Impact Healthcare REIT has agreed terms on a trio of acquisitions for a total of £61.1m.
The group, which owns a portfolio of healthcare properties, has completed the acquisition of a portfolio of care homes, has exchanged contracts to acquire a second portfolio and has entered into a pre-let forward funding arrangement with an existing tenant.
The deals will add 13 care homes comprising 925 beds to the group’s portfolio, which will then total 99 care homes and 5,253 beds. they will also increase its annual rent roll to £28.2m, a 21.9% increase on contracted annual rent at 31 December 2019.
All of the care homes will be leased on fixed terms of 25 years and annual upward-only rent reviews linked to the Retail Price Index.
Acquisitions
The first portfolio is for three homes in Bradford, which have been acquired from Victorguard Care, comprising 182 bedrooms. The three homes will be operated by Silverline Care, the group’s 10th tenant.
Impact has paid £7.5m, or £41,000 per bed, for the portfolio. Impact has committed £300,000 of capital expenditure into the homes and agreed a rent-free period of six months. The initial rent is £630,000 per annum, reflecting a yield of 8.1%.
The group has also exchanged contracts to acquire nine homes in Scotland, which are currently owned and operated by subsidiaries of the Holmes Care Group, in a sale and leaseback transaction. A subsidiary of Holmes will continue to operate the homes after completion, making Holmes the company’s 11th tenant.
The nine Scottish homes have a combined total of 649 beds and enjoy high ratings from The Care Inspectorate, Scotland’s healthcare regulator. One home is in Aberdeen and the other eight are located around Glasgow and in Scotland’s central belt.
The net purchase price before transaction costs is £47.5m and the initial rent £3.5m, reflecting a yield of 7.4%. Impact has agreed a deferred payment structure with the vendors under which the it will pay up to £3m based on the trading performance of the nine homes in the 12 months to 31 March 2021, in exchange for an annual rent increase of up to £225,000. The initial rent cover on the portfolio is in excess of two times.
The final deal is for Impact to forward fund the construction of a new 94-bed care home in Hartlepool, to be built by a subsidiary of Prestige Group, an existing tenant of the group. The development has planning in place and is targeting completion in 12 months.
Prestige has a strong track record of building care homes in the North East, three of which the Impact already owns. Prestige has committed to build the home for a fixed price of £6.1m, including the value of the land.
Impact has pre-leased the home to Prestige at an initial rent of £475,000 per annum reflecting a yield of around 7.8%.
The transactions will be financed from the group’s existing cash resources and available debt facilities, of which £49.9m is currently undrawn.
The group said it was at an advanced stage of negotiations on a number of other potential transactions and expects to make further announcements in due course.
IHR : Impact Healthcare REIT lands trio of deals for £61.1m