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Cofinimmo: The Belgian Healthcare Real Estate Transformation Story
I. Introduction & Episode Roadmap
Picture Brussels in December 1983—a city buzzing with European ambition, the EU institutions expanding their footprint, and real estate developers sensing opportunity in every new office tower rising against the gray winter sky. In that moment, a small property company was born with just 6 million EUR in capital—a modest sum even by 1980s standards. The founders likely never imagined that four decades later, their creation would control healthcare facilities housing more than 30,000 beds across nine European countries.
Today, Cofinimmo stands as one of the largest property companies in Belgium and a member of the BEL20, benefiting from the Regulated Real Estate Company (RREC) regime. Its portfolio stretches across Belgium, France, the Netherlands, Germany, Spain, Finland, Ireland, Italy, and the United Kingdom with a value of approximately 6 billion EUR. But the most remarkable aspect isn't the size—it's the transformation.
The central question of this story: How did a Belgian office landlord founded in the 1980s become one of the most important healthcare real estate investors in Continental Europe?
Founded in 1983, Cofinimmo was originally an investor in office buildings. Attentive to demographic trends, Cofinimmo shifted in 2005 towards healthcare real estate, diversifying by country, operator, and care specialty. That single sentence from the company's own history page captures a twenty-year metamorphosis that rivals any corporate transformation story in European business history.
The themes running through this narrative matter for any investor trying to understand durable competitive advantage in real estate:
Demographic foresight: Management spotted Europe's aging population trend early and bet the company on it—a bet that continues to pay off as the demographic wave accelerates.
Strategic pivots: The willingness to systematically exit a legacy business (Brussels offices) while scaling a new one (healthcare) demonstrates rare discipline among real estate operators who typically cling to their roots.
The healthcare transformation: From zero healthcare assets in 2004 to 77% of the portfolio today, the company essentially rebuilt itself while public markets watched.
The pending mega-merger: Belgian healthcare real estate company Aedifica agreed to merge with Cofinimmo. The combined group will have a gross asset value of 12.1 billion euros, making it the largest real estate investment trust (REIT) in Europe and the fourth largest in the world.
What follows is the complete story—from Brussels office specialist to continental healthcare champion, and now to the precipice of creating a European real estate behemoth.
II. Founding & Early Years: Brussels Office Specialist (1983–2004)
The Brussels Context
To understand why Cofinimmo started in offices, you must understand Brussels in the early 1980s. The city was transforming into the de facto capital of Europe. The European Commission was expanding, NATO had its headquarters there, and multinational corporations seeking EU presence flooded in. Office demand seemed limitless.
Since its establishment in 1983, Cofinimmo has been a major player in the office market, which is composed of different sub-segments. It is in this market that the company has built its real estate expertise for 40 years.
The founding capital of 6 million EUR was modest, but it allowed the young company to acquire its first properties in Brussels' commercial districts. The business model was straightforward: buy or develop office buildings, lease them to multinational tenants, and collect rent. In a city where the EU institutions guaranteed stable demand, it seemed like a formula that could work forever.
Going Public and the REIT Structure
In 1994, the company listed on the Brussels stock exchange, now called Euronext Brussels. The IPO provided capital for expansion and gave Cofinimmo access to public equity markets that would prove crucial in later decades.
Two years later came an equally important structural decision. Cofinimmo adopted SICAFI status in Belgium (the Belgian REIT regime). This tax-efficient structure—similar to REITs in the United States—meant the company would distribute most of its income to shareholders while avoiding corporate-level taxation on distributed profits. The REIT structure essentially aligned Cofinimmo's interests with income-seeking investors and created a governance framework that would shape its behavior for decades.
Building Core Competencies
During these formative years, Cofinimmo developed three capabilities that would prove essential to its later transformation:
Property Management Expertise: Thanks to its long experience in office real estate, Cofinimmo relies on a management model that offers an integrated services platform. Rather than outsourcing, the company internalized property management—maintaining buildings, handling tenant relationships, and optimizing operations. This hands-on approach meant Cofinimmo's teams developed deep operational knowledge that could be applied to new asset types.
Development Capability: The company wasn't merely a passive landlord. It developed new office projects, managing construction risk and creating value through development margins. This development expertise would later enable expansion into healthcare construction.
Tenant Relationship Model: In offices, tenant relationships typically span shorter terms than in healthcare. But Cofinimmo learned to work with large, sophisticated corporate tenants and government entities—experience that would translate when dealing with healthcare operators.
The Limitations of Pure-Play Office
By the early 2000s, cracks were appearing in the pure-office model. Brussels had three distinct office submarkets: the Central Business District (CBD), the decentralized area, and the periphery. The CBD commanded premium rents, but the decentralized and peripheral markets faced structural challenges. New construction diluted demand, and tenants could always move to newer buildings.
Perhaps more importantly, office leases typically ran for shorter terms than other real estate categories. Tenant turnover created vacancy risk and required continuous capital expenditure to keep buildings competitive. The office business was becoming a treadmill—running faster just to stay in place.
Management began asking a fundamental question: What asset class could deliver the long-term, inflation-indexed, predictable cash flows that REIT investors valued most?
The answer would come from an unlikely source: Europe's nursing homes.
