A New Way To Invest In Commercial Property
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
High Net Worth Individuals and their families are navigating a notably complex economic environment now that we are a quarter of the way through 2025. Economic uncertainty has undeniably impacted investor confidence. As of February 2025, the Saltus Wealth Index revealed that only 48% of UK HNWIs felt confident about the UK economy [1]. This figure represents a sharp decline from previous levels and marks the lowest point recorded, highlighting a clear need for investment strategies that offer resilience and stability.
Traditional investment avenues often feel exposed to persistent inflationary pressures, evolving tax landscapes, and the unpredictable nature of geopolitical events. It’s understandable that sophisticated investors are keenly focused on finding reliable, inflation-protected income streams to both preserve and enhance their wealth.
Against this backdrop, healthcare real estate, whether accessed through Real Estate Investment Trusts (REITs) or more specialised funds like Single Asset Funds (SAFs), is presenting a compelling case. While REITs offer portfolio diversification and liquidity through public trading, their share prices can be influenced by broader stock market sentiment unrelated to the underlying property performance.
SAFs, on the other hand, provide direct access to specific, institutional-grade properties, offering transparency and control without the complexities of direct property management or the blind pool risks sometimes associated with traditional funds. This sector possesses inherent defensive qualities, fundamentally tied to essential services and underpinned by undeniable demographic shifts. For those seeking predictable income in the current climate, gaining a deeper understanding of this evolving asset class is certainly worthwhile.
Healthcare real estate holds a distinct advantage in the current climate. It provides services that people need regardless of the economic cycle. Unlike sectors driven by discretionary spending, the demand for healthcare facilities remains robust, supported by long-term demographic trends. This intrinsic stability offers a strategic anchor for HNWIs looking for alternatives to more volatile assets.
The operational resilience of healthcare properties further enhances their strategic advantage. While all commercial properties incur maintenance costs, healthcare facilities typically benefit from triple-net lease structures where tenants bear responsibility for most operational expenses. This arrangement can result in more predictable net operating income (NOI) for investors.
Additionally, the regulatory framework governing healthcare operators, including Care Quality Commission (CQC) oversight, provides an additional layer of tenant quality assessment. Properties leased to operators with strong CQC ratings typically represent lower covenant risk, as these ratings directly impact the operator’s ability to maintain occupancy and revenue.
Consider the performance during recent periods of economic uncertainty. While the broader UK commercial property sector saw capital value declines averaging 15-20% between 2022-2024, prime healthcare assets demonstrated significantly greater stability, with value adjustments typically limited to 5-8% during the same period.
This relative outperformance during a challenging interest rate environment illustrates the defensive characteristics of healthcare real estate, particularly assets secured by long-term, inflation-linked leases. It seems this focus on essential services provides a buffer against broader economic downturns [3].
Inflation remains a significant concern for many wealthy investors, cited as a top threat by 52% [1]. Healthcare properties often come with long-term leases that include built-in rental escalation clauses. These clauses are frequently linked to inflation indices, such as the Retail Price Index (RPI), or tied to open market rent reviews, providing a tangible mechanism to help maintain the purchasing power of income streams over time.
The UK commercial property market is showing early signs of recovery, with alternative sectors like life sciences and aged care facilities forecasted to lead rental growth [2]. This trend suggests that healthcare-related real estate is well-positioned to deliver rental increases that can potentially outpace inflation, making it a compelling income-generating asset class for HNWIs in 2025 [2].
The healthcare real estate investment landscape is certainly evolving, with strategic partnerships and joint ventures becoming increasingly prevalent. These collaborations can offer enhanced portfolio diversification, facilitate more efficient capital deployment, and provide access to specialised operational expertise. This more sophisticated approach can lead to improved asset management and potentially superior risk-adjusted returns for investors.
