A US healthcare property investor has agreed to acquire 45 care homes in the UK from Leeds-based developer and operator LNT Care Developments Holdings in a deal worth about £1.1bn.
CareTrust REIT Inc completed the first stage of the transaction on 1 October, acquiring 24 homes for about £576m. All were built within the past two years.
A further 21 homes, which are still under development, will be acquired for about £504m once construction is complete and regulatory approvals have been secured.
The homes are, or will be, leased to subsidiaries of Crystal Care, LNT’s care home operating business.
James Callister, CareTrust’s chief investment officer, said the homes were “brand new, purpose-built, private pay homes” serving a market facing a shortage of modern care beds.
“We have structured it so that we are paid to be patient while the homes fill, and when we move to acquire the operating companies we underwrite all-in stabilised yields in the mid to high seven per cent range with room to grow as they are positioned for success for decades to come,” he said.
“This also materially improves the age, quality and configuration of our overall UK care home portfolio.”
LNT was founded by entrepreneur Lawrence Tomlinson, who has built more than 250 care homes during his career. The company says it aims to help address the shortage of care home places in the UK.
Tomlinson said he had designed and built his first care home in 1991 and that the sector remained personally important to him.
He said the deal was not simply about raising capital but about finding a strategic partner that could help LNT develop more care homes.
“This transaction was never simply about raising capital. We were keen to carefully choose a strategic partner who could help us deliver on our vision of hundreds of desperately needed new care homes across the United Kingdom, and CareTrust was plainly the best fit for that endeavor,” he said.
“I am pleased to have this one done, and we intend to keep finding ways to work together to meet the growing need in the UK for new, safe, well-run homes for residents and their families.”
CareTrust chief executive Dave Sedgwick said LNT had opened more care homes over the past two years than the next two developers combined, attributing this to its vertically integrated approach and standardised design.
“We’re thrilled to complete this initial transaction and, with aligned missions and values, we hope to support the LNT team further as they seek to develop hundreds more homes over the next decade and beyond,” he said.
The transaction was structured as a sale and leaseback agreement, with law firm Freeths advising LNT.
Sarah Moore, a health and social care partner at Freeths, said the deal demonstrated continued investor interest in the UK care sector and the need for purpose-built accommodation.
“The deal highlights continued investor confidence in the UK care sector and the importance of delivering high-quality, purpose-built care accommodation to meet growing demand across the country,” she said.
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