MEDICA L REI T S A HEALTHY BUILDING
Cintocare Hospital
INNOVATIONS WITHIN
THE HEALTHCARE SECTOR Healthcare real estate investment funds open the doors for better medical facilities, writes JAMES FRANCIS
T
he Cintocare Hospital in Menlyn Maine, east of Tshwane is a remarkable modern building, covered by glass and elegant curves. A spine-like design flows across the front of the building, reflecting the hospital’s exclusive focus on ear, nose, throat, head, neck, spinal, facial and vascular surgery. Cintocare is the crown jewel of Growthpoint Healthcare Property Holdings (GHPH), an unlisted fund and subsidiary of Growthpoint Properties, the prominent South African REIT (real estate investment trust). Built by Growthpoint, Cintocare was sold to GHPH, which operates the site and leases space to medical specialists and staff. “It is the first specialist head, neck and spine surgical hospital of its kind on the African continent, and one of only a handful globally,” says Dr Linda Sigaba, GPHP’s fund manager.
FAST FACT
South Africa only provides 2.3 hospital beds for every 1 000 people, presenting enormous growth opportunities, states a parliamentary commissioned report on inequality and access to quality healthcare.
IMAGES: SUPPLIED
is technically not a REIT as it’s not listed, but it serves a similar purpose for Growthpoint. “In the half-year to 31 December 2020, the fund delivered distribution per share growth of 7.5 per cent and a dividend of 40.8 cents per share,” Sigaba says. Growth of 10 per cent for the full financial year (ending June 2021) is anticipated. “Healthcare properties enjoy far A NEW SPIN longer leases than, for instance, Launched in 2018, GHPH is office and retail property, widely called a healthcare and most of our leases have REIT – a reasonably new model seven-plus per cent annual in the REIT market. A REIT escalations,” Sigaba explains. pools real estate assets under GHPH has a R2.64-billion a single investment umbrella, portfolio of four hospitals making returns through various and a medical chamber and means such as rent and asset a medium-term pipeline of ownership. Healthcare REITs R4.5 billion. It focuses on focus on medical facilities, Dr Linda Sigaba acquisitions, but this is just including nursing homes, the start; the medical real and bank their future on the estate market is still new. According to Million long-term stability of the medical market and Acres, less than 15 per cent of US healthcare the patronage of ageing populations. GHPH
“HEALTHCARE PROPERTIES ENJOY FAR LONGER LEASES THAN, FOR INSTANCE, OFFICE AND RETAIL PROPERTY, AND MOST OF OUR LEASES HAVE 7-PLUS PER CENT ANNUAL ESCALATIONS.” – DR LINDA SIGABA, GROWTHPOINT HEALTHCARE PROPERTY HOLDINGS
Cintocare is Africa’s first green hospital – rated 5-Green Star by the Green Building Council South Africa – and one of only a handful of global medical facilities sharing that distinction. Among the green building features are an HVAC system that places infection control and indoor air quality at the fore, a recycling waste storage facility, a rainwater storage tank for routine fire protection, entryway walk-off mats, which capture particulates from occupants’ shoes, and the inclusion of as much daylight as possible. The hospital is also remarkably high-tech, featuring a robotic pharmacist and an on-site oxygen production plant, among many other innovations.
facilities are REIT-owned, compared to 40 per cent of malls and hotels. Such funds offer real potential, not just for investment but also for market development.
INNOVATION FOR MEDICAL MARKETS Medical REITs can innovate for market growth as Sigaba points out, referring to two specific examples. “The first is to provide a special touch,” says Sigaba. “We work closely with the tenant operators of the healthcare facilities to ensure that the buildings support their goals and objectives.” At Cintocare, the theatre and ICU facilities are on the same floor so frail and vulnerable patients don’t have to ride in elevators with other people. The ICU rooms are also well lit with plenty of natural light – a feature that Sigaba lauds, lamenting that often ICU facilities “are in the basement”. The second example relates to the expense involved in developing healthcare sites, so accessing a large REIT’s funding and development muscle is particularly helpful. This model is also useful when expanding healthcare facilities to rural and underserved areas. “Townships and nontraditional centres are generally underserved when it comes to healthcare. Meeting this demand is an emerging opportunity,” explains Sigaba. “The government’s licencing programme encourages new, smaller and empowered players in the sector. However, the bricks-and-mortar component of new healthcare facilities requires a hefty capital outlay of up to three-quarters of setup costs. Backed by the balance sheet strength of big brother, Growthpoint Properties, our healthcare fund is well placed to partner operators.”
COMMERCIAL PROPERTY
CP_Medical REITS.indd 21
21
2021/08/23 4:08 PM
