Radius Care announces the acquisition of Clare House

RADIUS RESIDENTIAL CARE LIMITED
Level 4, 56 Parnell Road, Parnell, Auckland, New Zealand
Phone 09 304 1670 www.radiuscare.co.nz
Caring is our calling
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1 October 2021
R
adius Care is pleased to announce the acquisition of Clare House, an integrated care
facility and retirement village in Waikiwi, Invercargill with 69 care beds and 25 ORA
units. The acquisition includes all the land, buildings and operations of Clare House
as well as two adjoining residential properties at 71 and 83 Durham Street.
The purchase price is $14.5m being a 3% discount to the independent valuation
performed by Colliers and will settle on 1 November 2021.
B
ased on the pro forma projected earnings from the Colliers valuation, the
acquisition will immediately add $1.7m to pre-IFRS16 Underlying EBITDA (including
$0.6m from village resales
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). Colliers valued the care facility at $9.0m (implying an
undiscounted acquisition multiple for the care facility of 7.8x) and used a discount
rate of 15% on the retirement village valuation.
T
he acquisition will generate AFFO of ~$0.8m which represents strong mid-t eens
AFFO accretion based on full debt financing of the transaction. Radius Care’s
dividend policy of targeting a payout ratio of 50 to 70% of full financial year AFFO,
remains unchanged.
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he acquisition will be fully funded from the new ASB facility with post settlement
net debt / proforma pre-IFRS16 Underlying EBITDA remaining below 2.0x. Capacity
remains in cash and the ASB facility to fund the previously communicated brownfield
developments and settle the Northwood acquisition.
Fu
rther earnings growth beyond FY22 of ~$0.5m pre-IFRS16 Underlying EBITDA is
anticipated from the scale advantages of integrating Clare House into the group.
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xecutive Chairman Brien Cree commented “I’m really excited about the Clare House
acquisition, it’s an excellent facility with a culture consistent with Radius. It expands
our regional footprint and helps create a solid infrastructure for growth. We now
extend from Invercargill in the South to the Bay of Islands in the North. Our
continued expansion remains the focus for our team.”
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bout Clare House
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lare House is an integrated aged care facility and retirement village. It has operated
since November 1992 and comprises a purpose built aged care complex providing 69
Care Beds offering 28 Dual Purpose beds, 20 Rest Home beds and 21 Dementia beds.
The village component of the complex currently includes 4 studio units, 14 serviced
apartments and 7 independent villas all available on ORA license. The adjoining
residential property at 83 Durham Street is currently being refurbished and will
provide an additional ORA independent villa unit. The village also owns an additional
adjoining residential property at 71 Durham Street for future development.
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based on 5 expected village ORA resales plus 83 Durham Street.