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Passive investors can enter Marlborough’s aged care sector

New Zealanders are living longer and the country’s older population is growing proportionately faster than the overall population which has implications for the provision of healthcare, other community services and the supply of aged care facilities.

The age of entry into aged care accommodation in New Zealand is typically 85 years and above. This demographic is forecast to rise from 88,000 people in 2020 to 360,000 in 2063 – more than 309 percent growth.

There is ongoing need for different types of aged care facilities to provide older people with accommodation options to suit a broad range of requirements.

The land and buildings associated with Waterlea Lifecare at 50 McLauchlan Street, in Springlands, are for sale via a deadline private treaty campaign closing 23rd April, unless sold prior, through Sunil Bhana, Mike Houlker, and Glenn Dick of Bayleys.

Waterlea Lifecare is a 61-bed care facility offering full resthome, respite, and dementia care located around 2km from the Blenheim CBD.

The medium scale purpose-built care facility sits on a well-landscaped 5,121sqm site zoned Urban Residential, close to the popular Springlands shopping centre and main roading arterials.

The property has a long-term triple net lease in place to private aged care provider Heritage Lifecare Limited, one of New Zealand’s largest providers of residential aged care services, and forms part of Heritage’s more-than 40-strong network around the country.

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

The 30-year lease commenced March 2022 and will return net annual income of $419,012 plus GST from 31st March, 2024, with renewals extending the potential lease term out to 2112, and built-in annual rental growth to CPI capped at 4 percent.

Bhana says the triple net lease provides a truly passive investment opportunity with sound underlying fundamentals and long-term cashflow.

“This is an opportunity for a private investor or trust to acquire an institutional grade asset and get a foothold in a sector that is generally reserved for bigger players, including listed entities.

“The triple net lease structure is distinctly superior to the majority of standard commercial leases, with the landlord insulated from all costs and maintenance of the property to the maximum extent permitted by law.

“Passive investors looking for robust returns will recognise that given New Zealand’s demographic trajectory and rising demand for living and care options for older people, aged care will continue to be a defensive asset class over time.”

With an aging population, Dick says Marlborough will likely face a shortfall in the supply of aged care beds in time, which underpins the opportunity for private investors to secure a stake in the region’s aged care sector now.

“Heritage is a proven operator with Waterlea being a well-supported facility.

“There is clear demand for family-style aged care accommodation which allows people to remain in their local communities and the underlying 5,121sqm residential site will give investors confidence long-term.”

In addition to Waterlea Lifecare, a Whangārei aged care facility with the same fundamental tenure structure with Heritage Lifecare is also for sale through Bayleys.

Puriri Court Lifecare is a 74-bed aged care facility offering resthome and hospital-level care located around 4km north of the Whangārei CBD.

The property for sale comprises three core titles being 202-204 Kamo Road which accommodates the care home and associated amenities, and 214 Kamo Road, a standalone residential property. There is also 2,795sqm of adjoining development land at 216 Kamo Road. In total, there is 9,592sqm of General Residential-zoned land and the titles will be sold as one lot.

Both the standalone residential property and the development parcel form part of the lease to Heritage Lifecare as occupier. Under this arrangement, and following due process, Heritage has the right to expand their current operation by developing the vacant site should they require it.

Heritage’s triple net lease is for 30 years from 31 March 2022, with rental of $703,905 per annum plus GST and outgoings. There are annual rent reviews to CPI, capped at 4 percent and three further rights of renewal of 20 years each.

It is also being marketed for sale by deadline private treaty closing 23rd April, unless sold prior, through Bhana, Houlker and Henry Napier of Bayleys.

Click here for more information on the listing.

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