The disposal from Helical’s non-core portfolio will see Legal & General take on £46m of debt attached to the portfolio and Helical will receive 50% of the net proceeds on completion with the remainder deferred for a year.
The sale will reduce Helical’s overall level of debt, with the net cash proceeds received used to repay borrowings, and a reduction in LTV of around 5%. The sale has been undertaken at a discount of 13% to book value. Non-core assets now comprise just 4% of the company’s total portfolio as it focuses on London and Manchester offices and the logistics sector.
L&G is to integrate the business into Inspired Villages Group, the operator and developer that it bought in August.
L&G said that it would allow it to accelerate its later living plans by several years, “both in terms of housing delivery and operational skills”. The portfolio includes four village schemes, located in Warwickshire, West Sussex, Devon and Hampshire, totalling around 700 homes, of which more than half are already sold and occupied, with the remainder ready for sale or under construction.
The purchase will take Inspired Villages Group’s development portfolio to around 1,000 homes.
Nigel Wilson, L&G chief executive, said: “This acquisition is another terrific example of Legal & General using its long-term capital to address chronic market failures, by investing in a sector that delivers high social and economic impact to our society.
“The UK is under increasing economic strain as populations expand and demand for housing increases. Later living offers industrial scale reductions in health and care costs to the elderly through prevention and avoidance; we see this housing sector as one of the most underserved in the UK and look forward to the government engaging in positive public policy changes that help to support us in addressing this need.”
Gerald Kaye, chief executive of Helical, said: “Whilst we have generated good profits in the past from our retirement village portfolio we firmly believe that now is the right time to sell our interests, reduce our gearing and focus solely on our core sectors where we expect to be able to generate stronger shareholder returns in the future.”
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