Japara sells Springvale aged care home with a leaseback for $13.38 million

Japara Healthcare has banked $13.38 million selling a Springvale aged care complex with a leaseback.

The price for Japara Springvale Aged Care Facility at 340-344 Springvale Road was well over the c$11.5 million guide attached upon listing in February.

Net of costs, the result equates to a 5.6 per cent yield for the ASX-listed vendor.

The purchaser, private investor YWC Group Pty Ltd, offered a short settlement (scheduled for the end of April).

Vendor Japara recently spent $2.6 million refurbishing the Springvale complex.

Japara listed the Springvale asset with three four-year lease renewal options which, if exercised, could see the occupier stay until 2039.

The starting annual rent is $750,000 net of costs including taxes and insurances.

Savills Julian Heatherich, Benson Zhou and Mark Stafford were the brokers.

Springvale is about 22 kilometres south east of the Melbourne CBD.

Japara also this week sold a Highton, Geelong, block permit-ready for a 122-place aged care complex for $3.6 million – a loss, after costs, on the $3.5 million it paid for the parcel in 2016.

Aged care investments are particularly sensitive to market

Commercial real agents rarely seek editorial for aged care investment listings for various reasons, amongst them to avoid causing anxiety for residents at homes which could be the target of developers.

In February, a Singaporean buyer paid $11.3 million for a 70-bed purpose built facility constructed in 2012, in Boronia (a deal which reflected a 5.5 per cent yield. The occupier was two years into a 15 year lease agreement with two five year options).

Last August one in Melton South was put to the market while in 2018, a Camberwell facility on a corner block was offered.

In late 2018 Baptcare acquired three Gippsland investments from Alliance Care Services Group following an off-market marketing campaign managed by advisory Ernst & Young.

Also in that year, Blackburn’s Crofton House sold for $8.3 million to an offshore investor said to have a diversified commercial property portfolio.

Like many aged care homes, Japara Springvale has long-term residential redevelopment prospects

Savills made it clear upon listing 340-344 Springvale Road that the vendor was keen to stay on long-term.

Japara Springvale Aged Care Facility, with 71 places, recently underwent a $2.6 million upgrade – offering YWC Group depreciation (tax) benefits.

The asset contains 2780 sqm of internal area, and car parking.

Importantly, the underlying land value is high and set to increase: within the Springvale Activity Centre precinct, the 4347 sqm rectangle shaped site at the north west corner of Heather Grove is zoned Commercial 1 – meaning it can be replaced with a mixed-use complex comprising apartments.

It is near Springvale train station, Springvale Shopping Centre and parks.

Within the Springvale Activity Centre precinct the site (outlined) would have attracted significant interest from residential developers if Japara didn’t lock in such a long leaseback.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco