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01 February 2019

Charles Russell Speechlys Advises CareTech on Another Innovative Ground Rents Deal

Charles Russell Speechlys’ real estate team has advised CareTech Holdings PLC, one of the leading providers of specialist care in the UK, on an innovative transaction to raise £32.6 million in cash to further support its growth strategy through a ground rent agreement with funds managed by Alpha Real Capital LLP at a net initial yield of 2.85%. This transaction builds on the previous ground-breaking transaction with Alpha in February 2016, which Charles Russell Speechlys team also advised on.

Under the terms of the agreement, the freehold interest in 24 CareTech properties in England and Scotland are to be transferred to Alpha in exchange for a cash sum of £32.6mand security of tenure with a 150-year lease term returning to CareTech a virtual freehold interest in each property.

Ground rent transactions remain extremely rare in the healthcare sector. Charles Russell Speechlys advised CareTech on all legal aspects including commercial lease structuring, contract and revenue arrangements.

Farouq Sheikh, executive chairman of CareTech comments: "Our first ground rent transaction in February 2016 was truly innovative, raising £30m which was invested into earnings enhancing acquisitions. We are delighted to enter a further non-dilutive ground rent agreement with the Alpha to raise an additional £32.6m in cash on more attractive terms when compared with our previous ground rent transaction and which provides further capital for investment.”

Charles Russell Speechlys team included partner Ingrid Saffin and legal director Claire Timmings on the real estate side, CareTech relationship partner Michael Lingens who advised on corporate and commercial aspects of the transaction, and Robert Birchall advising on tax issues.

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