III. The 2005 Pivot: Seeing the Demographic Wave
The Strategic Insight
In 2005, Cofinimmo's leadership made a decision that would define the company's next two decades. That year marked the first healthcare real estate investment in Belgium and the first public-private partnership (PPP): the Antwerp courthouse.
The PPP with the Antwerp courthouse demonstrated something important: Cofinimmo could work with government entities on long-term, complex transactions involving specialized real estate. But it was the healthcare investments that signaled the strategic direction.
Why healthcare? The answer lay in demographics that were impossible to ignore.
Currently, in the European Union (EU), more than a fifth of the population is aged 65 years or older, with a ratio of three working-age individuals to each older person. However, projections suggest that older individuals will account for nearly a third of the population by 2050, with less than two working-age individuals for every older person.
The segment aged 75 to 84 years old is projected to increase by 56.1% and even more concerning is the number of people aged 85 years and more which is expected to more than double (12.5 million in 2019, versus 26.8 million in 2050).
This wasn't a trend that might happen—it was demographic math already baked into birth rates from decades prior. Europe's population pyramid was inverting, and someone would need to house and care for hundreds of millions of aging citizens.
Why Nursing Homes Made Sense for a REIT
Healthcare real estate, particularly nursing homes and care facilities, offered characteristics that office landlords could only dream of:
Long-term leases: The company's healthcare and restaurant tenants typically sign long-term leases, while its office tenants generally elect for short-term agreements. Nursing home operators often sign 20-25 year leases because relocating residents is impractical and operators invest significantly in specialized equipment and training.
Inflation indexation: Healthcare leases typically include CPI-based rent escalation, providing built-in protection against inflation—exactly what REIT investors want.
Triple-net structures: In healthcare, tenants typically bear maintenance costs, equipment expenses, and operational responsibilities. The landlord's role is simpler: own the building, collect rent, and maintain the structure.
Non-discretionary demand: People don't choose to need nursing care—they need it because of age and medical conditions. Healthcare assets offer the advantage of being non-cyclical. They have a more defensive profile, based on strong fundamentals and long-term trends.
The First Acquisitions
Cofinimmo's initial healthcare investments focused on nursing and care homes in Belgium. These facilities—housing elderly residents requiring daily assistance—represented the most straightforward entry point into healthcare real estate.
The acquisition strategy was simple but rigorous: identify quality operators with stable occupancy, negotiate long-term leases with CPI indexation, and acquire properties at yields that exceeded the company's cost of capital. Each transaction taught the team something new about healthcare operations, regulatory requirements, and tenant relationships.
By starting in Belgium, where management understood local regulations and market dynamics, Cofinimmo could learn the healthcare business before expanding internationally. It was a measured approach—characteristic of a company that would prove remarkably disciplined over the following two decades.
The 2005 pivot wasn't immediately transformative. Offices still dominated the portfolio, and healthcare investments remained modest. But the strategic direction was set. Every subsequent decision would be evaluated against a simple question: Does this accelerate our transition to European healthcare leadership?
IV. The Diversification Era: Pubstone & Distribution Networks (2007–2011)
The AB InBev Pubstone Deal
While healthcare remained the strategic north star, Cofinimmo saw an opportunity in 2007 that was too attractive to pass up. That year, the company launched a partnership with AB InBev Group for a portfolio of 1,068 pubs and restaurants located in Belgium and the Netherlands (Pubstone).
The investment value of the real estate portfolio (100%) amounted to 429 million EUR and the initial gross rental yield to 6.30%. The name of the new subsidiary, which would not be merged with Cofinimmo SA and in which InBev Belgium retained a 10% interest, was changed to Pubstone SA.
The deal structure demonstrated Cofinimmo's evolving sophistication in sale-leaseback transactions. Cofinimmo signed a global contract with InBev for a firm duration of minimum 23 years and for an initial rent of 26.6 million per year (indexed to CPI) covering all pubs. It was a commercial lease agreement with InBev Belgium and InBev Nederland, assorted with a guarantee by InBev SA, which ensured the firm duration of minimum 23 years.
This wasn't just a property deal—it was a financial engineering masterpiece. AB InBev, one of the world's largest brewers, needed to monetize real estate to fund its aggressive M&A strategy. Cofinimmo needed long-term, inflation-indexed income from a blue-chip tenant. The 23-year lease with corporate guarantees created exactly the cash flow profile that REIT investors valued.
After this transaction, Cofinimmo's portfolio was spread as follows: 76.3% offices, 14.7% pubs and 7.3% nursing homes. Diversification per sector improved the risk profile of the portfolio. The average lease length for the leases in portfolio went from 9.1 to 11.0 years.
The Pubstone deal taught Cofinimmo several lessons. First, large corporate sale-leasebacks could be executed efficiently if properly structured. Second, distribution network real estate—while different from offices or healthcare—shared favorable characteristics: specialized properties, long-term tenants, and predictable income. Third, the company could operate multiple subsidiaries with distinct investment profiles under a single parent structure.
Geographic and REIT Expansion
The years 2008-2012 marked Cofinimmo's transformation from a Belgian company to a truly European operator.
In 2008, the company made its first healthcare real estate investments in France and adopted SIIC status (French REIT regime). In 2012, it made first healthcare real estate investments in the Netherlands and adopted FBI status (Dutch REIT regime).
