Investors in the Healthcare Property Market
The entry of investors into the healthcare property market specifically targeting surgery premises has only emerged in the past ten years. Accordingly it is a relatively new sector with constantly changing requirements. Fundamentally the investor sees the rental from the surgery as a very safe revenue stream – the government pays the doctors a ‘current market rent’ who in turn pay the investor a rent. This is viewed as a “copper plated” investment.
There are obvious advantages to GP’s in pursuing a sale and leaseback opportunity:-
- Capital is released
- No cash/capital requirement for changes in partnership structure.
- GP’s can focus on their core business – provision of healthcare
- The external maintenance of the building becomes the responsibility of the landlord at no cost to the GP’s.
- Physical extensions of premises can be pursued without any cash injection or additional borrowing for the GP’s.
But with every business opportunity there is always a risk and a possible disadvantage:-
- Loss of rental income into the partnership – the current market rent paid by the LHB/NHS England will go to the investor.
- Loss of control of premises – another party has some say over the premises. This aspect can be controlled by the careful consideration and agreement of the terms of the lease.
- The investor will be looking for a twenty year lease commitment. Whilst this may seem daunting there will be provision for the assignment of the lease subject to certain provisos.
