Nursing home lessor prepares to float

The fast-expanding nursing home industry has attracted a new entrant to the stock market. In a first for the sector, Nursing Home Properties, which plans a February flotation, will not run any homes but plans to own the properties and lease them to existing, cash-strapped operators.

The company is planning to capitalise on the £3bn which it is estimated will have to be spent providing 100,000 new nursing home beds before the end of the decade. Deals have already been struck with three quoted operators and one large private business to buy and lease back properties worth £43.5m.

That will account for almost all the funds raised by the placing and open offer, which is planned to raise £25m in equity and a similar amount in borrowings from NatWest.

Because Stock Exchange rules do not allow a full listing for a company with no trading record the company's shares will be traded under Rule 4.2, the old matched-bargain market. But two market-makers have already said they plan to deal in the stock, so liquidity should not be a problem and a full listing is expected as soon as possible.

According to Andrew Richmond at NHP's stockbroker Collins Stewart, the company will pay out about 80 per cent of its pre-tax profits in dividends. The shares are expected to yield more than 7 per cent.