UK REIT in €150m plan to buy up Irish clinics
A UK property fund is to targeting doctors' surgeries and HSE clinics in a wave of investment in Ireland.
Primary Health Properties (PHP) plans to invest between €100m and €150m in Ireland from spring this year.
The Real Estate Investment Trust (REIT) owns a network of clinics in the UK and said it is now seeking investments across the Republic.
"The primary care premises market is controlled by the NHS in the UK and largely influenced by the HSE in the Republic of Ireland, meaning there is little or no speculative development of new facilities," the REIT said.
"Buildings are often located within residential areas which can lead to restricted alternative use potential.
"Against this, initial lease terms are longer than in general commercial markets, more than 20 years on average and locally provided healthcare will continue to be a necessity for the foreseeable future," it said.
While the HSE is unlikely to sell significant chunks of its property portfolio, PHP managing director Harry Hyman told the Irish Independent that the fund is targeting diagnosis clinics and some GPs.
It is also looking at developing sites that will be leased to the HSE or other bluechip tenants.
"It's about having good covenants and strong leases. That is the key thing for us," he said.
"If you look at the Irish economy overall, the country has made great strides since the financial crisis.
"The low yield on Irish government bonds reflects that.
"We want to move cautiously but also as quickly as we can. We have allocated between €100m and €150m for Ireland and we are in talks with a number of potential sellers at present.
"We expect to be able to close some of those sooner rather than later," Mr Hyman added.
The company is believed to be in talks with developers who specialise in the healthcare space but may also do deals with individual GPs in sale and lease back arrangements.
"In Ireland, the HSE makes a strong commitment to each primary care centre in order to create an integrated healthcare system alongside GP services.
"The HSE presence, representing 60pc to 75pc of rent received at a centre, will underpin the long term secure income to be received from Irish properties," the company told investors.
PHP is the latest UK property firm to invest in the Irish market. Another REIT - U+I - has spent heavily in the Dublin office market in particular.
It is funding the development of a major office block on Burlington Road in Dublin 4 and has also developed apartments at nearby Percy Place along with a slew of other projects.
The return on Irish property is still seen as being some way ahead of the UK market and this has brought in firms searching for yield.