Cindat makes further push into UK senior housing sector

The Beijing-based investment manager’s exposure to the alternative sector is now in excess of $1.5 billion in net asset value following this latest deal.

Beijing-based Cindat Asset Management is continuing its focus on acquiring senior-care assets in overseas markets, three years after making its debut investment in the sector in the US.

Last month, the firm announced the acquisition of the remaining 49 percent interest in a portfolio of 67 senior housing properties in the UK through a joint venture with Omega Healthcare Investors, a US REIT. The JV, split 51-49 percent between Cindat and Omega, paid $232 million for the interest in the portfolio.

The transaction gives Cindat and Omega full ownership of the portfolio. In June 2018, Cindat bought a 51 percent stake for an undisclosed sum from Healthpeak Properties (formerly HCP), another US healthcare REIT. The majority of the capital for the latest transaction is understood to have been raised from China Cinda Asset Management – a Beijing-headquartered Chinese merchant bank and asset management company, and one Cindat’s major shareholders.

Cindat’s total global exposure to senior care assets is now north of $1.5 billion in terms of net asset value. In terms of equity commitment, the firm has invested around $600 million in the alternative asset class.

Allen He, senior partner at Cindat Capital Management, told PERE the sector is one of the firm’s major focus areas.

“It is a very attractive recession-proof asset type,” he said. “Also, given the aging population, demand for senior care will pick up in the coming two to three years. Senior care used to be considered an alternative sector, but more and more institutional investors are now looking at the space.”

Cindat’s first senior care investment was in November 2016 when it formed a $930 million joint venture with the Chinese life insurer Union Life Insurance and New York-listed REIT Welltower to acquire a portfolio of 11 assets in the US. The firm told Bloomberg in early 2017 that it was seeking to spend around $2 billion on homes for the elderly in the US that year.

He told PERE the firm had looked at several large opportunities in the US since then but did not close any transactions because the market had become overpriced. By contrast, “the UK pricing is attractive right now, given currency movements. We see good opportunities in the coming five years to aggregate assets and build up a more diversified portfolio.”

In a 2019 research report, Knight Frank forecast the total value of the UK private senior living market to climb to £55.2 billion ($71.6 billion; €64.42 billion) in 2023, up from £39.6 billion in 2019. The research firm attributed this projected 40 percent rise in value to demographic shifts and increased investment from both the UK and overseas.