Active Portfolio

Ditchley Group Series III Millrace Note 2021

Millrace Nursing Home is a purpose-built residential nursing home care in a popular town centre location, with scope for maximising profit.

About the bond

Millrace Nursing Home is a purpose-built nursing home in Ballinasloe, which opened in 2008. It is a spacious 60 bed facility (52 single, 4 double) and one of the largest homes in the locality. The home is conveniently located in the heart of Ballinasloe town, within walking distance to the local church, community services, shops, hotels and restaurants.

All bedrooms, which are modern in terms of decor, have emergency nurse call bells in both the bedrooms and bathrooms. All rooms are wheelchair friendly and include temperature-controlled underfloor heating. The home boasts bright dayrooms and include a variety of lounges that offer guests the option of quiet reading, recreational activities and a wide screen TV.

The gardens and secure seating area are popular and residents have the opportunity to ‘make it their own’. A comprehensive range of additional services at the home include personal services such physiotherapy, chiropodist, hairdressing, as well as weekly bingo, music and a wide range of activities every day of the week. Mass can be held in the large oratory.

The Opportunity

Trading at the home was impacted by the demise of the original developer’s business; however, the decline was arrested by the appointment of an external manager in mid-2016. Ditchley Group believes that the addition of its management experience in the sector will add considerable value to the home.

In particular, the ownership by an established operator should ensure that occupancy is optimised. The current Fair Deal Rate was increased to €880 in April 2020, which provides upside opportunity to grow EBITDA. In addition, it is anticipated that the introduction of a modest additional service charge would be achievable in the medium term.

Investment Profile

Investment Start Date: August 2018

Target Exit Date: August 2021

Bond Notional: €2,811,00Million

Asset Managers: Ditchley Group (Nursing Homes) Management Limited

Investment Highlights

15.75% return on investment
First legal charge on underlying assets
3 year investment term
‘Fair Deal’ rate agreed with National Treatment Purchase Fund until July 2020
Asset manager with experience in the nursing home sector

The Ditchley Nursing Home Group (the operator) is headquartered in Cork and comprises seven nursing homes in regional locations throughout Ireland. The operator has engaged in a consolidation strategy across its homes in order to drive cost efficiencies and revenue enhancements.

Millrace Nursing Home is a high-quality asset located in an area of strong demand, which is evidenced in high occupancy rates of circa 92% for 2019.

Financial performance for FY19 is behind projections and BlackBee is engaged with the operator to ensure improvement. Current trading is sufficient to meet coupons; however, increase in trading output will ensure that asset value is maximised.

While the source of income into the nursing care sector is primarily government-funded and not considered to be at risk due to Covid-19, the spread of the virus does present a significant operational risk for all nursing home operators. We are continuously monitoring the situation with the operator to ensure that the increased requirements are met; however, the threat of infection entering the homes is high. We will provide further investor updates as the situation evolves.

Want to know more?

Investors: For information about how to invest contact your Financial Advisor.

Financial Advisors: Please contact @blackbee.ie or call on 021 123 4567