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We are pleased to join with Bridges Ventures to announce that terms have been agreed for a development partnership involving an initial equity investment by the Bridges Sustainable Property Fund of £5 million.
The investment will be used in a joint venture arrangement to fund a series of pre-let Barchester Healthcare care home development projects which we will source, deliver and manage. The collaboration will initially see about five new care homes developed, with the prospect of additional investment to cover more projects. These form part of a wider development programme announced by Barchester recently.
Launched in November 2009, the Bridges Sustainable Property Fund invests in properties, either directly or in joint venture, in regeneration areas and where buildings show environmental leadership. It is an initiative of Bridges Ventures, an investment company whose commercial expertise is used to deliver both financial returns and social and environmental benefits.
Simon Ringer, Managing Director of the Fund, explains that the transaction offers the opportunity to invest alongside an experienced partner in a series of pre-let developments in a sector where there is a shortage of good quality accommodation to meet the needs of an ageing population.
Simon Ringer today commented:
“We pride ourselves on working closely with high quality companies. Castleoak’s reputation and long-term experience combined with the fundamental strength of the care sector, where income will be derived from such a strong covenant, made this a very attractive proposition.
“We see our investment as producing positive results on a number of fronts. We believe our investors will benefit from attractive financial returns through both development profits and strong income returns. The investment also provides an excellent opportunity to demonstrate environmental leadership in the design and construction of buildings which typically have high energy use requirements.”
We have already acquired the first two sites for construction starts in 2010, with several more under negotiation.The care homes will be pre-let to Barchester Healthcare Homes Limited on a long-term lease with an option to purchase the freehold within the first four years.
Although project details will vary from scheme to scheme, the standard model will focus on homes with between 60 and 75 bedrooms with Barchester’s usual emphasis on high quality and designs that will be well in excess of national minimum standards. To qualify for funding under the joint venture, each development will need to feature construction and energy management initiatives which maximise environmental benefits and demonstrate environmental leadership.
This is one of several funding streams that we have negotiated to facilitate our overall development programme. Speaking about the collaboration with the Bridges Sustainable Property Fund, our Executive Chairman, Mel Knight, said:
“In the last few years, we have established a very active development business alongside our design and construction company and are delighted that our longstanding relationship with Barchester is being extended to cover both. This funding agreement not only gives us access to an important additional source of funding but also to an experienced and highly respected team that places a premium on quality and environmental leadership.
“The values promoted by the Bridges Sustainable Property Fund fit very well with our company values. This partnership creates the opportunity to make a positive difference not only by providing first class care accommodation, but also by helping to demonstrate how new care homes can respond to the environmental agenda.”