We’ve seen this model in action; for instance, SIRE Capital Partners recently diversified its portfolio by acquiring four freehold dental properties for £2 million, achieving a net initial yield of approximately 7.65% [4]. This move into dental assets, part of a broader strategy using Single Asset Funds, exemplifies how combining capital with specialised sector focus can enhance portfolio resilience and income potential [4].
Such partnerships demonstrate the potential for scale and professional oversight that benefits investors seeking secure income.
This particular acquisition involved properties with strong tenant covenants and long-term leases, aligning with the strategy to secure predictable, inflation-linked income. The focus wasn’t just on the immediate yield but on the long-term stability provided by the essential nature of dental services and the quality of the underlying assets and tenants.
Building on that thought, the UK’s ageing population provides a powerful, structural driver for healthcare real estate demand that transcends short-term economic cycles. As the proportion of older individuals increases, so does the fundamental need for care homes, retirement living facilities, and specialised medical centres. This demographic tailwind creates a robust foundation for sustainable, long-term growth in the sector.
Evidence of this demand is clear in ongoing development projects across the country. A substantial £280 million development in Hertfordshire includes an 80-bed care home, and approval was granted for a 68-bedroom care home in the New Forest despite local concerns [5]. These significant investments highlight the pressing need for modern healthcare infrastructure, underpinning the long-term income security offered by healthcare real estate investments [5].
Looking ahead, the UK’s ageing population is predicted to drive a 40% increase in specialist healthcare facilities by 2030, positioning focused funds to potentially capitalise on emerging subsectors like integrated retirement communities [8]. However, it’s worth noting that the UK’s National Health Service (NHS) is currently facing a significant workforce crisis, and a lack of investment in healthcare facilities, particularly in rural and coastal areas, presents a challenge for healthcare real estate investors who may see limited growth in these regions due to insufficient healthcare provision [11].
The UK government’s growth strategy, which includes investments in life sciences and infrastructure, has also seen delays, suggesting a cautious approach to healthcare real estate investments in certain areas [12].
The healthcare real estate sector is far more diverse than just traditional care homes. It encompasses a wide range of property types, allowing investors to diversify their exposure within the sector, spreading risk across different subsectors, each with its own demand characteristics and operational models.
The healthcare real estate sector encompasses a wide range of property types, including:
This breadth allows investors to diversify their exposure within the sector, spreading risk across different subsectors, each with its own demand characteristics and operational models.
Developments in the dental sector, such as FMC’s acquisition of a majority stake in Xcelerator Dental, published just yesterday [6], and assessments of GP practices, like the Care Quality Commission rating for Watling Street Medical Centre [6], illustrate this varied landscape. Investing across these subsectors can enhance portfolio resilience, providing multiple avenues to access secure income streams backed by essential healthcare services [6].
"Healthcare real estate is gaining ground, and we are seeing more money come into healthcare real estate than in other real estate sectors." - John Chang
For HNWIs who value direct exposure and transparency, Single Asset Funds (SAFs) are increasingly seen as a preferred investment vehicle in healthcare real estate. Unlike traditional blind pool funds where capital is committed without prior knowledge of specific assets, SAFs offer investors clear visibility into the underlying property, tenant quality, lease terms, and projected income streams. This transparency empowers investors to make informed decisions based on the specific merits of an asset.
Selecting healthcare properties for inclusion in Single Asset Funds involves a detailed and rigorous process. A typical due diligence process in such scenarios generally includes:
This structured approach helps minimise risks and ensure that investments align with the fund’s goals. This model, championed by firms like SIRE Capital Partners, provides FCA-regulated structures offering direct ownership benefits without the complexities of managing property directly. It addresses concerns about a lack of transparency often found in pooled funds, allowing investors to select assets that align precisely with their investment objectives for secure, long-term income.
SIRE’s approach focuses on acquiring institutional-grade properties – typically meaning assets with strong tenants (often NHS or large private operators), long leases (often 15-25+ years Weighted Average Unexpired Lease Term – WAULT), robust building specifications, and prime locations.
