Impact Healthcare REIT has announced that it has acquired four care homes from subsidiaries of the Maria Mallaband and Countrywide Group (MMCG) in a sale and leaseback transaction. MMCG will continue to operate the homes after completion. The net purchase price is £21.0 million, reflecting a net initial yield of 7.4%. Impact Healthcare REIT says that this investment comprises one of the six target transactions that the Company included in its announcement on 15 April 2019 and will be funded from the Group’s current debt facilities.
About the four care homes
The four homes have a combined total of 296 elderly care beds, of which 270 are currently in operation. Impact Healthcare REIT says that MMCG is a top-10 operator of care homes across the UK, with the group comprising 82 homes. The homes are:
- Belmont House, Harrogate – this opened in 2007 and has 100 beds, all of which have en suite bathrooms.
- Wallace View, Stirling – this opened in 2004 and has 60 beds
- Parksprings, Motherwell – this opened in 1997 and currently operates 70 beds. It is bringing a further 26 beds into operation this year. All of the bedrooms in each home are en suite.
- Thorntree Mews, Falkirk, – this is described is an attractive converted period building in Falkirk with a modern extension offering a total of 40 beds, over two thirds of which are en suite.
The company also says that there is a potential asset management opportunity at Parksprings to convert a unit formerly leased to the NHS, which is currently mothballed, into a complex care unit.
New fixed 25 year lease contracts
The homes are now on new leases that have fixed 25-year terms with no break clauses and will be operated as part of MMCG’s Countrywide portfolio. The rents receivable under the leases will be subject to annual upward-only rent reviews linked to the Retail Prices Index, with a floor of 2% p.a. and a cap of 4% p.a. MMCG has committed to a minimum annual expenditure on the maintenance of the homes.