L&G Secures Second Care Home Portfolio Investment, Bringing Investment in Sector to over Â£100m.
29 January 2014
Legal & General Property (LGP) today announced that it has agreed to forward fund and purchase five high quality care homes in Suffolk with Care UK for £31 million, representing a net initial yield of 6.75%.
The development forms the second phase of Suffolk County Council’s deal with Care UK, one of the leading providers of health and social services in the UK, to outsource care services for the elderly. Located in Bury St Edmunds, Eye, Stowmarket and Ipswich, each of the homes will provide between 60 and 80 beds, in addition to an on-site day centre.
On practical completion, each property will be let to Care UK on a new 30 year FRI lease with annual rental increases, and will be underpinned by Suffolk County Council’s 25 year contract. With work having already started at one of the Bury St Edmunds’ sites, target completions are staggered for delivery between autumn 2014 and spring 2016.
Funded on behalf of LGP’s Managed Property Fund, the deal brings Legal & General’s investment into the care home sector to over £100 million, having recently completed the acquisition of 13 care homes let to Methodist Homes for a total consideration of just over £70m. Furthermore, as a long-term provider of investment capital, Legal & General has invested over £3.2 billion in UK infrastructure projects to date and is one of the six UK insurers committed to investing £25 billion in the UK by 2018.
Mark Russell, Senior Fund Manager of LGP’s Managed Property Fund, commented: “The growing needs-based demand for residential care and nursing services for the elderly is well documented. By entering into this transaction with Care UK, we will facilitate a small part of the supply response required in the sector, whilst accessing long, sustainable income streams with in-built growth for our investors.”
Paul Humphreys, Group Finance Director of Care UK, said: “Care UK’s long-term contract with Suffolk County Council will result in the highest quality of residential care provision to Suffolk residents in modern, sustainable, purpose built care facilities. We are delighted to be partnering with Legal & General for the delivery of this project.”
Gerald Eve acted for LGP and Colliers advised Care UK.
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The Legal & General Group, established in 1836, is one of the UK’s leading financial services companies. As at 30 June 2013, we were responsible for investing £440 billion worldwide on behalf of investors, policyholders and shareholders. We also had over 7.3 million customers in the UK for our life assurance, pensions, investments and general insurance plans.
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