Impact Healthcare REIT has acquired nine care homes in Scotland from Holmes Care Group in a sale and leaseback deal.
The net purchase price before transaction costs is £47.5 million and the initial rent £3.5 million, reflecting a yield of 7.4%. Impact also agreed a deferred payment structure with Holmes under which Impact will pay up to £3 million based on the trading performance of the nine homes, in exchange for an annual rent increase of up to £225,000. The initial rent cover on the portfolio is in excess of two times.
Family-run Holmes Care Group pursued a sale and leaseback route as it allowed the owners Shiraz and Indumati Lakhani to retire while allowing the couple’s daughter to continue to operate and grow the business.
Sharifa Lakhani, managing director of Holmes Care Group, said: “Providing excellent care to everyone who makes their home with us is our absolute priority. We are very pleased to have concluded this deal, which will allow us to continuously invest in our homes across Scotland whilst maintaining our proud tradition as a family-run business. This long-term arrangement will see us continue to operate all of the homes, and is great news for residents, their families and our team.”
Specialist business property advisor Christie & Co facilitated the deal. Martin Daw, senior director at Christie & Co, said: “This deal is the largest care home transaction to happen in Scotland in over 15 years. For the deal to be agreed and concluded during this very difficult time we find ourselves in goes to show the confidence in the Scottish care home sector and our client’s quality of operation.”
Date published: September 18, 2020