Korian, France’s largest nursing home operator by revenue, has made a deal with its main property owner to build at least seven new facilities in the country. We speak to French healthcare real estate expert Stéphane Pichon about the deal.
On Monday, October 15, Korian signed an agreement with healthcare real estate developer CAREIT and property investor Primonial REIM, its main landlord. The former will act as advisors for the conception and construction of at least seven new rehabilitation facilities and medicalised nursing homes, while Primonial will supply funds and acquire all or part of the real estate of each facility.
“These are three complimentary structures, and the idea is that each entity focuses on its core business,” says Pichon. “CAREIT has been working with Primonial for two or three years now, and Primonial already owns a portion of Korian’s buildings, so these people know each other very well.”
The sector has a few different models in operation across the market, he adds. “Orpea and LNA Santé, for instance, have a completely different model where all of these tasks are internalised. They feel best placed to carry out construction at the right price, so that rent is not impacted by development margins.”
Korian made a similar deal with real estate investment company Icade last year in efforts to renovate a quarter of its housing stock. A lack of bed licences has put the breaks on organic growth, so the company has moved its focus to renovation, building assisted living facilities and opening geriatric clinics and hospitals.
“This partnership allows Primonial REIM to secure a position upstream of new investment opportunities while reinforcing its relationship with Korian,” says chairman of the board at Primonial, Grégory Frapet.
Korian plans to grow its current offering of around 750 facilities across Europe by another fifty before 2022. The group’s expansion was boosted this quarter by Korian’s acquisition of the remainder of Senior Assist’s Belgian portfolio, totaling 1,800 beds. Its acquisitive activity continues to fuel high growth abroad, with the group reporting 15% growth in both Belgium and Italy for Q3. Though this is in stark contrast to its domestic business where growth is a mere 3.6%.
Korian’s share price increased 10% on October 15th, the day of the announcement.
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