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Orchard Street buys Leamington Spa care home for pension fund client

By James Wallace - Tuesday, May 08, 2018 11:22

Orchard Street Investment has acquired a purpose-built residential care home in Leamington Spa in Warwickshire for £14.18m from Aprirose, a UK-based real estate investment company.

The asset was acquired by Orchard Street on behalf of a pension fund client. The purchase price represents a net initial yield of 3.85%.

The care home sector is a popular sector among pension funds due to the long-term, inflation-linked income return profile of such assets which are an effective match against pension liabilities.

The Leamington Spa care home includes 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.

Tom Chadwick, associate partner at Orchard Street, said: “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.

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

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