Residential Secure Income has exchanged contracts to acquire a 478-property retirement homes portfolio from Places for People for €45m (£40.2m), generating a yield in line with ReSI’s previous retirement home acquisitions. The deal has already completed for the large majority (421) of the properties, so immediately produces income, with the completion of the remainder (57) anticipated within 3 months. Heads of Terms have been agreed for the long-dated investment-grade equivalent debt secured on the portfolio, providing leverage to deliver equity returns from the portfolio at least in line with ReSI's total return target.
The portfolio consists primarily of one-bedroom flats and is located across 284 purpose-built retirement schemes, with over 93% located in Southern England, including in the Greater London area. The properties are held on a long leasehold basis, with a weighted average unexpired lease term of 92 years.
In line with ReSI’s existing retirement homes, the portfolio offers independent living and does not include the provision of care services. It is leased to retirement-aged residents on RPI-linked assured tenancies which offer lifetime security of tenure. The assets will continue to be managed by Girlings, part of the Places for People Group, which is responsible for the day-to-day management, rent collection and maintenance.
After this acquisition, ReSI will have invested €240.5m (£215m) in assembling a portfolio which comprises 2,414 residential units.
Ben Fry of ReSI Capital Management Ltd, ReSI’s fund manager, said: “This acquisition complements our existing portfolio of retirement flats. The portfolio offers a later-life independent living solution with the security of tenure but without the hassles of ownership, and serves a fast-growing, yet hugely fragmented and underserved, sector of the market. Our strategy continues to be focused on delivering a secure, long-term income stream to shareholders. We are making good progress in building a high-quality portfolio that meets these disciplined investment criteria, and expect this progress to continue.”