Mitigating Refinancing Risks in Healthcare Real Estate

In the current rising interest rate environment refinancing risk represents a significant concern for commercial property investors. Healthcare properties, however, offer distinct advantages in this regard.

The essential nature of healthcare facilities, combined with their stable, long-term income profiles, typically results in more favourable lending terms and lower refinancing hurdles. Strategic debt structuring with staggered maturity profiles and conservative loan-to-value ratios further protects investors from the ‘maturity wall’ that can threaten returns in other commercial property sectors.

Typical loan-to-value (LTV) ratios in healthcare real estate SAFs range from 55% to 75%. Debt maturity profiles generally span 5 to 10 years, aligning with investment horizons and allowing for strategic refinancing opportunities. This approach balances risk and return, providing a secure income stream for investors.

Professional management within SAFs also aids in navigating complex regulatory obligations, reducing administrative burdens for investors across different jurisdictions.

Demographic Tailwinds: Fueling Long-Term Demand

Demographic shifts, particularly the UK’s ageing population, are creating sustained long-term demand for healthcare services and supporting real estate [12].

Projected growth in the over-65 population ensures structural demand for healthcare properties. Nottinghamshire GP practises, for instance, provided over 7.8 million appointments in 2024, illustrating existing demand for primary healthcare [13].

This demographic trend firmly underpins the long-term investment rationale for healthcare real estate, offering HNWIs exposure to a sector supported by inevitable population changes and growing service needs. This long-term demand also mitigates refinancing risks linked to commercial property debt maturity walls, providing a stable outlook for investors.

Specifically, the ageing demographic translates to increased demand for care homes and assisted living facilities. With a projected 13.8% increase in the number of people of state pension age between mid-2022 and mid-2027, investing in these healthcare real estate sub-sectors becomes particularly compelling, offering secure investments anchored to predictable demographic trends [14].

ESG Considerations: Investing with Purpose

ESG factors are increasingly important in investment decisions, especially for HNWIs seeking both financial returns and positive societal impact. Healthcare property investments inherently align with social impact by supporting essential community services [15].

Initiatives like Adopt A Grandparent, partnering with care homes to enhance social engagement, highlight the sector’s focus on wellbeing [16]. Modern healthcare facilities are also incorporating environmental sustainability features, such as smart energy management systems, enhancing long-term value [17].

This ESG alignment strengthens healthcare real estate’s appeal for responsible investors.

Modern healthcare facilities are also designed to improve operational efficiencies in property conversions and expansions, addressing another key pain point. For example, NHS Property Services’ Green Plan aims to achieve net-zero carbon by 2040 through energy efficiency and waste reduction initiatives.

Such measures enhance long-term property value and appeal to ESG-conscious investors [18].

Liquidity and Exit Strategies for Healthcare Real Estate SAFs

Liquidity is a key consideration for HNWIs in longer-term investments like real estate. While SAFs in healthcare real estate are structured for long-term income, understanding liquidity and exit strategies is crucial.

While SAFs are less liquid than publicly traded REITs, several mechanisms offer liquidity options. A secondary market for SAF units may develop, allowing investors to trade holdings. Property refinancing can also enable capital extraction without asset disposal.

Structured exit plans, often in fund documentation, may include review points or asset sale triggers, ensuring a planned exit route. Fee transparency within SAF structures, compared to layered investments, also simplifies the exit process and value assessment.

Due diligence should include a thorough review of SAF liquidity provisions and exit strategies to align with individual investment horizons and liquidity needs.

SIRE Capital Partners: Your Specialist Gateway

Expertise is essential for navigating healthcare real estate investment. SIRE Capital Partners offers HNWIs a dedicated pathway to this prime asset class. Specialising in Single Asset Funds (SAFs), SIRE Capital Partners provides direct ownership and control over carefully selected healthcare properties.

This contrasts with traditional blind pool funds, offering transparency and asset-specific investment opportunities. SIRE Capital Partners distinguishes itself through complete fee transparency, eliminating the layered fee structures that often erode returns in traditional property investments.

Investors receive comprehensive fee disclosure before commitment, ensuring clarity on all costs associated with acquisition, management, and exit.

For HNWIs concerned about the growing administrative burden of complex regulatory obligations, SIRE Capital Partners offers a significant advantage. By managing all regulatory compliance aspects—from FCA requirements to healthcare-specific regulations across different jurisdictions—SIRE eliminates the administrative complexity that often deters direct investment in healthcare properties.

Additionally, SIRE’s specialist healthcare property management team addresses the operational inefficiencies common in healthcare property conversions and expansions through rigorous due diligence, clinical oversight, and dedicated asset management—transforming potential operational challenges into optimised performance. This specialist approach directly addresses pain points such as lack of fee transparency and operational inefficiencies in broader property investments.

SIRE Capital Partners leverages deep sector knowledge and FCA-regulated structures to deliver secure, inflation-linked income from essential healthcare infrastructure. By focusing on healthcare real estate, SIRE Capital Partners ensures resilient, essential-service-backed income streams with long-term security, aligning with the the HNWI investment objectives.

Their expertise spans dental properties, care homes, and GP medical centres, offering diverse investment opportunities [19]. In September 2024, SIRE Capital Partners acquired a portfolio of four freehold dental properties for £2.0 million, reflecting a 7.65% net initial yield, demonstrating their active presence in the market [20].

SIRE Capital Partners prioritises transparency, providing comprehensive property information before investment decisions, backed by an experienced leadership team with decades in fund management and financial services [21].

Getting Started: Practical Steps for HNWIs

For HNWIs considering healthcare real estate investments, these practical steps provide a structured approach:

1. Assessment of Investment Goals: Determine how healthcare properties align with your portfolio objectives, considering income requirements, time horizon, and risk tolerance.
2. Due Diligence Framework: Establish criteria for evaluating healthcare property investments, including location analysis, tenant quality assessment, and lease structure review.
3. Structure Selection: Evaluate whether SAFs or other investment vehicles best suit your specific needs, considering tax implications and management preferences.
4. Professional Consultation: Engage with specialists in healthcare real estate to develop a tailored investment strategy that complements your existing portfolio.

Conclusion: Secure Your Strategic Investment in Healthcare

Prime Healthcare Properties are a strategic and resilient investment for HNWIs. Their stability, inflation-protected income, and accessibility through innovative structures make them a compelling portfolio addition.

Underpinned by long-term demographic trends and strong ESG characteristics, healthcare real estate offers a secure, impactful investment for wealth preservation and growth in an uncertain world.

To explore how Prime Healthcare Properties can enhance your investment portfolio with inflation-protected income and market-resilient returns, contact SIRE Capital Partners today for a personalised consultation. Discover how our transparent, FCA-regulated Single Asset Funds can deliver the stability, returns, and tax efficiency you seek.

How might the addition of Prime Healthcare Properties enhance the stability and inflation protection of your current investment portfolio?

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions.