June 10, 2019 Finance, Property

Latest acquisitions at Impact Healthcare REIT

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The Board of Directors of Impact Healthcare REIT plc, the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, is pleased to announce that the Group has recently exchanged contracts on three acquisitions, detailed below.

These acquisitions comprise a total initial investment of £20.2 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 £21.3 million, up from £17.8 million at 31 December 2018.

The three care homes being acquired 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 the Group. Each of the investments has a strong occupancy record.

The rent receivable under each of the new care home leases 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.

These three acquisitions are in line with the Group’s investment criteria and returns profile.

Through the combination of these three acquisitions and the full repayment of the Group’s revolving debt facilities, the Group will have deployed over half the proceeds from the oversubscribed £100 million equity fundraise which closed on 10 May 2019.

The Group has agreed exclusivity on a number of further acquisitions and continues to evaluate a strong pipeline of potential investment opportunities.

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 £5.85 million and the initial annual rent will be £450,000.

The existing owner is fully exiting its interest in Holmesley, and the Group has agreed to appoint one of its existing tenants, Welford, as the new tenant. Welford has entered into a new 25-year lease on Impact’s standard terms, as detailed above.

Completion will take place as soon as regulatory approvals from the CQC for the change of operator have been received.

Kingston
The Group is acquiring 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, one of the Group’s existing tenants. The management contract has been replaced with a new 25-year lease to Careport on Impact’s standard terms, as detailed above.

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 £9.5 million, with initial annual rent due of £365,000 from Careport and £302,000 from the NHS. Completion took place on exchange.

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 15th 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 the Group has agreed to appoint Careport as the new tenant. Careport has entered into a new 25-year lease on Impact’s standard terms, as detailed above.

The home currently enjoys a good reputation in its affluent market. However, the Group has committed an additional £750,000 of capital expenditure to modernise fully the interior of the home. The initial net consideration being paid to the vendor is £4.75 million and the initial annual rent due from Careport is £330,000, which will increase to £390,000 once the asset management works have been completed.

Completion will take place as soon as regulatory approvals from the CQC for the change of operator have been received.

Pictured above Old Prebendal House 

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