ESADE Bussiness School Alumni association recently organized a webinar about investment opportunities in the Spanish nursing home industry.

The environment in which this event has taken place is one in which the population over 65 years of age has increased by one million in the last decade. In this time, the global capacity of long term care facilities for the elder has only increased by 12.353. These are public data recently published by the Imserso (Spanish Institute of ageing  and social services).  If the right ratio for nursing home beds for 100 people over 65 is 5% , in Spain the ratio is 4.21. Nine years ago it was 4.56. To comply with the benchmark, Spain should increase the number of nursing home beds by 70.000 places, 18.4% more than the current 381,158.

The president of Healthcare Activos, a firm specialized in long term care investment and health real estate assets, proposed the reordering the nursing home sector in the face of the Covid-19 health crisis. Accordig to Guarner, the long term care industry in Spain "moves towards greater professionalization and specialization”.



Comparing the Spanish situation with that of the United States, in America there are 18 Real Estate Investment Trusts (SOCIMI under Spanish acronym, Sociedades Cotizadas de Inversión en el Mercado Inmobiliario) specialized in health, with more than 240,000 million dollars invested in the US market ”. "In Europe, the SOCIMIs have more diversified portfolios, but in eight or ten years we will have real estate investment companies specialized in this industry”.

Professor Jordi Fabregat added “It is a useful asset to diversify, and that is a need that will not wane in the future".

Andreu Huguet, Chief business and development Officer in DomusVi, the French owned Spanish nursing home  leader by number of facilities explained that a consequence of the evolution of the industry a fall of profitability for real estate operators has appeared falling from 5.5% to 4.5%.  “"This drop is due to the fact that investors have realized that with a specialized operator the security of collecting the rent is very high," meaning they are willing to lower the yield in exchange of security. In addition, it points out that for the investment to be profitable, the rental of the space should not exceed 20% of the billing and should not be higher than the Ebitdar.

Cinta Pascual,  president of the Círculo Empresarial de Attention to People (CEAPs), a nursing home industry representative association, alluded to the current range of services available, stating that "it is important that there are service platforms, because they are the ones that will give the sector a future".


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