NW locations among £347m disposal by specialist property firm

A specialist property firm has disposed of eight of its 19 private hospitals, including two in the North West, as part of a deal worth £347m in total.

The board of Kent-based Secure Income REIT (real estate investment trust) announced the sale of the portfolio let to Ramsay Health Care Limited.

The assets sold represent 31% of Ramsay hospitals owned by the company, at their 31 December 2018 valuations.

The purchaser is Medical Properties Trust, the US specialist healthcare REIT capitalised at some US$7.8bn.

The occupational leases have a current net rent payable of £16m per annum.

Unconditional contracts for the sale of the eight subsidiary companies that hold the properties have been exchanged and completion is scheduled for 16 August 2019.

The eight hospitals sold are Renacres, near Ormskirk, Lancashire, Euxton Hall, near Chorley, Ashtead, Berkshire Independent, Mount Stuart, North Downs, Rowley and Winfield.

The impact of the disposal on the group with effect from completion of the sale will be to:

• reduce the group’s net debt by approximately £316m which will reduce the group’s net loan to value ratio from 43% at 31 December 2018 to 33.5% on a pro forma basis, adjusting only for the disposal;
• increase EPRA NAV per share by an estimated 6.9 pence per share after payment of estimated debt redemption costs payable at completion and all other costs of sale, together estimated at £32.4m;
• increase uncommitted cash by more than £170m to in excess of £200m on a pro forma basis; and
• increase the weighted average unexpired lease term of the group’s portfolio by 0.3 years.

While the disposal will temporarily reduce the group’s EPRA EPS, with an estimated annualised reduction of some 2.7 pence per share, the board intends to pay special quarterly dividends out of the net proceeds to restore the cash distributions to their pre-disposal levels until such time as the proceeds are redeployed.

Chairman Martin Moore said: “We believe that shareholders are best served by our active approach to portfolio management, recycling capital where it is prudent and advantageous to do so.

“This attractive offer, which represents a 19% premium above the December 2018 valuation, allows shareholders to realise some upside while still retaining a core holding of 11 high quality acute hospitals, worth £643m at their 31 December 2018 valuations, let to Ramsay Health Care Limited, one of the world’s largest private healthcare companies.

“We remain alert to opportunities to redeploy the capital raised when appropriate and, in the meantime, will top up shareholders’ income returns to the pre-transaction levels.”