CareTech saves on rent by buying 29 properties

28th Aug 2013 07:56

CareTech, the AIM-listed social care services firm, is hoping to save substantial costs in rental charges after the acquisition of two property portfolios.The company said on Wednesday that it has bought the freeholds of the portfolios, comprising 29 properties in total, for £38m. "The board responded swiftly to the opportunity to acquire these key property assets at what it considers to be a compelling valuation," CareTech said. "It is expected that the transaction will be immediately earnings enhancing and will save the group substantial cost in rental charges over the lifetime of the historic leases."The company estimates that it will save up to £4.4m in rent in 2014 and more thereafter given that previous rental terms were subject to inflation-based increases.Given that the majority of the purchase price will be provided by existing and new debt facilities with the group's syndicate of banks, CareTech's net debt following the transaction will be around £169m, up from £133m at the end of the fiscal first half (March 31st).Chairman Farouq Sheikh said: "We now have much greater flexibility to reconfigure and upgrade the properties in line with our strategy for enhancing fee rates whilst offering the highest quality of care."The stock was up 3.01% at 188p in early trading on Wednesday.BC