Canadian REIT eyes UK expansion following Aspen acquisition

Canadian REIT NorthWest Healthcare Properties Real Estate Investment Trust has continued its expansion in the UK private hospital market with the acquisition of four Aspen Healthcare properties in London for £260m. 

The Toronto-based company, which entered the UK hospital market with the £97.8m acquisition of six BMI Healthcare properties in February, said the deal positioned it for further growth in the UK and provided it with ‘an attractive portfolio with which to seed a future UK joint venture’. Something CEO Paul Dalla Lana said was a ‘priority for the business’.

‘The addition of the London Portfolio is strategically important to have as it increases the scale of the REIT’s UK portfolio to more than $620m and positions it for further growth in partnership with the region’s leading healthcare operators. It also diversifies the REIT’s UK operator mix and brings its focus into major UK healthcare markets,’ he added.

North American REITs have a strong presence in the domestic hospital market and have made inroads into the UK care home sector, but have remained on the periphery of the UK private hospital market. That, however, could be about to change. Medical Properties Trust’s expansion into the UK market with the £1.5bn acquisition of 30 BMI hospitals at the start of this year was a game-changer and NorthWest is already eyeing brownfield development opportunities.

‘There are a number of planned capital expansions that we are aware of and we are just starting to queue up around the operator and their plans and priorities going forward,’ said Dalla Lana.

Around 5% to 10% of the company’s portfolios are in some form of brownfield expansion and, Dalla Lana added, it expected to see similar metrics in the UK.

‘I think starting off, certainly 5% to 10% expectation, which is consistent across our portfolio, is probably a good starting point. But we will be working to refine that, and, if anything, that might end up on the bigger side given NHS backlogs and the plans to work through the private system,’ he said.

At the end of June 2020, the company’s 183-strong property portfolio spanned Canada, Brazil, Germany, Australia, New Zealand, Netherlands and the UK with total fee bearing assets under management of $8.4 bn.