(Alliance News) - Target Healthcare REIT PLC said Friday it is planning to raise about GBP50 million through an initial placing, subscription and intermediaries offer.
Target - which invests in purpose-built care homes in the UK - will issue up to 45.0 million shares at 111 pence per share. The company's shares were trading 0.5% lower in London on Friday mid-morning at 116.00p each.
The investment firm noted it may increase the size of the placing - should demand from investors exceed the initial offer - to a maximum of 150 million shares.
Chair Malcolm Naish said: "The very challenging period we have come through has clearly shown that the kinds of assets we own, together with the operational capabilities of our dedicated and professional occupier base, are well-placed to manage the complex requirements of the care home sector and its residents."
Target said the initial issue price represents a discount of 4.8% to the closing share price of 116.6p on Thursday and a 2.6% premium to the company's last reported EPRA NAV per share of 108.2p at the end of 2020.
"The group's portfolio has continued to demonstrate its high quality and defensive characteristics throughout the Covid-19 pandemic with the company's rental income remaining substantially unaffected, demonstrating the stable and secure nature of the portfolio's cashflows," Target said.
On top of this, the real estate investor has identified an investment pipeline of GBP224 million. The firm's investment manager stressed its belief in the underlying long-term fundamentals of the sector, and said the pandemic reinforced the essential requirement for high quality, modern, purpose-built care homes.
Pointing to the need for care homes, Target noted the "chronic undersupply" of fit-for-purpose care homes where demand far outstrips supply with about a 273,000 shortage of appropriate quality beds in the UK.
Naish added: "The momentum behind the underlying fundamentals of the sector remains unchanged, as reflected in the record level of enquiries last month which was reported by one of the company's largest tenants, and with the roll out of the vaccination programme progressing well, we are in a position now to respond to that demand."
Alongside the initial issue, Target will implement a placing programme to raise additional equity capital through the issue of up to 150 million shares in the 12 month period from March 4 to February 11, 2022.
"The placing programme will allow the company to tailor future equity issuance to its pipeline, providing flexibility and minimising cash drag," it added.
Target's portfolio was valued at GBP647.7 million at the end of 2020.
Naish said: "While we prudently paused our investment programme in the first half of 2020, we now believe there is sufficient visibility to return to our disciplined acquisition strategy. We have identified a strong pipeline of attractive potential investments and the structure of the fundraise we are announcing today provides us with the flexibility to be selective, but also to act quickly in a competitive market."
By Paul McGowan; paulmcgowan@alliancenews.com
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Target Healthc. (THRL)