Industry standard practices for evaluating properties and tenants for such funds typically involve meticulous physical inspections, location analysis, thorough financial and operational reviews of tenants, detailed market analysis, and comprehensive legal and regulatory reviews. This level of due diligence is crucial for selecting high-quality assets and reliable tenants.
Optimizing Net Operating Income (NOI) for healthcare properties within Single Asset Funds involves a focused asset management strategy. This includes comprehensive market analysis, strategic planning aligned with investment goals, and a strong focus on operational efficiency through cost management and technology implementation.
Effective tenant and lease management, regular facility maintenance, and robust risk management are also key components. Continuous financial performance monitoring and value-add initiatives, such as facility upgrades, contribute to long-term asset value.
For HNWIs, investment returns can be significantly impacted by fee structures and tax implications. Healthcare real estate investments through Single Asset Funds typically offer greater fee transparency compared to traditional investment vehicles. Unlike layered fee structures common in some investment products, SAFs generally operate with a straightforward fee model that includes acquisition, asset management, and performance components, all clearly disclosed to investors prior to commitment.
Comparative analysis suggests that while healthcare real estate SAFs may involve higher management fees due to the specialised nature of the assets and required expertise, diversified property funds generally have lower fees due to broader asset bases and economies of scale. However, the transparency and direct asset focus of SAFs can provide a clearer picture of how fees relate to specific asset performance.
From a tax perspective, commercial property investments including healthcare real estate can offer certain efficiencies. Depending on the structure, these investments may provide opportunities for inheritance tax planning when held in appropriate vehicles. Additionally, the rental income from healthcare properties can be managed efficiently within the UK tax framework, particularly when structured through Special Purpose Vehicles (SPVs).
The stability of healthcare real estate income streams also facilitates more predictable tax planning, allowing investors and their advisors to implement long-term strategies with greater confidence. This predictability stands in contrast to more volatile investments where fluctuating returns can complicate tax planning efforts.
While navigating tax legislation can be complex and subject to change, the clear income streams from healthcare properties within regulated structures can simplify reporting compared to less transparent investment types.
The prevailing interest rate environment significantly influences real estate investments, including healthcare REITs and, indirectly, the broader healthcare property market. Now that we are in 2025, potential interest rate cuts could provide a tailwind for the sector. The Bank of England has already reduced its base rate from 5.25% in August 2024 to 4.5% in February 2025 [1], and further easing is anticipated as inflation moderates.
Analysts suggest that even modest rate cuts can increase the distribution per unit for REITs by lowering borrowing costs [7]. Healthcare REITs with exposure to floating-rate debt structures are particularly well-positioned to benefit from this trend, potentially enhancing the distributable income available to investors [7]. This dynamic adds another layer to the secure income proposition of healthcare real estate in the current economic climate.
Recent performance metrics underscore this advantage. While the broader UK commercial property sector saw capital value declines averaging 15-20% between 2022-2024, prime healthcare assets demonstrated significantly greater stability, with value adjustments typically limited to 5-8% during the same period.
This relative outperformance during a challenging interest rate environment illustrates the defensive characteristics of healthcare real estate, particularly assets secured by long-term, inflation-linked leases.
Experienced investors naturally consider factors like diversification, liquidity, and regulatory compliance. While a single asset fund focuses on a specific property, diversification is achieved by selecting assets in different healthcare subsectors or regions, or by allocating capital across multiple SAFs. This provides targeted diversification within a resilient sector, distinct from the broader market exposure of diversified funds.
Of course, investing in a single asset carries inherent risks, such as potential tenant default specific to that property or localised market challenges. However, this is where rigorous due diligence and a deep understanding of the specific asset, tenant, and local market become paramount. A firm focused on meticulous selection and management aims to mitigate these risks by targeting properties with strong, reliable tenants and robust lease structures.
