Jean-Pierre Hanin, CEO, Cofinimmo
How would you describe the 2022 real estate year?
In the global context, and when looking back to the beginning versus the end of 2022, it was of course a year of convergent tsunamis for the real estate sector. The combination of the pandemic ending in most parts of the world and the geopolitical context of the invasion of Ukraine by Russia resulted in inflation peaking, interest rates increasing dramatically, volatile construction materials prices, and energy prices soaring throughout Europe.
On a micro scale, of course when you look only at Cofinimmo’s share price, you could say it was a ‘grey’ year. But operationally, business results were strong, despite a challenging environment. We almost ended up realising our gross acquisition scheme and succeeded in our divestment target. This while keeping our LTV ratio under control and financing cost quite low.
What are the main challenges facing the sector and your company in 2023?
Our ambition is to continue to participate in the expansion and renewal of healthcare real estate in Europe. Our growth will probably be more moderate in 2023, given the market context: a fairly significant rise in interest rates, inflation that remains high, the price of construction materials, the first impacts on property prices, etc.
What are likely to be the chief positive influences on strategy in 2023?
In the forecasts for 2023, healthcare real estate is seen as one of the segments with a promising future. Because healthcare real estate remains an interesting growth market. It responds to an important social demand. We all know that the population is ageing, the average age is increasing and with it the need for care. The number of people over 80 will double by 2050. Age-related diseases such as dementia make home care virtually impossible.
‘When I see the accomplishments that have been achieved by all our teams in just a few years, it gives me confidence that we’ll come out of the current crisis even stronger.’Jean-Pierre Hanin, Cofinimmo
At the same time, loneliness poses a major challenge. That’s where we play our role by delivering top-notch infrastructure that fits the needs of the tenants-operators. The development of care campuses must also be seen in that societal context.
Where do you see the best value and what will be the best strategy in the year ahead?
I think we’ll have to run the business in a disciplined way and we’re good at that. That means working on the things we can control: maintaining equilibrium in the balance sheet; preserving cash flow and controlling costs; continuing asset rotation, which is essential in real estate (selective sale of non-strategic offices, sale of our insurance agency portfolio in France, etc); maintaining a quality portfolio according to modern standard criteria; pursuing ESG objectives; continuing to diversify geographically and by sub-segment.
The financing of our development pipeline (approximately €700 million) is largely secured by available credit lines. And the cost of debt is under control with hedges of over 90% until 2025.
Looking back at 2022, what has given you the greatest inspiration for the year ahead?
When I see the accomplishments that have been achieved by all our teams in just a few years – bringing healthcare to the centre of our strategy and more than doubling the size of our healthcare real estate portfolio in just four years – it gives me confidence that we’ll come out of the current crisis even stronger. We have become a fully-fledged pan-European player active in nine European countries and we have also diversified in the healthcare sub-segments. This gives us and unique diversification.