This multi-country REIT structure was strategically brilliant. By qualifying for tax-efficient REIT treatment in Belgium, France, and the Netherlands, Cofinimmo could invest across these markets without double taxation eroding returns. The company benefits from the REIT regime in Belgium (RREC - Regulated Real Estate Company), in France (SIIC - Société d'Investissement Immobilier Cotée) and in the Netherlands (FBI - Fiscale Beleggingsinstelling).
The MAAF Insurance Agencies
In December 2011, Cofinimmo acquired a portfolio of insurance agencies in France, leased to the MAAF group, a subsidiary of the French insurance group Covéa. This portfolio was acquired by Cofinimur I, a new subsidiary of Cofinimmo.
The partnership with MAAF included a portfolio of 283 insurance agencies in France, and Cofinimmo also issued its first convertible bonds that year.
Like Pubstone, the MAAF portfolio represented the "distribution networks" concept—specialized real estate leased long-term to a single corporate tenant. The agencies were small, geographically dispersed properties that would be impractical for MAAF to own individually but made perfect sense for a professional real estate operator to aggregate and manage.
By 2011, Cofinimmo had three distinct platforms: offices (still the largest), healthcare (growing), and distribution networks (Pubstone and Cofinimur I). The distribution network segment would prove to be a bridge strategy—generating stable income during the transition years while healthcare scaled up.
What's notable is management's willingness to do both: grow healthcare aggressively while also executing opportunistic transactions in other categories when the economics were compelling. This wasn't a rigid strategy but an adaptive one, always oriented toward long-term, inflation-linked income from quality tenants.
V. The Healthcare Acceleration: Building a Continental Champion (2014–2021)
The Pan-European Expansion
The period from 2014 to 2021 represents the most intensive expansion phase in Cofinimmo's history. In 2014, the company made its first healthcare real estate investments in Germany and adopted RREC status in Belgium.
Germany represented a massive opportunity. With Europe's largest economy and a rapidly aging population, the country needed vast new healthcare infrastructure. German operators were increasingly open to sale-leaseback transactions that freed capital for operational investments.
In 2019, Cofinimmo made first healthcare real estate investments in Spain. The company accelerated rebalancing of the office portfolio in the Brussels' Central Business District (CBD), with over 56% of the consolidated portfolio now invested in healthcare real estate.
In 2020, the company made first healthcare real estate investments in Finland.
In 2021, Cofinimmo made first healthcare real estate investments in Ireland, Italy and the United Kingdom, with 67% of the consolidated portfolio invested in healthcare real estate.
Nine countries. Seven years. The geographic diversification wasn't random—it reflected a systematic assessment of where demographic trends, operator quality, and real estate yields aligned favorably.
The Investment Surge
The numbers from this period are staggering:
2019: Continued to accelerate investments in healthcare real estate (almost 500 million EUR).
2020: More than 700 million EUR invested, including nearly 600 million EUR in healthcare real estate in Europe; 59% of the consolidated portfolio invested in healthcare real estate.
2021: Almost 1 billion EUR invested in healthcare real estate in Europe; 67% of the consolidated portfolio invested in healthcare real estate.
Since 2018, the company has grown its total assets at a compound annual growth rate of 8%, from €3.7 billion to €6.4 billion, while keeping its debt-to-assets ratio between 41% and 46%.
This growth wasn't achieved through leverage expansion. Management maintained financial discipline even as investment pace accelerated—a rare combination that speaks to careful capital allocation.
Capital Markets Execution
Growing at 8% annually while keeping leverage stable requires constant access to fresh equity. Cofinimmo executed multiple capital raises:
2015: Capital increase with preferential subscription rights for an amount of 285 million EUR.
2018: Capital increase with irrevocable allocation rights in the amount of 155 million EUR.
2020: Capital increases in the amount of nearly 143 million EUR.
2021: Capital increases in the amount of nearly 565 million EUR.
Cumulative capital increases of 565 million EUR in 2021 and 114 million EUR in 2022 reinforced the group's financial resources and balance sheet structure.
The 2021 capital raise of nearly 565 million EUR was particularly significant—it represented conviction that healthcare real estate opportunities in Europe justified significant equity issuance despite the dilution to existing shareholders.
Sustainable Finance Innovation
Cofinimmo wasn't just raising capital—it was pioneering sustainable finance in European real estate.
In 2016, the company completed the inaugural issuance of 'Green & Social Bonds' through a private placement of 55 million EUR.
In 2020, Cofinimmo issued a first 500 million EUR benchmark sustainable bond.
These weren't just marketing exercises. Sustainable bonds typically carry marginally lower yields than conventional debt, creating real cost savings. More importantly, they attracted ESG-focused institutional investors who valued the alignment between healthcare real estate and social impact.
By 2021, Cofinimmo had transformed from a Brussels office landlord into something entirely different: a pan-European healthcare REIT with operations in nine countries, a best-in-class sustainability profile, and a growth track record that attracted institutional capital from across the globe.
VI. The Office Exit Strategy & Portfolio Rebalancing (2018–2024)
The Deliberate Wind-Down
While healthcare investment accelerated, something equally important was happening on the other side of the portfolio. Starting in 2018, Cofinimmo began rebalancing its portfolio towards the CBD.
