Operated real estate: why we separate the property from the operating company

What we call operated real estate

Traditional real estate rents square metres. Operated real estate sells a use: a fully equipped, managed practice for a healthcare practitioner, a room and shared spaces for a co-living resident. The value of the asset no longer comes only from its location and floor area, but from the quality of the operation that runs it. This is a strength, because the asset generates higher income than a bare lease. It is also a demand, because you must know how to operate, and that is precisely what a traditional real estate investment cannot do.

The principle: two companies, two trades

In our operations, the property company holds the real estate asset. It finances it, transforms it, then leases it in full to an operating company under a single head lease. The operating company brings the place to life: it selects the end users, collects the sub-rents, manages the day-to-day, maintains occupancy. Two structures, two trades, two profit and loss accounts.

What the separation changes for investors

First, risk legibility. Whoever invests in the walls carries a real estate risk backed by a single tenant and a head lease, not the day-to-day commercial risk of filling the building. Operating contingencies, such as resident turnover or the temporary vacancy of a practice, are absorbed first by the operating company.

Then, the operating margin. The operating company keeps a margin of around 15% between the head rent it pays to the property company and the sub-rents it collects. This margin is not just remuneration: it absorbs market variations and operating contingencies, which must pass through it before reaching the rent on the walls.

Finally, alignment. IDN Capital invests in each of its operations, alongside investors. Our remuneration combines development fees and a performance-based interest: we earn when the operation performs.

What the separation changes for value

At exit, generally four to five years, the two natures of value stand apart. The walls, transformed and secured by a head lease in place, can be sold on legible market terms to an institutional or private buyer. The operating business, for its part, can be retained: the operation continues, the IDN ecosystem keeps its trade and its teams. Selling the walls without giving away the operation, or keeping both: separation opens options instead of closing them.

The financial discipline that comes with it

This model only works with rigorous structuring: contained leverage, between 65 and 75% LTV depending on the nature of the asset; a target return of around 10% per year in cash-on-cash on invested capital, which we always present as a target and never as a promise; quarterly reporting to investors.

On the ground

This architecture carries the I-CA.RE practices and health houses, where the operating company supports practitioners while the property company secures the walls, as well as our shared-living pilot project, Maison Tallavi in Lormont. The same logic, adapted to each use.

Operated real estate is not just one more asset class. It is a way of making two trades work together that traditional real estate conflates: owning and operating. Separating them gives each its fair risk, its fair remuneration, and its fair value.