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With the new legislation in place for several years now, the healthcare real estate market has matured and evolved on several different levels. 

  • Legislation: the new legislation is now in place and the impact this will have is much clearer, certainly with regard to the separation of housing and care and the demand this is creating. Healthcare providers are now in a much better position to decide on the direction they want to take in terms of their own corporate real estate management. 

  • Professionalisation: healthcare providers are evolving to more market driven organisations, as financing is based on actual performance in stead of budget. Also, client satisfaction is becoming more and more transparent, e.g. through websites as where clients (or their family) can rate organisations. This leads to a strong increase in quality and commercial awareness with healthcare providers, which in its turn is the foundation of the Fund's strategy, namely that quality of housing will determine succes in healthcare propositions.

  • Competition: we see increasing competition on two levels in the near future. First, other investors are entering the market, both domestic and foreign. Second, due to the improving real estate market conditions, we see increasing competition from other real estate categories. Developers are willing to take more risks, e.g. by trying to realise a land destination change from ‘social’ to for example ‘housing’ or other.

In addition, low interest rates and more than healthy risk premiums make the Dutch health care sector an interesting proposition for investors. Some downward pressure on initial yields is expected to drive capital growth for investments in the near future, while strong economic and demographic fundamentals support a positive outlook.

To summarise, despite increasing competition, the outlook for new acquisitions is positive, as more healthcare providers decide to lease property, as opposed to ownership. The Fund has a clear growth strategy and due to the acquisition costs for the immediate future, the Fund’s return is likely to lag the target return of 6.5% over the next three years, while we build the portfolio. However, we are confident that we will be able to achieve our long-term target once we have achieved the desired scale, thereby providing a sound investment for the Fund’s shareholder.

Amsterdam, 20 March 2017

Bouwinvest Real Estate Investment Management B.V.

Dick van Hal, Chairman of the Board of Directors and Statutory Director
Arno van Geet, Managing Director Finance
Allard van Spaandonk, Managing Director Dutch Investments
Stephen Tross, Managing Director International Investments

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