The strategy was clear: exit secondary and peripheral office locations while retaining prime CBD assets that could command premium rents. As a reminder: Cofinimmo has managed to divest 700 million EUR (whereof nearly 500 million EUR in offices) over the last three years.
The cumulative amount of divestments carried out since 01.01.2023 reached approximately 300 million EUR, which was in line with the target set at the beginning of the year. CEO Jean-Pierre Hanin stated: "We are very pleased with the completion of these divestments, which were budgeted in 2023 and are fully in line with our overall portfolio rebalancing strategy. This demonstrates our ability to perform selective asset arbitrages in the current challenging market environment."
The office divestments weren't fire sales—they were methodical disposals at or above book value. The ability to sell well-leased properties even in difficult markets reflected the quality of the assets and Cofinimmo's sophisticated transaction execution.
Currently, Cofinimmo's offices portfolio is composed of 25 buildings with a total surface of approximately 255,000 m² and an approximate value of 0.9 billion EUR, representing approximately 15% of the company's total portfolio. It is mainly located in Brussels' Central Business District (CBD), as a result of the recentering to that area, initiated mid-2018.
The retained office portfolio—concentrated in Brussels' best locations—serves a specific purpose. These prime assets generate stable income, provide optionality for future capital recycling, and maintain Cofinimmo's expertise in office property management. The strategy wasn't to exit offices entirely but to own only the best.
The Cofinimur I Exit
In November 2023, Cofinimmo completed the large-scale disposal of the Cofinimur I-portfolio, which consisted of insurance agencies leased to the French MAAF group (265 assets at that time).
Brussels-listed real estate company Cofinimmo finally completed the disposal of its Cofinimur I portfolio for around €111 million. The transaction was announced as far back as September 2021, but the 265 asset sales took just over two years to complete as the company disposes of non-strategic assets.
The Cofinimur I disposal demonstrates the discipline of exiting non-core assets methodically. Selling 265 small properties across France required patience—some assets were sold in bulk, others individually. The two-year timeline reflected market realities rather than management urgency.
"This major divestment operation given the geographical spread of the assets in the portfolio was completed in just over two years for approximately €111 million. Some of these assets have been the subject of bulk sales whereas others were sold individually."
The proceeds reduced leverage and funded new healthcare investments—a direct recycling of capital from lower-growth assets to higher-growth opportunities.
Current Portfolio Structure
By late 2025, the transformation is largely complete. Cofinimmo owns a diversified property portfolio spread over nine countries worth approximately 6 billion EUR, representing a total surface area of approximately 2,412,000 m². Its main investment segments are healthcare real estate (77%), distribution networks (8%) and offices (15%).
With a portfolio of approximately 4.6 billion EUR spread over nine countries and comprising 310 facilities and approximately 30,500 beds, Cofinimmo is one of the major investors in healthcare real estate in Continental Europe.
The remaining 8% in distribution networks—primarily Pubstone—continues generating stable, long-term income from AB InBev under the original 23-year lease structure. These assets may eventually be divested, but there's no rush while they deliver predictable cash flows.
VII. Sustainability & ESG Leadership
The 30Âł Project
Sustainability isn't a marketing afterthought for Cofinimmo—it's embedded in the company's DNA. Cofinimmo has positioned itself as a pioneer in sustainability, with ISO 14001 certification since 2008 and ambitious science-based targets for reducing the energy intensity of its portfolio.
The company aims for a 30% reduction in energy intensity by 2030 (Project 30³) and has already made significant progress, reducing from 190 kWh/m²/year in 2017 to 138 kWh/m²/year in 2024.
That 27% reduction in energy intensity over seven years represents real operational improvement—not just asset rotation. The company invested in building upgrades, energy-efficient systems, and renewable energy sources across its portfolio.
The strategic thinking in 2019 led to the ambitious business project launched in 2020. This objective has been established following the science based targets methodology, which has made it possible to objectivize the effort to be made in order to contribute to the global objective of limiting global warming to a maximum of 1.5°C. It is in line with the Paris Agreement concluded at COP21.
Recognition & Green Finance
The market has noticed. Since February 2023, Cofinimmo is also included in the Euronext BEL ESG index.
Cofinimmo was listed in the 500 World's Most Sustainable Companies 2024 by Time and one of the two Belgian real estate companies in this ranking. It is the only real estate player, among 10 Belgian companies, listed in the 600 Europe's Climate Leaders 2024 by Financial Times.
This recognition translates into tangible benefits. ESG-focused investors increasingly allocate capital to companies meeting strict sustainability criteria. Cofinimmo's green bonds and sustainability-linked credit facilities carry lower financing costs than conventional debt.
As of June 30, 2025, the company had €825 million outstanding under its Sustainable Notes Programme and several sustainability-linked credit lines totaling over €690 million.
For a capital-intensive business like real estate, even small reductions in financing costs compound significantly over time. The ESG leadership isn't just ethically sound—it's financially accretive.
