Newly merged asset manager Aberdeen Standard Investments has diversified its long lease real estate fund into the medical sector, investing around £40m in two Harley Street properties.
Looking to take advantage of medical tourism in the UK, the Standard Life Investments Long Lease Fund has bought the freehold of numbers 95 and 97 on the road which is famous for its private healthcare and cosmetic surgery practices.
Number 97 is Grade II listed and was constructed in 1777, whilst number 95 was built in the late 1800s. Both five-floor properties have been recently refurbished, and offer state-of-the-art facilities in areas such as cancer treatments.
“Harley Street has become a centre of global medical expertise and the growth in private medical tourism has allowed many facilities there to invest in the latest technology and pioneering medical techniques,” said the long lease fund's manager Richard Marshall.
“As a result, real estate here has performed differently compared to other central London office locations with much less volatility over the economic cycle.”
Both buildings are currently occupied by cancer treatment centre The Loc, and are let on long-term leases until 2040.
These are guaranteed by HCA International, which is part of the world’s largest private hospital group and one of the key tenants of the Howard de Walden Estate, the family group which owns most of the freeholds in Marylebone.
Aberdeen Standard bought the buildings from Anglo Suisse Investments. Marshall added that the investment would increase the firm's “exposure to alternative sources of income and new trends in real estate”.
“As UK real estate moves into a mature phase of the cycle, long lease funds offer secure rental income with a substantial yield premium relative to UK government bonds,” he said.