Target Healthcare REIT Limited Acquisitions in Hertfordshire, York and the Wirral (4736Y)
December 06 2017 - 2:00AM
UK Regulatory
TIDMTHRL
RNS Number : 4736Y
Target Healthcare REIT Limited
06 December 2017
Target Healthcare REIT Limited
RNS Announcement
6 December 2017
Care home acquisitions in Hertfordshire, York and the Wirral
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 three properties in
Hertfordshire, York and the Wirral for a total value of GBP31
million (including purchaser's costs).
The Hertfordshire care home opened in 2013 and comprises 64
well-appointed bedrooms each of which benefits from full en-suite
wetroom facilities. The luxurious surroundings of the home,
combined with the attention to detail provided by the care staff,
mean the home represents one of the highest quality care home
environments in the UK.
The Hertfordshire home will continue to be run by the incumbent
operator, a new tenant to the Group, under a 30-year full repairing
and insuring lease. The purchase price is approximately GBP20
million (including purchaser's costs) and the rent payable is
subject to annual, upwards-only, RPI-linked uplifts, incorporating
a cap and collar. The investment yield for this property is lower
than the portfolio average reflecting the exceptional quality of
the home, prime location and the strong trading performance.
The care home in York was opened in 2006 and comprises 81
bedrooms with market standard en-suite bathrooms, including wetroom
showers. The property also benefits from a number of separate
lounges and dining rooms; a cinema room; a library; a hairdressing
salon; and well-maintained landscaped gardens.
The home on the Wirral is a purpose-built property which opened
in 1999 and comprises 86 bedrooms, all of which include en-suite
facilities. The home is well-appointed and includes several lounge
/ dining areas overlooking the large, landscaped gardens; a
hairdressing salon; and quiet lounges.
The tenant for the York and Wirral properties is a subsidiary of
the Four Seasons Health Care Group ("Four Seasons"), one of the
UK's largest care home operators. As part of the transaction, the
Group will be stepping into the existing full repairing and
insuring occupational leases which together have a blended average
unexpired lease term of approximately 21 years.
The York and Wirral homes have both traded profitably for
several years, evidencing average rent cover of 2.2x predicated on
sustainable rents, and are supported by compelling local
demographics. The net initial investment yield on acquisition of
7.8% is higher than the portfolio average reflecting, inter alia,
the weaker corporate covenant, whilst the price paid is
significantly below replacement cost and approximately 35% below
the Group's average capital cost per bed.
John Flannelly, Head of Investment at Target Fund Managers,
commented on the acquisitions:
"We are extremely pleased to announce the completion of these
transactions. The Hertfordshire home is of the highest quality and
represents a very positive addition to the Group. The operator has
demonstrated an enviable track record of delivering a strong
trading performance over a sustained period and we are delighted to
welcome them into the Group.
The acquisition of the York and Wirral properties is entirely
consistent with our approach of investing in good buildings with
favourable local market characteristics let at sustainable rental
levels. There has been considerable media interest in Four Seasons
in recent weeks and months, and we note that restructuring
proposals are under consideration and the principal creditor is
seeking to put in place an appropriate capital structure for Four
Seasons over the long-term.
In any event, the homes are attractive operational assets and
the acquisition price offers an opportunity for long-term capital
growth.
We continue to progress other opportunities and expect to make
more announcements in the near future."
All enquiries:
Kenneth MacKenzie / John
Flannelly
Target Fund Managers 01786 845 912
Martin Cassels
Maitland Administration
Services (Scotland) Limited 0131 550 3760
Fiona Harris / Sam Emery 020 7466 5058 / 020 7466
Quill PR 5056
This information is provided by RNS
The company news service from the London Stock Exchange
END
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