Why ESG Matters for Healthcare Real Estate
The alignment between healthcare real estate and ESG criteria runs deeper than energy efficiency. Nursing homes and care facilities serve fundamental social needs—housing and caring for elderly and vulnerable populations. By investing in healthcare infrastructure, Cofinimmo directly addresses the United Nations Sustainable Development Goals related to health and well-being.
This social dimension attracts impact-oriented investors who might otherwise avoid real estate. It also creates goodwill with regulators, operators, and communities—intangible assets that matter when seeking development approvals or negotiating lease renewals.
VIII. The Interest Rate Shock & Navigating 2022–2024
The Challenge
The years 2022-2024 tested every REIT in Europe. After a decade of near-zero interest rates, central banks raised rates aggressively to combat inflation. For real estate companies dependent on borrowed capital, the impact was severe.
Rising rates affect REITs through multiple channels: existing variable-rate debt becomes more expensive, refinancing fixed-rate debt costs more at maturity, and property valuations decline as discount rates rise. Many European REITs saw their stock prices fall 30-50% from 2021 peaks.
Cofinimmo wasn't immune. The stock price declined significantly from its highs as investors recalibrated expectations for all rate-sensitive assets.
The Response
What distinguished Cofinimmo was preparation. The interest rate risk is hedged at 100% as at 31.03.2023 through the use of IRS (interest rate swaps) and caps.
In terms of financing, Cofinimmo reinforced its financial resources and its balance sheet structure during the last two financial years (cumulative capital increases of 565 million EUR in 2021 and 114 million EUR in 2022). The financing operations during this period enabled the group to improve the maturity timetable of its financial debts, to increase the amount of available financing, and to maintain an average cost of debt at particularly low levels.
Cofinimmo also benefits from a very low average cost of debt at just 1.4%, providing financial flexibility in the current interest rate environment.
An average cost of debt of 1.4% when European policy rates exceeded 4% is remarkable. It reflects years of proactive hedging, long-dated fixed-rate debt issuance, and relationship banking that secured favorable terms.
Why Healthcare REITs Proved More Resilient
While all REITs suffered during the rate shock, healthcare-focused companies demonstrated relative resilience. The reasons were structural:
Inflation-indexed leases: When inflation spiked, Cofinimmo's rental income rose accordingly. CPI-linked rent escalation meant revenue kept pace with—or exceeded—rising costs.
Long lease terms: With a 13-year average remaining lease term, Cofinimmo had virtually no near-term rollover risk. Tenants were locked into existing agreements regardless of economic conditions.
Non-discretionary demand: Elderly patients still needed care facilities. Unlike retail or office tenants who might reduce space, healthcare operators couldn't simply close facilities.
Government support: Many healthcare operators received government subsidies or operated within regulated payment systems, providing stable revenue streams even during economic turbulence.
Cofinimmo reported results exceeding its outlook for the first half of 2025, with net result from core activities rising 2.4% to €122 million. The company maintained a high occupancy rate of 98.6% across its portfolio, with an average residual lease length of 13 years, providing strong visibility on future cash flows.
IX. The Aedifica Merger: Creating a European Healthcare REIT Champion
The Approach & Negotiations
In early May 2025, the European REIT market witnessed a seismic announcement. Aedifica submitted a non-binding exchange offer proposing an exchange ratio of 1.16 new Aedifica shares per Cofinimmo share.
Cofinimmo's board, led by Chairman Jean Hilgers, responded strategically. They didn't reject the concept of a merger—they rejected the initial price. Cofinimmo and Aedifica have complementary geographic footprints and aligned strategic focus on healthcare as well as comparable portfolio sizes, earnings profiles and capital structures. Cofinimmo acknowledged that a combination would create a leading pan-European healthcare REIT.
The negotiation that followed demonstrated sophisticated corporate finance on both sides. Aedifica launched an exchange offer at an exchange ratio of 1.185 new Aedifica shares for each Cofinimmo share.
On 3 June 2025, the boards of directors of Aedifica and Cofinimmo announced in a joint press release that an agreement had been reached on the terms of the exchange offer at an exchange ratio of 1.185. Cofinimmo's board of directors indicated that it would unanimously support and recommend the offer.
The improvement from 1.16x to 1.185x represented meaningful additional value for Cofinimmo shareholders—evidence that the initial rejection was strategically correct.
The Combined Entity
The transaction would create Europe's leading healthcare real estate investment trust (REIT), with a combined gross asset value of €12.1 billion.
Shareholders of both companies are expected to benefit from operational synergies of around €16 million, and their EPRA earnings per share are expected to be accretive for all shareholders.
The synergy estimate of €16 million annually may seem modest relative to the combined size, but it represents real operational improvements: centralized governance costs, reduced third-party fees, and enhanced operational excellence. For REITs, where operating margins are already high, additional synergies often prove difficult to extract.
The boards of both companies unanimously endorsed the merger, with Cofinimmo chair Jean Hilgers set to take over from Aedifica's Serge Wibaut as chair of the new group upon completion. The proposed exchange offer was expected to open for acceptance on or about September 1, and the combined group will retain a primary listing on Euronext Brussels.
Regulatory Hurdles
The planned merger between Belgian real estate groups Aedifica and Cofinimmo to form a leading European healthcare REIT is still under review by the Belgian Competition Authority (BMA).
