by Erica Billingham
Nursing Home Properties, the fast-growing care home owner, has hit back at claims that operators who lease its properties could struggle to afford their rents.
The claims are made in a report by healthcare consultant Laing & Buisson. It questions whether operators can make a reasonable return after paying NHP’s rents, around £3,600 per bed per year.
NHP, which is due to move from the Alternative Invest-ment Market to the main stock market this month, buys purpose-built care homes and leases them back to operators.
Chief executive Richard Ellert rejected L&B’s claim. He said: “Our competitors charge equivalent rents.”
Ellert said that NHP’s tenants, which on average receive £320 per week per bed, are easily able to afford the rents. Their operating profits are on average 1.3 times the amount they have to pay NHP.
The L&B report comes as NHP is arranging a second bond issue backed by rents from its portfolio.
“There has to be confidence that the lessee can pay the rent or, if space has to be relet, another party would be willing to pay the same,” said Laing & Buisson’s Paul Saper.
“Rating agencies for NHP’s securitised funds will surely seek to make proper adjustment for the relative financial strength of the operator and prudency of forecast earnings.”
Last month, one of NHP’s tenants, Cheshire-based Eton Hall, was bought by another operator, Ultima Holdings.
Ellert denied Saper’s claim that Eton Hall was unable to pay the rent. “We effected a merger to build a stronger tenant. This was not a distressed takeover,” he said.
NHP has grown rapidly since it floated in 1995. The company has spent £330m buying 177 care homes, which are leased to 20 operators. It has another £100m of deals in the pipeline.
When listed on the main market, Nursing Home Properties will have a market capitalisation of around £200m, making it the 30th- largest listed property company in the UK.
