On behalf of the LRIS Investment Management and AEW, Knight Frank advised the acquisition of three care home sales and leasebacks. The said transaction funded Prime Life to acquire Springhill Care Group. Springhill Care Group operates Springhill Care Centre located in Accrington, Birch Green Nursing Home located in Skelmersdale, and Riversway Nursing Home located in Bristol. In total, the care homes have 259 registered beds.
Care Home Sales and Leasebacks
The £22 million acquisition allowed Prime Life to sell its property assets to LRIS Investment Management and AEW. The said companies then leased the said properties back to Prime Life on long-term leases with inflation-linked reviews.
AEW acquired Springhill Accrington with 116 beds and Birch Green with 74 beds. Meanwhile, LRIS Investment Management had Riversway Nursing Home in Bristol that has 63 beds.
“Working with Prime Life, AEW, and LRIS Investment Management led to a successful outcome for us all, using the sale and leaseback investment strategy. Astute investors are capitalising on the opportunity to have diversified portfolios of high-yielding real estate assets, occupied by tenants on long-term leases,” said Huw Holman, an associate at Knight Frank. He added that the deal was beneficial for investors since Springhill Care Group’s strategic location and occupier demand. The company has an established property fundamental in providing long-term secure income, ticking off all the boxes.
Increasing Demand for Care Homes
More and more investors are now acquiring assets and leasing them back to operators. This is a result of the recent healthcare trend. Established organisations hold valuable real estate assets but lack capitalisation to make the business grow further. At the same time, a lot of investors are now leaning towards securing long-term financial assets that provide inflation-linked reviews.
Care homes are at the centre of all this. The growing number of individuals approaching old age is increasing by the year, with only a few care homes built to support this demand. As a result, more people are securing care homes even before they approach old age to address their needs later on. This practice helps spur care home investments. Meanwhile, existing care home facilities need capitalisation to further improve their facilities and services.
Investing in Care Homes
Investing in care homes in the UK is a profitable investment decision. This is the background of a growing UK population of elderly people requiring care home facilities. To date, the country has about 2.2 million individuals aged 85+. Additionally, close to 3,000 people do not have access to care home facilities.
One of the few ways investors can benefit from this is by using Special Purpose Vehicles (SPVs), which allow companies to reduce investment risks. CrowdHub Group offers guaranteed dividends through a Singapore-regulated investment vehicle for investments in the Raughton Manor Care Home located in Low Hesket. This allows investors to put their money in the UK care home property through share ownership.
Through the SPV, investors will own a long-term lease in Raughton Manor Care Home. The investment can give them 8-10% assured dividends annually. Since the company will use Singapore-regulated SPVs, investors will be free from paying any capital gains tax. Raughton Manor Care Home is a fully managed care home managed by Karma Health Management.