5th Sep 2007 07:31
Public Service Properties Inv Ltd05 September 2007 5 September 2007 Public Service Properties Investments Limited ("PSPI" or "the Group") Acquisition of Stonelea Healthcare Group PSPI (AIM: PSPI), the specialist European real estate investment and financingcompany, is pleased to announce that yesterday it acquired Stonelea HealthcareGroup ("Stonelea") for a total cash consideration, including costs, ofapproximately £24 million. Stonelea owns and operates three purpose-built residential care homes in CountyDurham, which have been simultaneously leased and licensed to the European CareGroup for a term of 35 years at an initial aggregate rent of £1.58 million perannum. The rent will increase annually by reference to the retail price index, with aminimum uplift of 2.5% per annum, and Colliers CRE has valued the homes for PSPIat approximately £27 million, before selling expenses, reflecting acapitalisation rate of 5.75% on the initial lease rentals. The acquisition has been made by HCP Stonelea Limited, a newly incorporatedEnglish company which is a wholly owned subsidiary of the Group. Financing The Bank of Scotland (the "Bank") has provided senior debt equal to the entirepurchase price and associated transaction costs. As part of this financing,other members of the Group have re-financed their existing facilities, and intotal, the Bank has made available up to £84 million or 75% of the valuation ofthe properties owned by the relevant subsidiaries. Part of this has been used torefinance £39 million of existing facilities on a shorter term, interest onlybasis and at a lower blended margin. The balance of the facility will be used tofund up to £20 million of capital expenditure on the existing portfolio of theGroup, as well as working capital and investment, on a non recourse basis, bythe Group in its other target markets, principally Germany. The Stonelea Healthcare Group The three Stonelea homes have all been constructed within the last 8 years andprovide a total of 177 beds - Ashwood Park (constructed and opened in 1999, 65beds), Birchwood Court (2002, 43 beds) and Cedar Court (2005, 69 beds includinga new 20 bed extension currently being developed and expected to open by the endof this month). The homes provide residential care to the elderly, the elderlymentally infirm and those with learning difficulties. All three homes have been designed to provide high quality care in an attractiveand comfortable setting, and all rooms provide single occupancy with en-suitefacilities. As a result of the quality of the purpose built facilities anden-suite configuration, the homes have limited competition from comparableaccommodation in and around their immediate location, and Stonelea's excellentreputation enables all three homes to enjoy high occupancy rates, currentlyaveraging 93-94%. Stonelea has a long standing and well established relationship with the relevantlocal authorities and has provided care home services in the area since 1998.This relationship is further strengthened with the Chief Operating Officer ofEuropean Care Homes being the Chairman of the Durham Care Home OwnersAssociation. All care homes in County Durham have recently been graded by quality, with theStonelea homes having been rated grade 1, the highest grade. As such, these homes will receive the highest fee rates, including pre-agreed fee rate increasesin April 2008 and April 2009. Increases in fees, reflecting the high qualityfacilities, are likely to result in increased profitability of these homes inthe years ahead. Advisors on the acquisitionPSPI was advised by RP&C International, Inc, its Asset Manager, on theacquisition. Legal advice was provided by Nabarros and taxation and accountingadvice by PKF. PSPI expects to report interim results to 30 June 2007 on Friday 28 September2007. Patrick Hall, Chairman of PSPI, commented, "The acquisition represents anaddition of high quality properties that enhances the existing portfolio andincreases bed capacity in the UK portfolio by approximately 11%. "Despite recent volatility in the debt markets, PSPI has secured attractivefinance both for this acquisition and to improve its overall existing debtstructure, reflecting the high quality of its assets. Overall these transactionswill enhance group earnings. "Due diligence on acquisitions in Germany is also continuing well and we hope toreport on further progress on that front in the near future." For further information, please contact: Ralph Beney Simon Hudson / Rachel DrysdaleRP&C International Limited Tavistock Communications31A St James's Square 131 Finsbury PavementLondon SW1Y 4JR London EC2A 1NTTel: 44 (0) 20 7766 7000 Tel: 44 (0) 20 7920 [email protected] [email protected] Jeremy EllisEvolution Securities100 Wood StreetLondon EC2V 7ANTel: 44 (0) 20 7071 4300 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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