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Caretech Holdings Plc NEX:CTH.GB NEX Ordinary Share GB00B0KWHQ09
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  +0.00p +0.00% 365.00p 350.00p 380.00p 370.82p 365.00p 365.00p 200 16:30:06
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CareTech Holdings PLC Ground Rent Transaction Raises £32.6m

29/01/2019 7:00am

UK Regulatory (RNS & others)


TIDMCTH

RNS Number : 3364O

CareTech Holdings PLC

29 January 2019

 
 For immediate release   29 January 2019 
 

CareTech Holdings PLC

("CareTech" or "the Company")

Ground Rent Transaction Raises GBP32.6m

CareTech Holdings PLC (AIM: CTH), a pioneering provider of specialist social care services in the UK, announces that it has raised GBP32.6 million in cash to further support its growth strategy through a ground rent agreement with funds managed by Alpha Real Capital LLP ("Alpha") at a net initial yield of 2.85%. This transaction builds on the previous ground-breaking transaction with Alpha in February 2016.

Under the terms of the agreement, the freehold interest in 24 CareTech properties ("the Properties") are to be transferred to Alpha in exchange for a cash sum of GBP32.6m (before costs) and security of tenure with a 150-year lease term returning to CareTech a virtual freehold interest in each property (the "Transaction"). The commencing rent will be GBP1.0m per annum, which will rise with the Retail Price Index on a yearly basis between 0% and 5% per annum. One property with proceeds of GBP1.1m and GBP34k of annual rent is subject to a deferred completion. The Properties are located across England and Scotland, representing less than 8% of the aggregate number of freehold properties owned by the Company (including those of Cambian Group Limited, ("Cambian")).

The Transaction releases a significant amount of cash for reinvestment in growth opportunities whilst in the near term it will reduce borrowings. There is no requirement to pay off any existing bank debt as a result of this transaction.

The Transaction also highlights the extent to which the valuation of our freehold portfolio is in excess of our book cost. The enlarged group's property portfolio valuation was undertaken on 19 September 2018 at GBP774.1m.

Following the Transaction, the loan to value is expected to be approximately 40% and the proforma net debt to EBITDA of the enlarged group is expected to be under 4.0x

Farouq Sheikh, CareTech's Executive Chairman, commented:

"CareTech's first ground rent transaction in February 2016 was truly innovative, raising GBP30m which was invested into earnings enhancing acquisitions. We are delighted to enter a further non-dilutive ground rent agreement with the Alpha to raise an additional GBP32.6m in cash on more attractive terms when compared with our previous ground rent transaction and which provides further capital for investment."

Hugo James, Alpha's Head of Long Income, commented:

"We are delighted to have continued our partnership with CareTech with this second transaction. We see ground rents increasingly used by operating businesses to provide long term capital to support the reinvestment. Alpha has now invested more than GBP1bn of capital into new commercial ground rents in the last three years."

For further information, please contact:

   CareTech Holdings PLC                                              01707 601800 

Farouq Sheikh, Executive Chairman

Gareth Dufton, Interim Group Finance Director

   Buchanan (PR Adviser)                                               020 7466 5000 

Mark Court

Sophie Wills

Tilly Abraham

   Panmure Gordon (Nomad and Joint Broker)             020 7886 2500 

Emma Earl

Freddy Crossley

Charles Leigh-Pemberton

   WH Ireland (Joint Broker)                                            020 7220 1666 

Adrian Hadden

Chris Viggor

   Alpha Real Capital LLP                                                 020 7391 4700 

Hugo James, Partner and Head of Long Income

Mark Rattigan, Partner and Fund Manager ILIF

About CareTech

CareTech Holdings plc is a leading provider of specialist social care services, supporting adults and children with a wide range of complex needs in more than 330 specialist services around the UK.

Committed to the highest standards of care and care governance, CareTech provides its innovative care pathways covering adult learning disabilities, specialist services, young people residential services, foster care and learning services.

On 19 October 2018, CareTech acquired Cambian Group, which has a specific focus on children with high acuity, challenging behaviours and complex care requirements. Cambian looks after 2,000 children across a portfolio of 224 residential facilities, specialist schools and fostering offices located in England and Wales.

CareTech, which was founded in 1993, began trading on the AIM market of the London Stock Exchange in October 2005 under the ticker symbol CTH. Its property portfolio comprises more than 200 properties.

For further information please visit: www.caretech-uk.com

About Alpha

Alpha Real Capital LLP is an investment services group focussed on income security from real assets. We invest in asset--backed income from real estate, infrastructure, and lending, with an emphasis on long income and inflation protection.

Headquartered in London, Alpha has a 100 plus strong professional team with over GBP2.9 billion of assets under management, including capital commitments.

For further information please visit: www.alpharealcapital.com

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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