Aedifica formally filed its request for approval of the transaction with the Belgian Competition Authority (BCA) on 27 October. A final decision from BCA is anticipated within 55 working days.
Approval has already been obtained from competition authorities in the Netherlands and Germany and France has provided FDI clearance.
The transaction is still subject to the approval by the Belgian Competition Authority. During the ongoing pre-notification phase, the authorities indicated that further questions need to be answered. Aedifica and Cofinimmo will therefore provide additional information in the coming weeks.
The Belgian regulatory process reflects the merger's significance for the domestic healthcare real estate market. Combined, Aedifica and Cofinimmo would control substantial market share in Belgian nursing homes—exactly the kind of concentration that competition authorities scrutinize.
X. The Business Model Deep Dive
Current Portfolio Structure
Healthcare assets are now distributed across nine countries: Belgium (21%), France (35%), Netherlands (15%), Germany (10%), Spain (9%), Finland (3%), Ireland (2%), Italy (5%), and the United Kingdom (1%).
This geographic diversification serves multiple purposes:
Regulatory risk reduction: Healthcare real estate operates within nationally specific regulatory frameworks. By diversifying across countries, Cofinimmo reduces exposure to any single government's policy changes.
Market cycle diversification: Real estate markets don't move in lockstep. A construction boom in Germany might coincide with supply constraints in the Netherlands. Geographic spread smooths portfolio returns.
Operator diversification: Different countries have different leading operators. By working with operators across markets, Cofinimmo reduces tenant concentration risk.
The Tenant Relationship Model
With attention to social developments, Cofinimmo has the mission of making high-quality care, living and working environments available to its partners-tenants, from which users benefit directly. "Caring, Living and Working - Together in Real Estate" is the expression of this mission.
The "partners-tenants" terminology is deliberate. Cofinimmo doesn't view operators as mere rent-payers—they're partners in delivering healthcare services. This orientation shapes how the company approaches lease negotiations, capital investments, and operator relationships.
Results arise not only from excellent operational performance like gross rental income up nearly 3% like-for-like, high occupancy rate, and long residual lease length of 13 years on average.
A 13-year weighted average residual lease term is extraordinary in real estate. It means that on average, existing leases don't expire until 2038—providing exceptional visibility on future cash flows.
Key Metrics
Healthcare portfolio: 77% share in overall portfolio, 4.6 billion EUR fair value, 99.4% occupancy rate.
The company's S&P credit rating of BBB/Stable/A-2 was confirmed in March 2025, reflecting its solid financial position.
Standard & Poor's placed Cofinimmo's rating on 'Positive Watch' on 04.06.2025, following the press release regarding its potential combination with Aedifica. This means that the rating on Cofinimmo could be raised one notch upon the project's completion.
A 99.4% occupancy rate across healthcare assets indicates virtually no vacancy—an operational achievement that reflects both asset quality and tenant strength. The potential credit rating upgrade from the merger would further reduce financing costs.
XI. Playbook: Business & Strategy Lessons
Lessons from the Cofinimmo Story
1. Demographic foresight wins: Cofinimmo spotted Europe's aging population trend in 2005 and acted decisively. By the time competitors recognized the opportunity, Cofinimmo had built capabilities, tenant relationships, and scale advantages that proved difficult to replicate. Early movers in demographically driven sectors often capture disproportionate value.
2. Transformation takes time: Twenty years elapsed between the first healthcare investment (2005) and reaching 77% portfolio concentration. Corporate transformations rarely happen quickly—they require sustained commitment, patient capital, and willingness to accept transition periods where the old business funds the new.
3. Capital discipline during growth: Despite growing total assets at an 8% CAGR from €3.7 billion to €6.4 billion, Cofinimmo kept its debt-to-assets ratio between 41% and 46%. Growth without leverage discipline often ends badly. Cofinimmo's approach—raising equity regularly to fund expansion—preserved financial flexibility.
4. Geographic diversification reduces risk: Operating across nine countries reduces exposure to any single regulatory change, economic shock, or market dislocation. The complexity of multi-country operations is offset by the stability of diversified cash flows.
5. Long-term lease structures create predictability: The 13-year average lease term provides visibility that most businesses can only dream of. For income-seeking investors, this predictability justifies premium valuations.
6. ESG as competitive advantage: Early commitment to sustainability attracted ESG-focused investors, reduced financing costs through green bonds, and created goodwill with regulators and communities. ESG leadership generates real economic value.
7. Knowing when to exit: The systematic wind-down of offices and disposal of Cofinimur I demonstrated discipline in exiting non-core assets. Many companies hold declining businesses too long; Cofinimmo accelerated exits even when painful.
8. Triple REIT status: Qualifying for REIT treatment in Belgium, France, and the Netherlands enabled tax-efficient cross-border investment. Structural choices about corporate organization create durable competitive advantages.
XII. Porter's Five Forces Analysis
1. Threat of New Entrants: LOW-MODERATE
High capital requirements create barriers—assembling a portfolio of €4.6 billion in healthcare real estate requires substantial equity and debt capacity. Long-standing tenant relationships create switching costs; operators don't easily change landlords mid-lease.
Regulatory expertise matters in healthcare real estate, where compliance requirements differ by country. However, private equity and sovereign wealth funds increasingly target this sector, bringing fresh capital that could intensify competition for acquisitions.