Liquidity in real estate investments, including SAFs, is different from publicly traded securities. SAFs are typically long-term investments designed for stable income, not short-term trading. Typical investment horizons might range from 5 to 10 years. Structured exit strategies and periodic review points are part of the fund structure, providing pathways for liquidity over the investment horizon.
This contrasts with the volatility of publicly traded REITs, whose share prices can be influenced by stock market sentiment unrelated to the underlying property performance.
Furthermore, investing through an FCA-regulated structure, such as those offered by SIRE Capital Partners, provides a crucial layer of investor protection and ensures adherence to stringent governance and reporting standards. This regulatory oversight means enhanced transparency, robust risk management frameworks, and clear reporting, offering confidence in the management and security of the investment, directly addressing concerns about compliance often associated with less regulated property schemes.
Governance structures often require clear identification of trustees and beneficiaries, and mandate regular public disclosures to ensure transparency [9].
Operational costs and capital expenditure are also key considerations. Maintaining healthcare properties to institutional standards involves significant costs for maintenance, utilities, staffing, insurance, and regulatory compliance. Capital expenditure can include substantial investments in medical equipment and technology upgrades.
These costs impact Net Operating Income (NOI), but effective management and strategic investments in efficiency measures can mitigate these effects and maintain profitability. For instance, new staffing notification requirements under Health Protection Regulations, effective this month (April 2025), are expected to increase compliance costs, potentially impacting operator margins [10]. Understanding how these operational realities are managed is vital for assessing the true income security of an asset.
Successful asset management initiatives can significantly increase NOI. Case studies in the UK property sector, including those focused on residential and community service properties like elderly care facilities, have shown substantial year-over-year NOI increases through strategic acquisitions and cost-effective management.
Active asset management, including refurbishments and mechanical/electrical upgrades, has also proven effective in improving energy performance and attracting long-term tenants, thereby enhancing NOI and marketability.
ESG factors are also increasingly shaping investment decisions and valuations in the UK healthcare real estate market. The integration of environmental, social, and governance considerations is not only a response to regulatory and societal pressures but also a strategic move to enhance resilience, attract investment, and achieve sustainable growth [15].
For healthcare real estate, such factors can lead to increased valuations and investment opportunities, as sustainability becomes a critical factor in property development and management [15].
The adoption of technology in healthcare is increasingly influencing property valuations. The integration of AI and other digital technologies is reshaping healthcare facilities, with technologies enhancing diagnostic accuracy and efficiency. This can lead to increased demand for properties equipped to handle such advancements, potentially driving up valuations.
The global healthcare AI market is projected for significant growth, indicating a trend that could influence property values.
Personalisation in healthtech, driven by AI and data analytics, requires advanced infrastructure, potentially increasing the value of properties that can support these technologies. Strategic expansions by healthcare technology companies and innovations in areas like early dementia diagnosis further underscore the need for properties that can integrate new technologies, potentially increasing their demand and valuations.
The MedTech industry’s growth and the widespread adoption of AI in hospitals also point towards increased value for AI-ready properties.
However, it’s worth noting that regional disparities in infrastructure and digital literacy may lead to varied impacts across different areas. Properties that can adapt to these technological changes are likely to benefit the most in terms of valuation.
Healthcare real estate, accessed through vehicles like Single Asset Funds, offers High Net Worth Individuals a compelling opportunity for secure, inflation-linked income now that we are in 2025. The sector benefits from strong demographic tailwinds, evolving investment structures including strategic joint ventures, and potential tailwinds from interest rate movements.
By focusing on essential services and leveraging transparent, regulated investment structures, HNWIs can access institutional-grade properties that provide stability and predictable returns.
Understanding the specific dynamics of healthcare subsectors and the benefits of direct asset exposure through SAFs empowers investors to make informed decisions. As the economic climate continues to evolve, healthcare real estate stands out as a resilient asset class capable of safeguarding and growing wealth through secure, long-term income streams.
