The increase in life expectancy gives clinics a resilience in the face of crises. Due to their specialization, they are evaluated based on their operational performance and financial ratios. The strict regulations that govern them require in-depth legal expertise for their evaluation. They attract sustained interest, considering them as a safe haven in a field where security is paramount.
In a context of aging population, needs are increasing faster than supply. The valuation of an EHPAD depends on its location, the scarcity of supply and its operating conditions. The difficulty of obtaining the approvals necessary to open an EHPAD accentuates the shortage situation on the market, which makes it a secure product that investors appreciate.
Clinics...!
Increased life expectancy gives clinics resilience to economic crises. Due to their specialization, clinics are evaluated based on their operational performance and financial ratios. The strict regulations governing this sector require in-depth legal expertise for their valuation.
Clinics are attracting sustained interest in the real estate market, with investors viewing these establishments as safe havens in an area where security is paramount.
What are the attributes that characterize the “Clinical” asset ?
Clinical real estate is distinguished by its operational complexity, which is very different from that of offices or logistics warehouses. It includes various spaces, such as patient rooms, outpatient areas where patients only stay for a few hours, as well as a technical platform including operating rooms and logistics areas.
The layout of these buildings is often adapted according to the medical specialties practiced and must sometimes be modified to follow developments in medicine and outpatient surgery. New or recently renovated clinics often have a better adaptation to contemporary needs, with generally more efficient cost management, representing around 10% of medical turnover. Consequently, the analysis of operating ratios is of crucial importance in the evaluation of a clinic.
What are investors' expectations ?
The attractiveness of healthcare real estate for investors is multiple:
• Institutional investors seek to broaden the diversification of their portfolio, often composed of real estate assets with a tertiary or commercial vocation.
• Outsourcing of walls allows operators to inject funds into their technical equipment. With this in mind, the rent is set so as to be stable and affordable for the operator, which ensures security for the investor.
• Yields remain attractive, with firm lease terms often extended up to 12 years. This reflects a solid partnership relationship between the operator and the new owner of the real estate. In some cases, the latter may be called upon to finance new investments
• In conclusion, this type of asset represents a complex but secure investment, thanks to the essential partnership relationship between the tenant and the lessor.
What are the main criteria for evaluating clinics ?
In the valuation of healthcare facilities, the monovalence of these real estate assets requires a specific approach. The in-depth analysis of operating ratios plays a decisive role in this estimation, because it makes it possible to assess the risk associated with the real estate as well as the level of rent that the establishment can sustainably support.
By carefully examining these financial indicators, investors can better understand the financial and operational solidity of the clinic, which contributes to a more accurate estimate of its value on the real estate market.
• Number and length of stays: These are hospitalizations.
• Revenue excluding medical procedures: Private room or accompanying person fees.
• Turnover per practitioner: The fees of each doctor.
• Expense items: For example, personnel costs by specialty.
• Effective profitability of the clinic: Margin rate, financial profitability, etc. To evaluate a clinic, a medical-surgical center, a maternity ward, a dialysis center, it is necessary to know and analyze its operation, and to assess its operating profitability which is closely linked to the rental charge.
Many other ratios can be taken into account to value a health establishment, such as the outpatient turnover rate, the number of examinations and scans, the average age of the establishment’s doctors and their reputation, etc. The most secure products with regard to these criteria are generally recent, large clinics, well established locally and managed by national or international groups.
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Healthcare real estate...!
EHPAD
In a context of aging population, needs are increasing faster than supply. The location of an EPHAD, the scarcity of supply and its operating conditions make it a secure product that investors appreciate...
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