Target Healthc. Regulatory News (THRL)

Target Healthcare REIT Limited

RNS Announcement

17 April 2014

Acquisition of Two Modern, Purpose-Built Care Homes

Target Healthcare REIT Limited ("the Company"), a specialist investor in UK care homes, announces that it has acquired a modern, purpose-built care home located in Flixton, Greater Manchester for approximately £3.8 million including acquisition costs. In addition, the Company has also exchanged contracts to acquire another care home in York which is due to be completed and opened in summer 2014 for approximately £5.1 million including acquisition costs. These transactions are both in accordance with the Company's investment policy.

Both properties are modern, purpose-built residential care homes and are built to high specifications, benefitting from generously proportioned bedrooms and public spaces. All bedrooms (116 in total across the two homes) have en-suite facilities, including wet room showers.

The care homes will both be leased to operator Ideal Carehomes Group for a period of 35 years and the transactions both represent an initial yield in excess of 7%. The rent payable under these leases is subject to an annual uplift in line with the retail prices index, subject to a cap and collar.

As part of the agreed transaction, the Company is to provide a short-term loan facility to Ideal Carehomes Group in order to fund the completion of the York property. This facility attracts a paid interest coupon of 7% and will be repayable from the consideration proceeds on the completion of this York property.

Ideal Carehomes Group has been operating in the care sector for a number of years and benefits from LNT Group's 25 year heritage in designing, developing and operating purpose-built residential care homes for older people. Currently, Ideal Carehomes Group employs 1,800 staff across 36 residential care homes.

These transactions represent the Company's twelfth and thirteenth acquisitions since it listed its shares on the London Stock Exchange's Main Market on 7 March 2013. The Company has now invested approximately £59.3 million of the £95.7 million raised from institutional investors, wealth managers and private investors.

 Kenneth MacKenzie, Managing Partner of Target Advisers LLP, commented on the acquisition:

"We are delighted to have completed these transactions, continuing our support for an existing tenant who demonstrates a strong care ethos. With approximately £49.7 million of deals in advanced, non-binding legal negotiations (including acquisition costs) we expect to announce further acquisitions in the near-term."

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