The Board of Directors of Impact Healthcare REIT plc (ticker: IHR), the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, has announced that the Group has recently completed the accretive acquisition of three properties (one in Somerset and two in Devon) with an existing Group tenant, Welford Healthcare, for £25.0 million, plus transaction costs.
The portfolio includes a 61-bedroom specialist dementia nursing home in Devon which was purpose-built in 2011 and benefits from 100% en-suite wet rooms, and two part-converted and extended nursing and residential homes in Devon and Somerset registered for 54 and 69 elderly clients, respectively. All three properties are well located with long-standing exceptional local reputations for providing high-quality care within the local community. The homes have CQC ratings ranging between Good and Outstanding and benefit from favourable underlying demographics in the local catchment areas with attractive demand/supply fundamentals.
The transaction is expected to deliver the following benefits to the Group:
- add three care homes comprising 184 predominantly en-suite beds to the Group’s portfolio, which will then total 134 properties with 7,316 beds (at 31 March 2022: 128 homes and 6,977 beds)1;
- initial rent under the new leases is set at £1.7 million, reflecting a gross initial yield of 6.8%.
- based on the homes’ current trading performance, rent cover is expected to be greater than 2.0 times;
- contributing to continued growth in the Group’s contracted annual rent roll to £42.0 million, an increase of 6.6% since 31 March 2022 (£39.4 million);
- EPC ratings of B on one home and EPC C on two homes with a clear pathway to convert both of these to EPC B;
- all of the acquisitions will be leased on Impact’s green leases, with fixed terms of 30 years and annual upward-only rent reviews linked to the Retail Price Index (“RPI”), 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; and
- this investment will take the Group’s relationship with Welford Healthcare to 12 care homes across England, with 646 beds.
The Company’s investment manager, Impact Health Partners LLP, is also in exclusivity on several further projects and expects to make further announcements in the near future.