Investment Strategy

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INVESTMENT STRATEGY

The Fund’s operations are focused on managing the property itself as well as on qualitative and financial monitoring of the nursing home operators.

Valartis German Residential Health Care is a specialised real estate fund and invests into senior living facilities primary in peripheral regions in Germany. The properties are rented out to renowned and reliable operators for nursing homes and assisted living facilities which take care of the residents and their families. The lease terms are agreed upon for 20 years and more.

The Fund is responsible for the selection and the monitoring of the operator as well as the property as such. The tasks comprise of maintaining the infrastructure, developing, and building new facilities, and refurbishing and modernizing existing properties.

By providing best infrastructure and selecting the best operator for our nursing homes and independent & assisted living facilities the Fund intends to cover the entire service needs of the silver generation.

Properties managed by the Fund as well as potential new investments comprise of independent and assisted living facilities, and nursing homes including gerontopsychiatric and palliative specialization.

  • The Fund raises capital and acquires established nursing homes and barrier-free apartment buildings and develops high-quality senior living facilities.

  • The properties are rented out to renowned and reliable nursing home operators for a period of 20+ years plus prolongation options, at double-net or triple-net lease terms and conditions.

  • The Fund collects the rents, actively manages the properties, monitors the quality of the care services and envisages to pay out dividends of EUR 60 per share corresponding to a dividend yield of approximately 4.5 %. The pay-out ratio is planned to amount to beyond 60% of the annual profit.
  • The operators rent, manage, and operate the senior living facility as such, service the residents and receive their income from the residents themselves, the care insurance, the residents’ families, or the state of Germany.
  • The operator takes care of the entire operation, including hiring and leading the professional staff and managing the facility in line with the regulations for nursing homes, cooperation and coordination with the home supervision authorities (“Heimaufsicht”).
  • The German long term care insurance covers approx. 50% of the residents’ costs for living and care-services. The remaining costs are to be covered by the resident him/herself, the family or, if needed, by the German social welfare system. as a result, the operator’s default risk is covered by the state of Germany.

Investment Focus

VGRHC invests in health–care real estate assets for the silver generation in Germany. The Fund acquires nursing homes with 24/7 care for its residents as well as barrier-free living apartments for elderly people. The facilities support the residents’ wish for an independent and self-reliant life.

  • Properties are primarily acquired in peripheral locations with increasing or high demand for in-patent and out-patient care services. The catchment area for age-appropriate living facilities are regions within a radius of 10 to 15 km. 
  • The Fund focusses on strengthening the location and the existing facilities by enlarging the service portfolio for the silver generation.
  • The properties are rented out to reputable and renowned operators for 20 to 25 years. Current WAULT amounts to beyond 15 years.
  • The investment strategy can be classified as Core plus/Value Add. 

Investment Profil

  • Asset Class: core plus/ value add
  • Properties: Nursing homes with in-patient services, properties for out-patient assisted living groups, assisted living apartments and adjacent day care facilities
  • Geography: Peripheral locations in Germany
  • Concept: Facility is managed by a reputable operator that meets the criteria of financing banks
  • Size: Nursing home with approx. 60 to 120 nursing places in combination with flats with outpatient assistance, special care home (e.g. dementia) up to 60 places and out-patient assisted living communities up to 36 residential places depending on the respective requirements of the federal states
  • Single / double room ratio: 80 % single rooms or more for new buildings or in case of more restrictive regulation of the federal state
  • Sustainability criteria: Energy efficiency with CHP, solar, geothermal energy, or similar

Fund Structure

The Luxembourg based fund structure combines attractive regulations and tax regimes and facilitates a lean management. The Fund is AIFM-D compliant which reduces the risks for investors due to stricter requirements for marketing around raising private capital, remuneration policies, risk monitoring, reporting, as well as overall accountability.