Impact Healthcare REIT buys three care homes –
Impact Healthcare REIT has recently exchanged contracts on three purchases for a total initial investment of GBP20.2 million, plus transaction costs. Once completed, these acquisitions, plus the acquisition of four homes from Maria Mallaband Countrywide Group announced on 2 May 2019 and rent increases achieved so far in 2019, will grow the group’s annualised contracted rent by 19% to GBP21.3 million, up from GBP17.8 million at 31 December 2018. Impact will also have deployed over half the money it raised in May.
The three care homes will be leased to two of the group’s existing tenants, Welford and Careport, and the two medical units being acquired are on existing leases to the NHS, adding an eighth tenant for Impact. Each of the investments has a strong occupancy record.
Rents 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. The tenants have committed to a minimum annual expenditure on maintenance of each care home.
Holmesley Nursing Home
Holmesley is a care home in Sidmouth, Devon, with 49 of its 52 bedrooms providing en-suite facilities. It is being acquired for a net purchase price of GBP5.85 million and the initial annual rent will be GBP450,000.
The existing owner is fully exiting its interest in Holmesley, Welford has entered into a new 25-year lease on Impact’s standard terms, as detailed above.
Cumberland infirmary
Three units adjacent to the Cumberland Infirmary, the main general hospital in Carlisle. One unit, Kingston Court, is a care home offering 74 beds, all with en-suite bathrooms. The care home is currently operated under a management contract by Careport and the management contract has been replaced with a new 25-year lease to Careport on Impact’s standard terms. The other two units are Reiver House, currently used as a cancer out-patient facility, and a surgery used to provide orthodontic care. Both are leased to NHS Cumbria University Hospital NHS Trust on leases which have annual CPI uplifts and have four years and six years respectively left to run. The investment manager believes that in the medium-term, and through working in partnership with the NHS, both units have asset management potential.
The total net consideration being paid for all three units is GBP9.5 million, with initial annual rent due of GBP365,000 from Careport and GBP302,000 from the NHS.
Old Prebendal House
Old Prebendal House is a 37-bed care home in Oxfordshire, with an adjacent development of senior living units comprising 16 apartments and four cottages (all held on long-term leases by their occupiers). Original elements of the building date back to the 15(th) century and were converted and extended to their current use in 1990.
The existing owner is fully exiting its interest in Old Prebendal House, and Careport has entered into a new 25-year lease on Impact’s standard terms, as detailed above.
Impact has committed an additional GBP750,000 of capital expenditure to modernise fully the interior of the home. The initial net consideration being paid to the vendor is GBP4.75 million and the initial annual rent due from Careport is GBP330,000, which will increase to GBP390,000 once the asset management works have been completed.
IHR : Impact Healthcare REIT buys three care homes