Healthcare will thrive on structural change

Transcription

1 United Kingdom Healthcare, March 2016 Healthcare will thrive on structural change 4.50% (4.50%) 4.50% (4.50%) 5.00% (5.00%) 5.50% (5.50%) *Arrows indicate yield direction. Previous quarter yields in brackets. Chart 1: UK Healthcare Investment by Investor type 2014 and UK Real Estate Investor 23% 31% 26% 15% US Real Estate Investor Overseas Real Estate Investor 7% 23% UK Trade Buyer 6% 16% Overseas Trade Buyer 33% 14% 6% Private Equity Source: CBRE, 2014 and 2015 UK HEALTHCARE INVESTMENT HIGHLIGHTS IN THIS ISSUE 2.8 BILLION Total transaction values in UK Healthcare market in 2015 (excluding IPO activity). 970 MILLION Total investment by US and Overseas Real Estate Investors, up from 800 million in MILLION Overseas Trade Buyers step in increasing investment from 205 million in MILLION Private Equity are active buyers at similar level for See Chart 1 March 2016 CBRE Research 2016 CBRE Ltd 1

2 STRUCTURAL CHANGE WILL DRIVE INNOVATION ACROSS THE HEALTHCARE INDUSTRY IN 2016 ELDERLY CARE RETIREMENT LIVING PUBLIC SECTOR HEALTH Table 1: Summary of Structural Changes and Opportunities Sector 2016 Key Structural Changes 2016 Opportunity Elderly Care Primary Care / NHS Private Hospitals Retirement Living Source: CBRE National Living Wage Expansion of Strategic Estate Partnerships and new Premises Directions for GP surgeries Wider connection with customers, be it preventative medicine, well being or post operative / acute care Government & industry acceptance that a buy-now, paylater model isn't detrimental to the customer s position Encouraging more proactive management and more analytical response to staff vacancies to drive efficiency Evolving a politically acceptable interface between NHS as care commissioner & private sector (procurement & investment) to create the single greatest investment opportunity in the UK Healthcare market Facilitating genuine public private partnerships where commissioner, care provider and investor are aligned Ability to create long term, annuity style income products which fit into an elderly Private Rented Sector investment category March 2016 CBRE Research 2016 CBRE Ltd 2

3 OUR TEAM OF SPECIALISTS LOOK INTO PARTICULAR AREAS OF OPPORTUNITIES PRIMARY CARE NHS / STRATEGIC ESTATE PARTNERSHIP Andrew Surgenor Senior Director CBRE Healthcare Valuation Advisory David Batchelor Executive Director CBRE Specialist Markets CHARITIES / TRADE BUYERS CBRE DEBT FINANCE Peter Farnes Associate Director CBRE Healthcare Brokerage Lisa Attenborough Director CBRE Debt & Structured Finance March 2016 CBRE Research 2016 CBRE Ltd 3

4 OUR TEAM OF SPECIALISTS LOOK INTO PARTICULAR AREAS OF OPPORTUNITIES RETIREMENT VILLAGES NORTH WEST CARE HOME MARKET Ben Rosewall Director CBRE Healthcare Valuation Shaun Skidmore Senior Director CBRE Healthcare Valuation - Manchester MIDLANDS / SOUTH WEST CARE HOME MARKET YORKSHIRE / NORTH EAST CARE HOME MARKET Jon Hodgkins Associate Director CBRE Healthcare Valuation - Birmingham James Laidler Associate Director CBRE Healthcare Valuation - Leeds March 2016 CBRE Research 2016 CBRE Ltd 4

5 Healthcare Investment Cumulative Total MARKETVIEW HEALTHCARE MARKET ACTIVITY Sold by CBRE: Kings Park Hospital, Stirling TRANSACTION HIGHLIGHTS Chart 2: UK Healthcare Transactions by Value 1,400m 14.0b 1,200m 12.0b 1,000m 10.0b 800m 8.0b 600m 6.0b 400m 4.0b 200m 2.0b 0m Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 To date UK Real Estate Investor US Real Estate Investor Overseas Real Estate Investor UK Trade Buyer Private Equity Cumulative Total (From 2005) 0.0b Source: CBRE, Q1-15 to Q1-16 March 2016 CBRE Research 2016 CBRE Ltd 5

6 HEALTHCARE PRICING DYNAMICS Table 2: Care Homes, Hospital, and Specialist Care Parameters Category Yield Range % Multiple Range Price Per Bed k Trend Super Prime Best in class, high value location, Prime* Modern purpose build, fully compliant Tier 1 Older purpose built, single ensuites Tier 2 Mixed converted/extended, part en-suite Obsolete Small low value conversions, compliance issues >11 >200 Stable >9.0 >100 Stable >7.5 >70 Stable >10.00 >6.0 >40 Stable No Market >5.0 / VP / AUV Up to 40 Weaker Specialist Care > 5.50 > 6.0 N/A Stronger Hospitals - Prime >10 N/A Stable *Note: Prime yields refer to rack rented care homes let to financially strong tenants, but not charitable, on a lease with a minimum 25 years unexpired and index linked rent reviews. Table 3: GP/ Medical Centres Category Yield Range % Trend Super Prime Stronger Prime Stable Secondary Stable Tertiary Stable Table 4: Care Home Development Land Values Category Description Land Value Range Per Bed* k Top-tier Mid-tier Mostly located within Greater London and the South East of England in recognised affluent locations Regional affluent locations with small core catchments and recognised retirement towns with high elderly populations Trend Stronger Stable Lower-tier Generally regional/provincial less affluent locations <20 Stable * Subject to planning. Source: CBRE, updated March 2016 March 2016 CBRE Research 2016 CBRE Ltd 6

7 CONTACTS London Regions 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.