BNP Paribas Real Estate Investment Management (BNP Paribas REIM) has been providing innovative solutions for private investors and international institutions to invest in European real estate for more than 50 years. Our dialogue with clients has led us to invest in new and emerging sectors outside the mainstream focus of offices, retail and logistics/industrial. Responding to clients' desire to diversify their exposure and access the sector's competitive returns, BNP Paribas REIM teams manage around €2.2B* of "alternative" real estate assets.
Alternatives offer investors exposure to a wider range of real estate uses. With the emergence of opportunities in areas such as student housing, senior housing and healthcare, the market is becoming increasingly institutionalised. What these novel opportunities have in common is a tenant that provides goods and services from a building that is often designed or adapted specifically for that purpose. The sector often offers investors income from a single tenant on a long-term lease. Examples include hospitals or doctors' surgeries.
Alternatives typically generate income returns that are more competitive than those from mainstream real estate sectors. This reflects the operational risks posed by the tenants and the limited number of new uses possible for a purpose-built or specially adapted building. The performance of alternatives is also unrelated to economic cycles, providing useful portfolio diversification. Investment in the alternatives sector is growing rapidly in response to the increased reluctance of property occupiers to own their buildings. Innovation and new uses of real estate add to the growth opportunities.
Europe is still in the early stages of this structural change in the uses of real estate. Each country has different rules or practices. The market is therefore fragmented and presents opportunities for operators to build platforms of scale that may raise overall professional standards. An example of this is in the provision of acute care for the elderly.
BNP Paribas REIM has the expertise to advise on alternatives strategies tailored to a client's risk profile and investment objectives. Working from offices across Europe, our team of more than 350 professionals has expert local knowledge of real estate uses in each country, while our research experts provide up-to-date insights on the secular and industry trends affecting the alternatives sector.
Case Study of Our Expertise in Navigating the Disruption in Alternative Real Estate
A Strategy That Built a €500M Portfolio of French Healthcare Assets for institutional investors
We established the specialist fund HPF1 for institutional investors to assemble a portfolio of over €500M of healthcare assets in France. We identified an opportunity to invest in medical clinics and hospitals leased on a long-term basis to leading private operators.
The fund's final three investments involved the forward purchase of a pre-let clinic under development in Bordeaux. The two others – a private clinic run by Korean and a private hospital operated by Ramsay / Général de Santé – were in Lyon. All three had renewable 12-year leases at the time of purchase.
* As of 31st December 2018