Orchard Street Investment Management (‘Orchard Street’), the specialist commercial property investment manager, has acquired a purpose-built residential care home in Leamington Spa, Warwickshire on behalf of a pension fund client for £14.18m from Aprirose, a UK-based real estate investment company. The purchase price represents a net initial yield of 3.85%.
Providing 50 en-suite bedrooms across three floors, the freehold property is let to Methodist Homes for the Aged on a 35 year term with 27 years remaining and annual RPI-linked rent reviews subject to minimum uplifts of 2.5%.
Methodist Homes is one of the UK’s major operators of care for the elderly in both care homes and extra care settings and is considered to be one of the sector’s leading covenants.
The care home sector is the subject of growing interest amongst investors looking to achieve long-term, inflation-linked income returns, to match against pension liabilities.
Tom Chadwick, Associate Partner at Orchard Street, commented:
“This is a high-quality purpose-built care home located in a prosperous part of the UK. Owing to the long lease, strong operator and also supported by the demographic trends which continue to underpin the care home sector, we expect this to be an excellent long-term investment. We are pleased to have successfully closed our second care home transaction with Aprirose and continue to look for further long income opportunities.”
Orchard Street was advised on the acquisition by Whitaker Horton.
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Orchard Street Investment Management
Established in 2004, Orchard Street Investment Management LLP is a leading specialist commercial property investment manager, focused on the UK market. It acts on behalf of institutional clients world-wide to advise on investing in and the active management of property assets, including industrial, retail warehouses, offices and shopping centres. Orchard Street currently has assets under management exceeding £5 billion.