Investor pumps £56m into portfolio of care homes
Impact Healthcare REIT has revealed its £56m investment into a portfolio of six care homes which were owned and operated by Morris Care.
The portfolio has 438 beds, of which 400 have en suite bathrooms, with five homes in Shropshire and one in Cheshire.
The portfolio comprises of:
Isle Court Nursing Home, Shrewsbury
Radbrook Nursing Home, Shrewsbury
Oldbury Grange Nursing Home, Oldbury
Morris Care Centre, Telford
Corbrook Park Nursing Home, Crewe
Stretton Hall, Church Stretton
Four of the homes have EPC ratings of B, and two are rated C, with outline strategies in place for achieving an EPC rating of B.
80% of the purchase price will be paid in cash (£44.8m), with the remainder of the balance paid in shares. The company has issued to the vendors 9,603,841 shares priced at 116.62 pence per share.
The vendors have also granted a licence for the homes to continue to trade under the Morris Care brand for three years and the operational management team of Morris Care will transfer to Welford Healthcare, which will operate the homes.
Welford is an existing Group tenant and the investment will take the group’s relationship with Welford to 18 care homes across England with 1,087 beds.
The funding of the investment has been made initially by way of a loan by the group to Welford. The REIT says the structure “creates several benefits for all stakeholders”, including enabling Welford to take immediate operational control of the six homes.
This therefore avoids a potentially lengthy transition period while regulatory approvals are sought to register the operation of the homes in new legal entities.
Once CQC regulatory approvals are received, Impact then has the option to acquire the entire share capital of the company which owns the properties from Welford.
Welford then has the option to sell the share capital of the company to Impact in order to repay the loan.
Impact will receive interest payments equal to 8.4% per year for the duration of the loan. When either option is exercised, new 35-year leases on Impact’s standard terms, which have been pre-agreed with Welford, will come into effect.
Initial rent under the new leases is set at £3.9m, reflecting a gross initial yield of 7%.
