TIDMIHR
RNS Number : 5511B
Impact Healthcare REIT PLC
02 June 2023
The information contained in this announcement is restricted and
is not for publication, release or distribution in the United
States of America, any member state of the European Economic Area
(other than the Republic of Ireland or the Netherlands and then
only to professional investors in such jurisdictions), Canada,
Australia, Japan or the Republic of South Africa.
2 June 2023
Impact Healthcare REIT plc
("Impact" or the "Company" or, together with its subsidiaries,
the "Group")
Transfer of the operations of seven care homes to an existing
tenant operator of the Group and smaller related party
transaction
The Board of Directors of Impact Healthcare REIT plc (ticker:
IHR) (the " Board "), the real estate investment trust which gives
investors exposure to a diversified portfolio of UK healthcare real
estate assets, in particular care homes, announces that it has
successfully negotiated a transaction to transfer the operations of
all homes let to Silverline Group ("Silverline") to an affiliate of
an existing tenant of Impact Healthcare REIT plc.
In negotiating this handover of seven homes from Silverline, the
Board placed high priority on the best interests of the residents
who live in these homes and the staff who work in them by ensuring
continuity of care and operational improvements.
The Company has seven homes let to Silverline, which account for
3.4% (GBP1.6 million) of the Company's total annual contracted
rent. As reported by the Company on 31 January and 25 April 2023,
Silverline has not paid its contractual rent for the two quarters
to 31 March 2023 and 30 June 2023, although the Company has
received GBP0.4 million from Silverline's rent deposits.
The Company has continued to receive 100% of rent payments due
from each of its other tenants.
The Company has had extensive discussions with a number of
alternative care providers to take over Silverline's
responsibilities. The Board has now decided that it is in the best
interests of all the Company's stakeholders that it enables the
solvent sale of Silverline's tenant companies to Melrose Holdings
Limited ("MHL"), which will take over responsibility for operating
the seven homes immediately. MHL is a new company and wholly-owned
by connected parties of Mahesh Patel (1) , and will benefit from a
service agreement with Minster Care Group Limited ("Minster"),
under which Minster will support the turnaround of the Silverline
Homes. Minster has a long and effective track record of taking on
and improving under-performing care homes.
To assist in the funding of Silverline's overdue liabilities to
third parties other than the Group and to fund remedial capital
expenditure to bring the operational and financial performance of
the homes up to the required standards, the Group has agreed to
provide a GBP1.6 million loan facility for up to three years to
MHL. This facility will have an interest rate of 8.0% per annum on
drawn funds and will be repaid in priority to rent from surplus
funds in MHL.
In the initial phase of the operational turnaround of these care
homes, the existing leases will be temporarily amended to replace
the fixed rent with a variable rent, payable once the loan has been
repaid. The lease variations will also entitle MHL to pay Minster a
fixed management fee of GBP1,000 per registered bed in the homes
(approximately GBP400,000 per annum plus VAT) to cover the direct
costs it will incur in overseeing the turnaround, payable only from
any surplus cash generated by the seven homes. Any surplus cash
after the management fee, will first be used to repay the loan
facility and accrued interest to Impact and, once the loan is
repaid, will be paid as rent to Impact.
The rental default from Silverline and the new arrangements
agreed with MHL will temporarily reduce the level of rent received
by the Group. Whilst this reduction will be partly mitigated by
rental deposits, the Board anticipates the total reduction versus
the Company's original budget for 2023 to amount to around GBP1
million(2) .
The transaction with MHL is a smaller related party transaction
for the purposes of Listing Rule 11.1.10R and this announcement is
therefore made in accordance with Listing Rule 11.1.10R(2)(c). As
per the requirements of Listing Rule 11.1.10 the Company has
obtained written con rmation from an FCA-approved sponsor rm that
it believes the transaction is fair and reasonable as far as the
shareholders of the Company are concerned.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners Via H/Advisors
LLP Maitland
Andrew Cowley
----------------------------------------- ---------------
D avid Yaldron
----------------------------------------- ---------------
Jefferies International +44 20 7029
Limited 8000
---------------
Tom Yeadon tyeadon@jefferies.com
----------------------------------------- ---------------
Ollie Nott onott@jefferies.com
----------------------------------------- ---------------
Winterflood Securities +44 20 3100
Limited 0000
---------------
Neil Langford neil.langford@winterflood.com
----------------------------------------- ---------------
Joe Winkley joe.winkley@winterflood.com
----------------------------------------- ---------------
H/Advisors Maitland +44 7747 113
(Communications advisor) 930
---------------
James Benjamin impacthealth-maitland@h-advisors.global
----------------------------------------- ---------------
Rachel Cohen
---------------
The Company's LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at
www.impactreit.uk .
NOTES:
Impact Healthcare REIT plc acquires, renovates, extends and
redevelops high quality healthcare real estate assets in the UK and
lets these assets on long-term full repairing and insuring leases
to high-quality established healthcare operators which offer good
quality care, under leases which provide the Company with
attractive levels of rent cover.
The Company aims to provide shareholders with an attractive
sustainable return, principally in the form of quarterly income
distributions and with the potential for capital and income growth,
through exposure to a diversified and resilient portfolio of UK
healthcare real estate assets, in particular care homes for the
elderly.
The Company has a progressive dividend policy with a target to
grow its annual aggregate dividend in line with the
inflation-linked rental uplifts received by the Group under the
terms of the rent review provisions contained in the Group's leases
in the prior financial year.
On this basis, the target total dividend for the year ending 31
December 2023 is 6.77 pence per share (2) , a 3.53% increase over
the 6.54 pence in dividends paid or declared per ordinary share for
the year ended 31 December 2022.
The Group's Ordinary Shares were admitted to trading on the main
market of the London Stock Exchange, premium segment, on 8 February
2019. The Company is a constituent of the FTSE EPRA/NAREIT
index.
Neither the content of the Company's website, nor the content on
any website accessible from hyperlinks on its website for any other
website, is incorporated into, or forms part of, this announcement
nor, unless previously published by means of a recognised
information service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
(1) Mahesh Patel is the controlling shareholder of Minster Care
Group Limited. He is also a principal in Impact Health Partners LLP
and a significant shareholder in the Company. He has a 35 year
track record of owning and managing care homes.
(2) This is a target only and not a profit forecast. There can
be no assurance that the target will be met and it should not be
taken as an indicator of the Company's expected or actual
results.
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END
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June 02, 2023 11:25 ET (15:25 GMT)
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