Impact Healthcare REIT buys two new care homes – Impact Healthcare REIT (IHR) has recently exchanged contracts to acquire two care homes in Kent for £14m plus acquisition costs. These purchases are with a new tenant, Belmont Healthcare.
One home is a purpose-built, 120-bedroom property split over four units, each with 30 beds. It has strong operational cashflows and is located on a generous site, which has significant potential for future value-enhancing asset management and development opportunities. Following completion, IHR intends to reconfigure the existing layout of each unit, reducing the number of bedrooms in each from 30 to 20. These works will be undertaken on a phased basis to enable occupancy to be maintained.
The second transaction is the sale and leaseback of a home currently owned and operated by Belmont. It has 48 bedrooms with en suite bathrooms. The home has been recently refurbished and extended. The acquisition of this home includes a potential deferred payment of up to £550k, subject to its continued strong trading performance. The deferred payment, if it becomes payable, will result in increased rental payments, ensuring that the effective purchase yield of this asset remains materially unchanged.
Both properties have ‘Good’ CQC inspection ratings and, once completed, are expected to deliver the following benefits to the group:
- enable the IHR to deploy an initial £14m of capital, plus transaction costs, followed by additional asset management and development opportunities;
- the initial annual rent has been agreed at £890,000, reflecting an accretive gross initial yield of 6.36%;
- will add two care homes comprising 168 beds to IHR’s portfolio, which will then total 136 care homes and 7,484 beds
- EPC ratings of B on both homes; and
- introduce a new tenant, IHR’s 14th. Further acquisitions with Belmont are under consideration.
These acquisitions will be leased on Impact’s standard green leases, with fixed terms of 25 years and annual upward-only rent reviews linked to the Retail Price Index, with a floor of 2% p.a. and a cap of 4% p.a., with commitments to a minimum annual expenditure by the tenant on the maintenance of the care homes.
Completion is subject to re-registration with the Care Quality Commission.
IHR : Impact Healthcare REIT buys two new care homes