Target Healthcare REIT Limited

RNS Announcement

12 July 2017

Acquisition of new care home in Leicestershire and development site in Merseyside

Target Healthcare REIT Limited and its subsidiaries ("the Group"), the UK listed specialist investor in care homes, announces that it has completed the acquisition of two properties for a total value of £16.6 million (including acquisition and forward funding costs):

·     The Amwell in Melton Mowbray, Leicestershire, is an 88 bed home which opened its doors to residents in March 2017.  Situated in a prominent location adjacent to the town centre, the home boasts large bedrooms over four floors and full ensuite bathrooms with wetroom showers.  The home benefits from excellent provision of public space, including very large lounges with views over the neighbouring park, a coffee shop, a cinema room and a gym.  It is set in a peaceful location alongside a river, with well laid out gardens providing good outdoor space for residents and visitors.

The home was purchased for £8.4 million including costs, and leased back to Melton Care Limited who developed the property to their own design.  It is subject to a 35 year lease with RPI-linked uplifts with a cap and collar.  Melton Care is a joint venture between Magnum Care, a Leicestershire-based operator, and the principals behind Care Concern, the national operator with whom the Group have worked in a number of homes.

·     The Group has also acquired a development site and entered into a forward funding opportunity in Birkdale, Merseyside.  The site received planning in early 2017 for a high quality care home.  The Group intends to fund the development of this home under a capped development contract, to have 55 large bedrooms with en-suite facilities with wetroom showers and good public space in an impressive building on this corner location.    

The development will be carried out in partnership with Athena Healthcare, who have entered into an agreement to lease the property on completion at an agreed rental level.  The lease will again be for 35 years with RPI uplifts subject to cap and collar.  The home will target the premium residential market, and once completed will become the third home in the Group's portfolio with Athena, a growing operator with three operational homes and several further in development. 

The home is expected to complete by March 2019, with a total development price of around £8.2 million including costs.

Yield across the two assets is broadly consistent with that seen on the Group's existing portfolio.  These homes increase the Group's portfolio to 47 properties and means that funds invested in high quality care homes since the Group's inception total around £285 million, including around £105 million committed since the Group's fundraise in May 2016.

John Flannelly, Investment Partner of Target Advisers LLP, commented on the acquisitions:

"We are extremely pleased to announce completion of these transactions.  The Amwell is a very high quality home in a fantastic setting.  We know both Magnum Care and Care Concern well and have been impressed with their ability to deliver great care.  The forward funding opportunity in Birkdale allows the Group to expand in an affluent area with a respected operator and developer, and will provide a further impressive addition to the portfolio in due course.

We continue to progress other opportunities and expect to make more announcements in the near future."

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