Legal & General Property has agreed to forward fund and purchase five care homes in Suffolk with Care UK for £31m.
The price for the developments – at Bury St Edmunds, Eye, Stowmarket and Ipswich – reflects a 6.75% net initial yield.
The deal forms the second phase of Suffolk county council’s deal with Care UK to outsource care services for the elderly.
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. Completions are expected 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 circa £100m.
Mark Russell, senior fund manager of LGP’s managed property fund, said: “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.”
Colliers International advised Care UK; Gerald Eve acted for LGP.
joanna.bourke@estatesgazette.com