2. Bargaining Power of Suppliers (Development/Construction): MODERATE
Multiple construction firms operate across Europe, but specialized healthcare construction capability is more limited. Land scarcity in prime locations increases supplier power for development sites.
Cofinimmo's in-house development expertise reduces dependency on external contractors. The company can manage projects directly rather than relying entirely on third parties.
3. Bargaining Power of Buyers (Tenants/Operators): MODERATE
Large healthcare operators have negotiating power, particularly when they operate multiple facilities and can threaten to take business elsewhere. However, leases usually run for 20 to 25 years in healthcare, and maintenance costs are usually for the tenant—unlike offices, where contracts usually run for shorter terms.
The long-term nature of healthcare leases means operators need specialized facilities and can't easily relocate residents. This structural dependence limits tenant bargaining power despite the concentration among large operators.
4. Threat of Substitutes: LOW
Healthcare assets offer the advantage of being non-cyclical. Aging populations need physical care facilities—there's no substitute for a nursing home bed when someone requires 24-hour care.
Home care represents a partial substitute for some populations but cannot replace residential care for those with severe needs. Telehealth advances affect outpatient settings but have minimal impact on residential care requirements.
Government healthcare spending is largely non-discretionary—countries must care for aging citizens regardless of economic conditions.
5. Industry Rivalry: MODERATE (Consolidating)
Sector consolidation is increasing, with continental healthcare landlords Aedifica and Cofinimmo proposing a merger that could create a sector champion in Europe. A shrinking in the number of European REITs, leaving fewer, larger, more efficient and hopefully higher-rated companies is part of the necessary evolution of the sector.
The Europe REIT market landscape remains fragmented—top-five players control only 31% of capitalization—which leaves ample room for consolidation plays.
The Aedifica-Cofinimmo merger reflects this consolidation trend. Healthcare REIT leaders are building scale to compete more effectively for large transactions, access lower-cost financing, and achieve operational efficiencies.
XIII. Hamilton's 7 Powers Analysis
1. Scale Economies: BUILDING
Aedifica's portfolio includes 607 sites across Belgium, Germany, the Netherlands, the United Kingdom, Finland, Ireland and Spain. Cofinimmo is a public regulated real estate company listed on Euronext Brussels with operations across nine countries.
The merger creates a €12.1 billion platform that can spread central costs over a larger asset base. A team of approximately 155 employees in Brussels, Paris, Breda, Frankfurt and Madrid manages €6 billion in assets—remarkable efficiency that improves further with scale.
The €16 million in annual synergies from the merger represents just the beginning. Larger platforms negotiate better terms with service providers, access debt markets more efficiently, and spread technology investments across more properties.
2. Network Effects: LIMITED
Real estate ownership doesn't generate traditional network effects—each property stands alone. However, indirect benefits exist:
Operator ecosystem: Relationships with healthcare operators in one country can lead to introductions in others. An operator expanding from Germany to Spain might prefer working with a known landlord.
Information advantages: Data accumulation across 300+ facilities provides insights into healthcare operations, lease structures, and development approaches that inform future investment decisions.
3. Counter-Positioning: MODERATE
Cofinimmo was originally an investor in office buildings. Attentive to demographic trends, it shifted in 2005 towards healthcare real estate.
Office-focused REITs face a challenge: their existing business model and expertise center on a property type with structural challenges (hybrid work, shorter leases, higher capital intensity). Pivoting to healthcare requires building entirely new capabilities.
Cofinimmo's 20-year head start in healthcare creates advantages that pure-office players cannot quickly replicate. The expertise in healthcare tenant relationships, regulatory compliance, and development cannot be acquired overnight.
4. Switching Costs: HIGH
Leases run for 20 to 25 years in healthcare. Operators cannot easily switch landlords when they've signed multi-decade agreements. Even at lease expiration, relocating residents—many elderly and fragile—creates operational challenges that discourage switches.
The specialized nature of healthcare facilities (equipment, licensing, design) means buildings can't easily convert to other uses. Tenants are effectively locked in once established.
5. Branding: LIMITED
Real estate brands matter more to investors than tenants. Cofinimmo's reputation for quality, reliability, and ESG leadership helps attract capital but has limited impact on healthcare operators choosing landlords. Location, price, and building quality drive tenant decisions more than landlord brand.
6. Cornered Resource: MODERATE
With 310 facilities and approximately 30,500 beds, Cofinimmo is one of the major investors in healthcare real estate in Continental Europe.
This portfolio represents a cornered resource—quality healthcare real estate in desirable locations cannot be easily replicated. Development takes years, and existing operators have limited incentive to sell to competitors.
The geographic spread across nine countries, with established relationships in each market, creates a platform that would take a decade for competitors to assemble.
7. Process Power: MODERATE
CEO Jean-Pierre Hanin has law and tax degrees from top Belgian institutions and an LL.M from Georgetown University. He started his career as a business attorney and subsequently joined several international groups including as CFO and CEO of Lhoist Group. His functions led him to operate in various regions around the world for over 20 years.
The management team has developed processes for evaluating healthcare acquisitions, structuring sale-leasebacks, managing multi-country REIT compliance, and executing development projects. These processes—built over 20 years—create execution advantages that new entrants cannot immediately replicate.
