Hanseatic Continuity
The Hamburg-based company HBB relies on close cooperation between investors, project developers and operators. The focus is on the continuous development of the portfolio and not on rapid growth. The current discussion about ESG criteria and sustainability seems to confirm this approach.
The growth strategy of the Hanseatic Care and Investment Company HBB is long-term oriented. Over the past 20 years, the Hamburg-based real estate company has built 45 care facilities with around 7.200 beds in Germany, most of them in northern Germany and Berlin. All of the facilities were financed and developed by HBB. In addition, all of the properties remained the property of the company or its shareholders after completion. Six more facilities are currently under construction, in contract negotiations or in the building permit process.
Another central component of the HBB concept is the close cooperation with the operating partner Domicil Seniorenresidenzen SE, to whom all houses are rented on a long-term basis. In any case, long-termism seems to be the key word that plays a central role in the HBB strategy. This applies from site development (see interview) to the construction of the properties and operation. "For example, we wash our laundry in the houses and cook all meals on site every day," explains HBB Managing Director Oliver Radünz. Both not only offer residents added value, but also contribute to important quality criteria with regard to sustainable management. "It significantly reduces delivery traffic and avoids our laundry being driven across half of Europe."
Against this background, it is not surprising that HBB feels more confirmed by the introduction of ESG criteria by the EU and the discussion about sustainability in the real estate industry. "As all properties are to be retained, we attach great importance to durability," assures Radünz. So far, HBB has built in the KfW 55 standard in care, and for new projects they will probably regularly aim for KfW 40 EE.
"Overall, we try to create livable, sustainable properties in the right location," says Radünz. This also includes creating gardens and parks with high-quality trees, planned by landscape architects, even on inner-city properties, and building as few sealed areas and parking spaces as possible. Radünz: "This green oasis has always been part of our concept. Our gardens should enable people to experience the seasons and create ecological added value."
“If the number is 98 percent, we cancel”
In an interview with CARE Invest, HBB Managing Director Oliver Radünz spoke about quality criteria when selecting a location, new operating concepts and the consequences of the Corona crisis for project development. HBB is an investor, project developer, property owner and has a permanent operating partner in Domicil. Have you ever considered deviating from this strict line?
Oliver Radünz: In principle, yes. Our main focus is to act as an investor. However, there are also some special locations where we work as a service provider and consultant for investors with the aim of Domicil renting the properties. Since we have very strict requirements for the locations and the quality of the facilities and deliberately do not invest in all federal states, an additional option for the future could be to act as a service provider for other operators or investors in addition to our core business, but that is not the main focus of our strategy at the moment.
And how about a second operator brand for a different market segment?
Domicil's nursing services and our focus as an investor aim to provide nursing services close to home for all citizens of a city. With regard to the property, we strive to create a structural and architectural quality that is in the premium segment. The same applies to the locations: we build "in the middle of life", primarily in large cities and there in central and integrated locations. We consistently turn down locations that do not meet our strict criteria - and that is 98 percent of all property offers. We do have the idea of building smaller houses with a different concept. However, given our extensive work to date, we have not yet pursued the idea in more depth.
What growth target have you set for the next twelve months?
As investors, we think very long-term and prefer to be "krüsch" with the locations, as they say in Hamburg. In other words, we are very selective. We have completed some projects from the initial idea to handover in four to five years, others take longer. The house in Berlin-Zehlendorf near Mexikoplatz, which we handed over at the end of last year, took 15 years. On average, we complete three houses a year. Because of the high location and quality requirements, we are more of a long-distance runner with good fitness.
Could you imagine taking over and renovating existing facilities?
No. We have clear ideas about structural and technical equipment, ecological criteria and functional processes because we want to create an above-average quality of living for our residents. Sustainability also plays a role. We want our buildings to meet the most diverse requirements of the future. To do this, we have to think about it before we start planning.
What must a suitable location offer?
Usually a catchment area of 70.000 to 100.000 residents and a central location in the center or the districts. In Berlin alone, we have built 16 nursing homes in recent years, all in the middle of the districts. In the Kiez, as Berliners would say. We want our residents to participate in the daily life of a city. You could say: We are looking for the gap between the city park and the market square. But such gaps are rare.
How do you find the “right” properties?
Through perseverance, market knowledge and very good local knowledge. In addition - but only in addition - through location analyses. We also sometimes do things that are out of the question for others. For our house in Frankfurt-Rödelheim, which was completed last year, we first had to demolish an old high-rise bunker made of reinforced concrete up to 2,50 meters thick on the site. As far as I know, no one has ever done that in an inner-city location in Germany, but that's why we were able to get the site. In moments like these, our company structure helps: We are a Hanseatic family business owned by a Hamburg merchant family. This enables us to make clear and quick decisions.
The shortage of skilled workers poses challenges for investors and operators alike. How do you deal with this issue?
We plan our facilities in such a way that the buildings make their demanding work easier for the nursing and domestic staff thanks to short distances and modern technical infrastructure, and are attractive workplaces. And, as I said, this is easier with new buildings than, for example, with a renovation of existing buildings. In addition, in consultation with our partner Domicil, we always target specific regions such as northern Germany or Berlin. This clustering with ten or more buildings not only makes it easier to find staff or train them, but also improves the range of career opportunities on offer.
How does the Corona crisis affect your projects?
In terms of construction activity, all construction projects have so far been completed without additional costs. But when it comes to acquiring land, a lot is changing. This includes, for example, discussions about what the city of the future will look like in terms of its mix of uses. We have been communicating for 20 years that cities should be livable and liveable for all age groups and sections of the population. In this respect, we are now sensing greater openness and, admittedly, a slightly changed demand for land, which can be helpful for social real estate.
Will we still need traditional nursing homes in 20 years?
Yes, absolutely. Given demographic change and increasing demand for dementia care, we will continue to need nursing homes in the future. Far more than there are today. But we also need the right home, the right size, in the right location, with a long-term concept in terms of property and operations.
Source: “CARE Invest 3-2022″