Considering how healthcare real estate might enhance your investment portfolio’s income security? Explore how Single Asset Funds could align with your wealth preservation and growth objectives in today’s economic climate by reviewing detailed investment guides or scheduling a consultation with sector specialists.
The current economic climate, marked by persistent uncertainty, naturally reinforces our conviction that secure, inflation-linked income is paramount for high-net-worth investors. We firmly believe that healthcare real estate, underpinned by essential services and powerful demographic trends, offers a robust foundation for achieving this stability. Our focus on Single Asset Funds provides the transparency and direct asset exposure we know our clients value, allowing them to invest with clarity in institutional-grade properties. This approach, centred on meticulous due diligence and selecting assets with strong tenant covenants and long leases, is not merely a strategy; it is a fundamental expression of our commitment to safeguarding and growing wealth through predictable, resilient income streams, irrespective of broader market volatility.
While challenges within the healthcare sector are acknowledged, our expertise lies in navigating these complexities through rigorous asset selection and proactive management. We maintain that focusing on prime assets with reliable tenants and robust lease structures mitigates risks associated with regional disparities or sector-wide pressures. The undeniable demand driven by the UK’s ageing population, coupled with the potential for technological integration in high-quality facilities, underscores the long-term value proposition. For us, providing access to these secure income opportunities through regulated, transparent structures is central to our mission, empowering investors to build resilient portfolios with confidence and precision.
Patrick Ryan is a Principal and Co-founder at SIRE Capital Partners, working on Deal Origination and Asset Management. Patrick has spent 20 years in the property sector in London. His first foray into the sector was in 2003 when he co-founded a mezzanine finance business that focused on lending to property developers in and around London. Following this he headed up SIRE Properties, a healthcare focused asset management firm. Patrick has now co-founded SIRE Capital Partners that has expanded on his healthcare asset management focus to take in broader services to include brokerage and capital advisory.
[10]: https://www.mondaq.com/unitedstates/health-safety/1614320/strategic-legal-guidance-for-healthcare-executives-employment-challenges
[11]: https://bmjleader.bmj.com/content/early/2025/04/23/leader-2025-001229
[13]: https://www.investegate.co.uk/announcement/eqs/starwood-european-real-estate-finance-ltd–swef/swef-portfolio-update-/8843351
[15]: https://www.investmentweek.co.uk/interview/4412241/big-interview-rlams-cio-piers-hillier-revitalising-uk-role-esg-private-markets
Discover the benefits of pooling resources to access institutional- grade property in a Single Asset Fund.
The UK healthcare market is rapidly evolving, presenting unique investment opportunities in real estate.
A Single Asset Fund is an arrangement whereby like-minded investors collectively allocate funds to invest in a commercial property.
Healthcare real estate offers stability and attractive yields amid economic uncertainty. With inflation-linked leases and government support, it’s a compelling choice for wealth preservation and dependable income.
UK healthcare real estate is evolving post-pandemic. Strategic insights reveal opportunities in specialised care facilities and tech-ready properties, offering resilient growth for discerning investors amid regulatory and economic shifts.
UK healthcare property offers stable, inflation-linked returns for investors. Benefit from government-backed leases, strategic regional investments, and tax-efficient structures. Secure income in a resilient sector with predictable demand.
UK healthcare property offers stable, inflation-linked returns with long-term leases and essential services demand. Explore this secure income opportunity amidst market uncertainty for reliable wealth preservation.
UK healthcare real estate is evolving with digital innovation and sustainability, offering secure, inflation-resistant returns. Strategic investments in this sector align with ESG principles and long-term growth.
Mastering the Corporate Transparency Act is crucial for UK healthcare property investors. Ensure compliance to avoid penalties, leverage private equity trends, and optimise investment structures for stable, long-term returns.
- Khalid Hussain (Clinical Director at Todays Dental Group)
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