Nine Scottish care homes sold to property trust in £47m deal

Nine Scottish care homes are set to change hands in a sale-and-leaseback agreement worth £47.5 million.

Holmes offers services including residential, palliative, nursing and dementia care, as well as day services for the elderly. Picture: Getty Images

Listed property investment trust Impact Healthcare REIT has acquired the properties, with a combined total of almost 650 beds, which are currently owned and operated by subsidiaries of Holmes Care Group.

One home is in Aberdeen, with two properties in Drumchapel, Glasgow, and the remainder located across the Central Belt: in Wishaw, Banknock in Stirlingshire, Renfrew, Greenock, Armadale in West Lothian and Stevenston in Ayrshire.

A subsidiary of Holmes will continue to lead operations at the nine care homes after the completion of the sale-and-leaseback transaction.

Almond Court Care Home in Glasgow is included in the deal. Picture: Contributed

The net purchase price before transaction costs is £47.5m with an initial rent is £3.5m, reflecting a yield of 7.4 per cent.

The two companies have agreed a deferred payment structure under Impact will pay up to £3m based on the trading performance of the nine homes in the 12 months to 31 March 2021, in exchange for an annual rent increase of up to £225,000.

This will make Holmes the care home-focussed group’s tenth tenant as it continues on the acquisition trail.

Holmes, which is headquartered in Essex, offers services including residential, palliative, nursing and dementia care, as well as support for young people with disabilities, and day services for the elderly.

The Scottish deal was announced as part of a trio of acquisitions for a total of £61.1m. These include the takeover of three homes in Bradford from Victorguard Care, which will be operated by Silverline Care, and an agreement to forward fund the construction of a new 94-bed care home in Hartlepool, to be built by a subsidiary of Prestige Group.

Impact said the trio of transactions will increase its contracted annual rent roll to £28.2m, marking a 21.9 per cent increase on contracted annual rent at the close of last year.

All of the property deals will be leased on Impact’s standard lease terms, with fixed terms of 25 years and annual upward-only rent reviews linked to the Retail Price Index.

The 13 additional care homes comprise 925 beds boost and will boost Impact’s portfolio to 99 homes and a total of more than 5,250 beds.

This comes hot on the heels of a £3m buy-out announced by Impact in January. The group appointed existing tenant Minster Care Management as the operator of the acquired home at an initial rent of £225,000, reflecting an initial yield of 7.5 per cent.

Impact said at the time that it would “continue to work on a strong pipeline of further acquisitions”.