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Target Healthcare deploys recently-raised funds in four transactions
8th Nov 2019 12:05
(Sharecast News) - Care home investor Target Healthcare has agreed the acquisition of eight care homes and 31 retirement apartments, in four separate transactions, for a total consideration of £81.3m including transaction costs, it announced on Friday.
The London-listed real estate investment trust said the acquisitions, which were identified in advance of its recent £80m equity placing, would mean the "rapid deployment" of the majority of shareholders' funds, reducing the potential for cash drag.
It said in the first transaction, it completed the acquisition of a portfolio of five care homes, totalling 362 bedrooms in Yorkshire, to be let to an existing tenant of the group - Bondcare.
Secondly, Target exchanged contracts to acquire a further two care homes in Yorkshire to be let to an existing tenant, a subsidiary of Burlington Care.
That transaction would complete once the second home has received CQC registration, which was expected before the end of the year.
In the third transaction, the company completed the acquisition of the freehold of 31 retirement living apartments in Gloucestershire, managed by an existing group tenant, Aura Care Living.
Finally, it completed the acquisition of an operational care home in Dorset, which added a new operator to the group, a subsidiary of Encore Care Homes.
The company said the acquisition yield on the care home transactions was representative of assets of a similar standard and location within its portfolio, adding that all had the benefit of long-term occupational leases with RPI-linked cap and collars.
"Having completed the successful September fundraising, it is very pleasing to have deployed the proceeds so soon after, in a group of assets that meet our strict investment criteria and at yields that are consistent with previous similar acquisitions," said Target Fund Managers head of investment John Flannelly.
"At the same time, we are further strengthening the group's relationship with existing tenants whilst delivering continued portfolio diversification, a key focus for the group.
"There is continued strong investor appetite for the stable and sustainable long duration rental income available from care home real estate, and we continue to develop our pipeline of further opportunities, leveraging our deep sector experience and proprietary in-house research capabilities."
At 1202 GMT, shares in Target Healthcare were up 0.7% at 115.6p.
The London-listed real estate investment trust said the acquisitions, which were identified in advance of its recent £80m equity placing, would mean the "rapid deployment" of the majority of shareholders' funds, reducing the potential for cash drag.
It said in the first transaction, it completed the acquisition of a portfolio of five care homes, totalling 362 bedrooms in Yorkshire, to be let to an existing tenant of the group - Bondcare.
Secondly, Target exchanged contracts to acquire a further two care homes in Yorkshire to be let to an existing tenant, a subsidiary of Burlington Care.
That transaction would complete once the second home has received CQC registration, which was expected before the end of the year.
In the third transaction, the company completed the acquisition of the freehold of 31 retirement living apartments in Gloucestershire, managed by an existing group tenant, Aura Care Living.
Finally, it completed the acquisition of an operational care home in Dorset, which added a new operator to the group, a subsidiary of Encore Care Homes.
The company said the acquisition yield on the care home transactions was representative of assets of a similar standard and location within its portfolio, adding that all had the benefit of long-term occupational leases with RPI-linked cap and collars.
"Having completed the successful September fundraising, it is very pleasing to have deployed the proceeds so soon after, in a group of assets that meet our strict investment criteria and at yields that are consistent with previous similar acquisitions," said Target Fund Managers head of investment John Flannelly.
"At the same time, we are further strengthening the group's relationship with existing tenants whilst delivering continued portfolio diversification, a key focus for the group.
"There is continued strong investor appetite for the stable and sustainable long duration rental income available from care home real estate, and we continue to develop our pipeline of further opportunities, leveraging our deep sector experience and proprietary in-house research capabilities."
At 1202 GMT, shares in Target Healthcare were up 0.7% at 115.6p.