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Te Puke aged care asset with triple net lease

With Stats NZ forecasting the number of New Zealanders aged 85-plus will more than double by 2040, the provision of aged care in this country is of mounting interest.

Institutional investors are active in the aged care market, and New Zealand’s leading providers are listed on the stock exchange here and in Australia showing the weight the sector has in investment circles.

The aged care asset class, for facilities under proven management, are proactively being scoped by investors who are recognising population indicators and looking for opportunities in the wider healthcare sector.

With private investors seldom able to compete with bigger players for institutional grade assets in the main centres, a well-performing aged care facility now for sale in Te Puke has compelling investment fundamentals for individuals or trusts wishing to secure a presence in this niche and defensive sector.

The land and buildings associated with Carter House Lifecare at 69 Moehau Street, are being marketed via a deadline private treaty campaign closing 4pm, Thursday 10th August, unless sold prior through Sunil Bhana and Mike Houlker, Bayleys Auckland along with colleague Brendon Bradley from Bayleys Tauranga.

Carter House Lifecare has a long-term triple net lease in place to private aged care provider Heritage Lifecare, one of New Zealand’s largest providers of residential aged care services.

It forms part of Heritage’s more-than 40-strong network around the country and there is a 30-year lease in place from March 2022, with renewals extending the potential lease term out to 2112.

The property returns current annual net income of $566,592 plus GST, with the lease providing built-in rental growth.

Carter House Lifecare is a medium-scale 65-bed care complex providing full rest home care services including hospital, and dementia care.

In addition to the land and buildings associated with the care facility component of the property, the landlord also owns the land beneath eight detached buildings housing 17 independent living units around the perimeter of the site.

These buildings remain the property of Heritage Lifecare Villages Limited who sell them to residents under an Occupational Rights Agreement. (ORA), however the land they occupy forms part of the property’s lease arrangement.

In total, there is 12,761sqm of land, recently rezoned to medium density residential which is a favourable long-run development zoning.

Bradley says Heritage Lifecare leverages its scale and resources to efficiently run its family-focused care homes, with centralised administrative functions and a strong operational focus on resident care.

“This property would provide an affordable step into an institutional grade asset for a private investor, with the triple net lease structure vastly superior to the majority of standard commercial leases given the landlord is insulated from all costs and maintenance of the property to the maximum extent permitted by law.

“Demand for aged care real estate within New Zealand will continue to increase due to the undersupply of existing and new facilities and an increasing ageing population, and this Te Puke facility draws from a large catchment.

“Bayleys recently sold another Heritage Lifecare-occupied offering in Tauranga with the identical lease structure, showing proven demand for a regional aged care asset that is a completely hands-off investment proposition.”

The quality of the tenant and the lease structure, which is of a corporate nature, provides a landlord with long-term tenure, and a steady and consistent revenue stream – without any direct property management required.

In addition to Carter House, two other regional Heritage Lifecare-leased properties are also for sale through Bayleys – either individually or combination.

Karina Lifecare at 11-15 Karina Terrace in the Palmerston North suburb of Roslyn, close to the CBD, amenities and the hospital, occupies an elevated 3,485sqm site and comprises a 37-bed aged care facility returning a net annual income of $104,832 plus GST.

Waterlea Lifecare’s 61-bed care facility offering full resthome, respite, dementia care and medical services is located at 50 McLauchlan Street, in Springlands, around 2km from the Blenheim CBD.

This medium scale purpose-built care facility sits on 5,121sqm of Urban Residential-zoned land, and provides annual net income of $402,896 plus GST.

With the age of entry into aged care beds in New Zealand typically 85 years and above, and the growth of this age segment expected to be rapid, Houlker says the three aged care assets are all located in popular retirement locations that draw from an ageing surrounding catchment, supporting the ongoing demand for aged care facilities.

“These properties not only have strong, proven tenant covenant and exceptionally-robust long leases, they are located on large residentially-zoned sites underpinned by rising land values which provides intrinsic long-term value.”

Click here for more information on the listing.

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