LXi REIT buys Leeds care home for £8.4m. The Board of LXi REIT has announced that the company has exchanged contracts to acquire the Priory Care Home, Leeds for GBP8.4 million, reflecting a net initial yield of 6.3% (net of acquisition costs to the company).
The Property is fully let to Priory Elderly Care Limited and guaranteed by its parent company, Priory Investments Holdings Limited (“the Priory Group”), a leading provider of mental health and elderly care services. The Priory Group is ultimately owned by NASDAQ-listed Acadia Healthcare which has a market capitalisation of $4 billion and operates a network of over 570 facilities with over 17,000 beds.
The lease has an unexpired term of just under 23 years (expiring in March 2040), without a break, and is subject to annual upward only rent reviews index-linked to the Retail Price Index (collared and capped at 2% p.a. and 5% p.a. compound). The next rent review is due in March 2018.
Purpose-built as a care home in 2010, the Property spans three storeys with 75 en-suite bedrooms. It is well-located, approximately two miles to the east of Leeds city centre, in a predominantly residential area within the suburb of Osmondthorpe.
The acquisition is being funded from equity resources, with senior debt finance expected to be introduced in the near term. Completion is due to occur within the next week.
John White, Partner of LXi REIT Advisors Limited, commented: “We are pleased to have acquired the Priory Care Home, Leeds, which provides the Company with an attractive net initial yield of 6.3% and a long, secure income stream with rare annual RPI rent reviews. This acquisition, our tenth since IPO, means that the Company now has 12 strong tenants with exposure to six distinct sub-sectors and has deployed 80% of its net equity.”