Circle Holdings to develop £32.3m Birmingham hospital

Healthcare provider Circle Holdings is to develop a £32.3m hospital in Birmingham after gaining financial backing from a US real estate investment trust.

The AIM-listed company has agreed with affiliates of Medical Properties Trust (MPT), to build the hospital within the old Pebble Mill site in Edgbaston, which is currently being developed by Calthorpe Estates to become a healthcare campus.

As part of the deal, Circle will sell its long-term lease on the Birmingham plot to an affiliate of MPT for £2.7m who will then develop a 39-bed, 6,500 square metre acute care facility, which will be operated by Circle, with scope to expand to a six-theatre hospital.

Construction of ‘Circle Birmingham’ is expected to start within four weeks, with completion scheduled for the fourth quarter of 2018 with patients expected to being admitted towards the end of 2018 or early 2019.

Once the hospital had been completed, Circle will start a 15-year repairing and insuring lease with MPT, which may be extended for up to three additional five-year terms.

Under the terms of the lease, Circle will provide MPT with a cash deposit equal to one-year's rent, half of which will be released when Circle Birmingham delivers two consecutive quarters of an earnings before interest, tax, depreciation, amortisation and rent/restructuring costs (EBITDAR) to rent ratio of 1.75 or greater.

Circle chief executive Paolo Pieri said: "This facility will have state-of-the-art technology and we expect it to be the first new build hospital to integrate leading edge rehabilitation."

MPT chairman and chief executive Edward K. Aldag added: "This investment, our second in the UK and with Circle, demonstrates our enthusiasm for and commitment to continued geographic and operator diversification."

Shares in Circle Holdings were up 0.85% to 29.75p at 0804 BST.