties cooperate effectively this year on the possibilities created by (local) government(s) and the way with the objective to facilitate new developments, we are in which healthcare operators and housing associations convinced that more senior citizens and other people in need of decide to deal with the outdated properties in their possession. care will be able to find suitable housing with the provision In order to make the current supply futureproof again, they need.U investments are needed.

2 HEALTHCARE SPECIAL H2 2019 INVESTMENT VOLUME

ANOTHER INVESTMENT INVESTMENT VOLUME IN 2019: FACTS AND FIGURES VOLUME RECORD - Total investment volume in 2019 was €1,125 billion, which is 17% higher than in 2018 (€ 964 million). - The average volume per transaction in 2019 at € 8.3 million is slightly lower than the average volume in 2018 (approximately € 8.9 million per transaction). Investment volume in Dutch healthcare real estate has now been growing for seven years in - The number of transactions rose to 137 in 2019, a row. In 2019, more than € 1 billion was compared with 107 in 2018. invested in care-related properties for the first - Some 64 different investment entities were active in the time. As in previous years, the largest share of acquisition of healthcare real estate. this was invested in public nursing homes and That is four more than in 2018. assisted living. In other words, investors are - The four largest investors in 2019 jointly had a total increasingly responding to the growing demand investment volume of € 427 million, which is 37% for housing for elderly people in need of care. of the entire market. Both local and international investors are - Broken down by province, the highest investment volume was showing a greater interest in healthcare real recorded in Noord-Brabant (19%). It was followed by Utrecht estate, a fact reflected in the enquiries we are (18%), Zuid-Holland (13%) and Noord-Holland (13%). receiving in combination with new entrants to - Approximately 29% of transactions by investment volume were the market. This increased interest, together with sales by developers and about 28% were sales by healthcare rising construction costs and growing supply-side operators. Inter-investor transactions are also rising slowly, shortages, is forcing investors to pay ever now accounting for around 24% of investment volume. keener yields. - Approximately 39% of transactions are in public nursing homes, about 28% are in assisted living locations and 16% are in private nursing homes. The remainder involve primary medical office buildings (9%) and secondary clinics (9%).

HEALTHCARE REAL ESTATE INVESTMENT VOLUME BY COMMERCIAL INVESTORS

x 1 million

€ 1.200,

€ 1.000,

€ 800

€ 600

€ 400

€ 200

€ - 2012 2013 2014 2015 2016 2017 2018 2019 PublicExtramuraal nursing homesParticulierePrivate woonzorg nursing homes IntramuraalAssisted livingEerstelijnsPrimary careTweedelijns Secondary care

Source: CBRE Research

3 HEALTHCARE SPECIAL H2 2019 INVESTMENT VOLUME

Developments in prime net returns

The percentages below represent the prime net initial yields, including transaction costs, applicable in the second half of 2019. They are based on fifteen-year at market rates for new-build properties in good locations, with solvent tenants and fully adapted for their intended healthcare use.

Primary Secondary Public nursing Assisted living Private nursing Health centres centres homes homes

H2 2019 5.15% 5.60% 4.65% 3.75% 4.90%

H1 5.30% 6.00% 4.65% 3.75% 5.20% 2019

Source: CBRE Research

Transactions Syntrus Achmea Real Estate & Finance has acquired a portfolio of four primary health centres of which one also offers specialist Numerous transactions in Dutch healthcare real medical care (primary plus), all in Maastricht. These are let on a estate have been completed in the past six long-term basis to various primary care providers and months. Below we highlight just some of them. medical specialists.

HEALTHCARE REAL ESTATE TRANSACTIONS Care Invest (Belgium) has acquired the estate Landgoed Wulperhorst at Tiendweg 6 in Zeist. This is being completely renovated by Panta Rhei Healthcare. The main is being converted into 25 luxury studios and the existing coach house is to be replaced by a newly built property with an additional thirteen self-contained studios. Following its refit, the property will be leased to Valuas Zorggroep to provide high-quality residential and care services for the elderly. CPI has also purchased private residential care locations in Zelhem and Hillegom. Wulperhorst estate before the renovation

4 HEALTHCARE SPECIAL H2 2019 TRANSACTIONS

NorthWest Healthcare Properties REIT and Focus Real Estate have been working in partnership since 2019 to build a healthcare real estate portfolio in the Netherlands. The parties started this cooperative venture with Focus’s clinic portfolio as their foundation, including locations in Hilversum and Rotterdam. These are former office buildings that Focus has transformed into high-quality clinics with long-term leases.

In Harderwijk, Bouwinvest has acquired a public nursing home at which it plans to create 54 sheltered living units plus communal areas and various associated general amenities. The basement will house premises for primary healthcare functions. Equipe Zorgbedrijven, Rotterdam Zorggroep Noordwest-Veluwe is to rent the building (Villa Verde) on a long , to provide dementia care for senior citizens. The Over the past six months, Aedifica has invested approximately € building will be built on a circular base and becomes energy- 82 million in Dutch healthcare real estate. Amongst its neutral (EPC 0). acquisitions is a portfolio in Hoogeveen consisting of five complexes let long term to the Northern Netherlands Cooperative of Care Organisations (NNCZ). Aedifica has also bought several private residential care complexes and a nursing home.

Intermaris’ care portfolio in the province of Noord-Holland has been purchased by Holland Immo Group. This comprises nine complexes with a total of 251 social dwellings (both independent and sheltered housing units), thirteen community spaces and one plot of undeveloped land. A large proportion of the portfolio is let on a long-term basis to various healthcare institutions.

The Amvest Living & Care Fund has been very active in the Villa Verde, Harderwijk healthcare real estate market last year. Since 2019, the fund has been also investing in assisted living suitable for low Having previously acquired Leyhoeve Groningen, Heitman has demand of care in addition to private nursing homes. The fund now also purchased Leyhoeve Tilburg from Bonita Groep for has purchased a number of objects spread throughout the € 84 million. This complex in Tilburg contains 200 “age-resistant” Netherlands. apartments for senior citizens and 85 sheltered living units for those with a high demand for care. In addition, there are various Healthcare Real Estate (HCRE) acquired various properties over communal facilities. the past half year, e.g. a primary medical office building in Culemborg and a private nursing home in Emmen.

5 HEALTHCARE SPECIAL H2 2019 CONTACT

CONTACT For more information about CBRE Healthcare and our market reports, please see our Healthcare real estate page.

TAKING CARE OF YOUR REAL ESTATE CBRE Healthcare is a vital link between healthcare and the property market. As consultants to both healthcare organisations and players in commercial real estate, we are actively involved in these sectors on a daily basis. So we are keenly aware of the trends, opportunities and threats within them, and how specific legislation and regulations affect property transactions.

CBRE Healthcare acts on behalf of healthcare organisations, investors, banks and developers, and is involved in strategic Also view our previous consulting, feasibility studies, sales and purchasing, valuations, report on H1 2019 building cost estimates, construction supervision, technical due diligence, risk analyses, holding/sale analyses, programmes of requirements, financing and so on.

Annette van der Poel Dirk Adriaanse Associate Director Healthcare Consultant Healthcare +31 6 55 47 61 41 +31 6 25 19 94 43 [email protected] [email protected]

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Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE. cbre.nl