Japara has announced its acquisition of the Riviera Health residential aged care portfolio which includes four facilities on freehold land in Sydney and the NSW Central Coast.
The properties include a newly built 73-bed home in Brighton-Le-Sands due to open in August 2018, Forestview Aged Care facility in Chatswood, the recently completed ‘Henley Manor’ in Doonside, and Wyong Aged Care Facility.
The $39 million transaction also includes 507 bed licenses, of which 265 are operational, vacant possession of a closed aged care facility in Toukley on freehold land and 4.3 hectares of development land in Wyong.
In an investors statement, the company said its immediate focus will be to complete and commission the Brighton-Le-Sands home and integrate the Riviera portfolio into the Company’s high-quality care and operating model.
In the medium term it will seek to develop a new 120 bed home on the Wyong site as a replacement for the existing Wyong aged care facility.
The acquisition builds upon Japara’s growth strategy and expansion into New South Wales, where it already has a 110 bed greenfield development in Belrose and operates homes in Bayview, Coffs Harbour, South West Rocks and Albury.
The net cash purchase price of Riviera is circa $39 million and Japara will assume circa $14.5 million of Refundable Accommodation Deposit and employee entitlement liabilities.
The cash purchase price will be reduced to circa $16 million as Japara expects to generate in excess of $23 million from net RAD inflows from the nearly completed Brighton-Le-Sands home over the next 18 months.
The acquisition will be funded from the Company’s existing debt facility and cash reserves. It is expected to provide an operating EBITDA uplift of between $3.5 million and $4.0 million in fiscal 2019 following its integration into Japara’s care model.
Japara’s Chief Executive Officer and Managing Director, Mr Andrew Sudholz, said: “We are pleased we were able to secure this highly value accretive acquisition opportunity when it arose.”
“The bed licences will transfer to Japara on completion when we will proceed to re-accreditation of two homes and be in a position to seamlessly introduce Japara’s high quality care and operating standards across the portfolio.”
“It provides Japara with an expanded footprint in high demand locations in New South Wales and an opportunity to further develop in these areas.”
“This acquisition will accelerate Japara’s strategy to build a strong position in the Sydney market including brand new homes at Brighton-Le-Sands, Doonside and Belrose, as well as a new replacement home in Wyong.
“The acquisition of Riviera is consistent with our integrated value creation strategy which includes growing through selective acquisitions that meet our strict investment criteria and offer identifiable improvement opportunities.”