Care home investment opportunity – Retail Charity Bond – 5% due 2030

There have been few opportunities for those seeking regular income from retail bonds of late; now a bond issued by Retail Charity Bonds offers retail investors the opportunity to invest in the care home sector which has received so much attention during the pandemic.

Registered charity Greensleeves Homes will be the beneficiary of the Greensleeves Homes Trust 5% Bonds which will pay due a coupon semi-annually until maturity in 2030.

Retail Charitable Bonds (RCB)is a special purpose vehicle (SPV) created to connect charitable organisations seeking unsecured loan finance with investors looking for fixed income bonds listed on the London Stock Exchange.

The bonds have a minimum initial subscription amount of £500 and are available in multiples of £100 thereafter; they will pay a fixed rate of interest at 5% per annum until 17 December 2030, payable twice yearly on 17 December and 17 June of each year.

The first coupon payment being made on 17 June 2021 and the bonds are expected to mature on 17 December 2030 with a final legal maturity on 17 December 2032.

The bonds are available up until 12 noon on 11 December 2020 through stockbrokers AJ Bell, Equiniti Financial Services Limited and Redmayne Bentley LLP; they may be sold at any time during the life of the bonds on the open market.

This is the second bond that RCB has launched for the charity, having raised £50m in 2017; overall it is the tenth bond it has launched, following successful issues for Golden Lane Housing, Hightown Housing Association, Charities Aid Foundation, the Charity, Dolphin Living, Belong and The Alnwick Garden Trust, raising over £225 million since 2014.

Greensleeves provides care for older people with over 1,000 bed spaces across 25 residential, dementia and nursing homes across London, South and East England and the Midlands; it started in 1997 when the Women’s Royal Voluntary Service transferred ownership and management of its care homes to an independent organisation.

The charity took its name from the green arm bands worn by WRVS volunteers during World War II; the growing charity says it is constantly adapting to meet the needs of older people; it aims to improve quality of life for residents at all of its care homes, based around the core belief that ageing should be a continued stage of development and growth, rather than a period of decline.

The charity reinvests ‘profits’ back into the charity with the goal of offering a home in perpetuity to all its residents irrespective of how they are funded.

Historically, Greensleeves has had a mix of 75% privately funded and 25% publicly funded residents, and is therefore less reliant on public sector funding than many other care home operators.

Like many others Greensleeves has faced the impact of Covid-19, but corrective action was been taken to mitigate the impact, with just two outbreaks – defined as two or more staff/residents testing positive – since 30th September.

Occupancy levels fell as a result of the initial wave of the pandemic by approximately 9% from the level at 31 March 2020 but have since steadily recovered reaching 86% as at 30 September 2020.

Paul Newman, chief executive of Greensleeves Homes Trust, said: ‘Our focus is to provide residential, dementia and nursing care, comfort and security to older people, at a price that reflects our charitable status. During the past year, we cared for over 1,300 residents and employed and developed over 1,500 staff. Reflecting the critical role that our homes can play in supporting elderly residents and their families and the substantial demand-supply imbalance characterising the UK care home sector, we have significant ambitions to scale our offering and remain committed to expanding and modernising the care and support we offer.

‘As a result of the emergence of covid-19, in common with most other adult social care providers within the care homes sector in the UK, various aspects of the Charity’s business have been affected. Despite this, the portfolio has performed well during the year, and has thus far demonstrated clear resilience and we look to the future with confidence.’

Adrian Bell, chief executive officer of lead manager Allia C&C, said: ‘The provision of high-quality later life care is part of the fabric of our society and Greensleeves Homes Trust has been positively impacting on the lives of not just residents but also their families for nearly a quarter of a century.’

Investors seeking income may believe that the growing demand for residential care might make this offer worthy of their attention; however as with any retail bond, there is no protection from the Financial Services Compensation Scheme should Greensleeves get it wrong, or circumstances conspire against it.