AEW UK Real Return Fund buys NHS residential block for GBP14.2m

The AEW UK Real Return Fund has purchased a block of residential accommodation for GBP14.2 million let to an NHS Trust. The property has a secure lease term of 20 years with five-yearly rent reviews linked to inflation and the purchase price reflects a net initial yield of 5 per cent.

The 7.5 acre site comprises 21 purpose-built blocks of residential accommodation, and is an important part of the hospital’s infrastructure predominantly housing NHS staff, trainee doctors and their families.
Ian Mason, Portfolio Manager at AEW UK Real Return Fund, says: “This acquisition takes the Fund’s NAV to over GBP100m and is a great addition to the portfolio, with its long lease term with inflation linked reviews and attractive yield. This type of social infrastructure is an ideal fit for the Fund as we look to invest in demographically driven areas of the economy where there is real demand and need for property. We are pleased to have secured this within the context of the government mandate for the NHS and its associated trusts to sell land and buildings to maximise returns, whilst retaining properties for NHS use, which is mutually beneficially for private investors and the NHS. It is important to us as property investors to build a strong relationship with the Trust and we look forward to working with them on any future developments and enhancements to the property should they need them.”
Cushman & Wakefield and Johnson Tucker acted for AEW.
Jacques Esterhuizen at Cushman Wakefield, says: “We have seen a real shift in institutional appetite towards alternative investment opportunities to complement traditional asset classes. In the year ending 2017, the alternative sector accounted for circa 28 per cent of total spend and we expect this figure to increase by the end of 2018 as investors continue to favour comparatively defensive assets offering stable, long term income in the current climate. This deal represented a very good opportunity for AEW to acquire an asset with strong investment fundamentals secured against an excellent tenant”.