XIV. Key Risks and Considerations
Operator Credit Risk
Healthcare operators—not end patients—pay rent. If operators experience financial distress, lease payments may be delayed or renegotiated. Cofinimmo mitigates this through operator diversification and careful credit analysis, but concentrated exposure to any single operator remains a risk.
Regulatory Changes
Healthcare real estate operates within nationally specific regulatory frameworks that determine reimbursement rates, staffing requirements, and facility standards. Adverse regulatory changes could impact operator profitability and, consequently, their ability to pay rent.
Interest Rate Sensitivity
Despite extensive hedging, REITs remain rate-sensitive. Higher-for-longer rates affect property valuations, refinancing costs, and investor demand for yield alternatives. The current 1.4% average cost of debt will eventually rise as hedges mature.
Merger Execution Risk
The Aedifica combination faces regulatory review and integration challenges. Competition authority requirements, integration complexity, and cultural differences between organizations could delay or diminish expected benefits.
Construction and Development Risk
Development projects carry completion risk, cost overruns, and lease-up risk. While Cofinimmo manages a modest development pipeline relative to its portfolio size, construction projects consume capital with uncertain returns.
XV. Key Performance Indicators for Monitoring
For investors tracking Cofinimmo's ongoing performance, three KPIs warrant particular attention:
1. Occupancy Rate (Currently 99.4%)
Healthcare real estate generates value through occupancy. A declining occupancy rate—even from 99.4% to 98%—signals tenant stress, portfolio quality issues, or market oversupply. This metric provides early warning of operational problems before they appear in financial results.
2. Like-for-Like Rental Growth
Like-for-like rental growth was positive across all segments, with healthcare real estate growing by 2.9%, offices by 2.2%, and property of distribution networks by 3.4%, resulting in an overall like-for-like growth of 2.8% for the total portfolio.
Like-for-like growth strips out acquisition effects, isolating organic performance. Positive like-for-like growth indicates rental escalation clauses are working, indexation is flowing through, and market rents support renewals. Negative like-for-like growth signals pricing pressure or lease renegotiations.
3. Debt-to-Assets Ratio
The debt-to-assets ratio stood at 43.4% as at 30.09.2025, already in line with the year-end outlook.
This ratio measures financial leverage and regulatory compliance (65% maximum for Belgian REITs). A rising ratio signals aggressive acquisition activity, property value declines, or capital structure strain. A declining ratio indicates capital discipline and deleveraging.
XVI. The Investment Case: Myth vs. Reality
Myth: Healthcare REITs Are Just Defensive Yield Plays
Reality: While defensive characteristics attract income investors, Cofinimmo has delivered 8% annualized asset growth since 2018. The combination of demographic tailwinds, pan-European expansion, and development activity creates genuine growth opportunity beyond yield harvesting.
Myth: The Merger Premium Is Fully Priced
Reality: The exchange offer awaits Belgian Competition Authority approval. S&P placed Cofinimmo on 'Positive Watch,' meaning the rating could rise upon completion. Potential rating upgrades, unrealized synergies, and reduced trading discount post-merger may offer additional upside beyond current valuations.
Myth: Office Exposure Remains a Drag
Reality: The office portfolio is mainly located in Brussels' Central Business District as a result of recentering to that area initiated mid-2018. The remaining 15% office exposure concentrates in prime CBD locations with different dynamics than suburban or secondary markets.
Myth: Rising Rates Will Crush Performance
Reality: The cost of debt is stable at 1.4%, one of the lowest levels for REITs in Europe. Extensive hedging protects against near-term rate impacts. Inflation-indexed leases provide natural hedge as rental income rises with CPI.
XVII. Conclusion: What Comes Next
The Cofinimmo story is remarkable not for what it is—a €6 billion healthcare REIT—but for what it became. From office landlord to continental healthcare champion required two decades of strategic conviction, disciplined capital allocation, and willingness to make difficult choices about legacy businesses.
The population aged 60 and older in the WHO European Region is rapidly growing – from 215 million in 2021 to a projected 247 million by 2030, and over 300 million by 2050. The demographic wave that Cofinimmo anticipated in 2005 has barely begun.
The pending Aedifica merger—if approved—creates something unprecedented in European real estate: a €12 billion healthcare REIT with scale to compete globally and efficiency to deliver shareholder returns. This consolidation reflects the necessary evolution of the sector as European REITs learn lessons from the more established US REIT sector.
For fundamental investors, Cofinimmo presents a clear case study in strategic transformation. The company identified a durable secular trend, built capabilities to exploit it, maintained financial discipline through decades of growth, and now stands poised to benefit from continued demographic change.
The next twenty years will reveal whether the strategic bets placed in 2005 continue compounding—or whether new challenges emerge that test the healthcare real estate thesis. But the story so far demonstrates what disciplined, long-term thinking can achieve in an industry often criticized for short-termism.
From 6 million EUR in founding capital to 6 billion EUR in assets. From a Brussels office specialist to a nine-country healthcare platform. From a single market to potential European champion. The transformation of Cofinimmo offers lessons that extend far beyond real estate—into the heart of what strategic conviction and patient execution can accomplish.
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