Target Healthc. Regulatory News (THRL)

11 July 2018

Target Healthcare REIT Limited and its subsidiaries

("Target Healthcare" or "the Group")

 Acquisition of care home in Doncaster and development site in Lancashire, for £13.9 million

Target Healthcare (LSE: THRL), the UK's listed specialist investor in modern, purpose-built care homes, announces that it has completed the acquisition of two properties for a total value of £13.9 million (including acquisition and forward funding costs):

· The Group acquired the freehold of Cantley Grange, a modern purpose-built care home in Doncaster, South Yorkshire. The 40-bed home, which opened in 2007, has full en suite wetroom facilities and is operated by Orchard Care Homes ("Orchard"). The home is let on a 35-year full repairing and insuring lease, with 24 years left to run and is subject to annual RPI-linked rent increases subject to a cap and collar.

Orchard is an established care operator with homes across the UK and is an existing tenant of the Group across five of its assets. 

Cantley Grange provides a high standard of accommodation for residents in an area where the Group's research demonstrates a shortage of modern market-standard care facilities. It has been acquired at a yield which is similar to other Orchard assets in the Group's portfolio and slightly higher than the Group's overall average property yield.

· The Group has also acquired a development site and entered into a forward funding agreement in Burscough, Lancashire, just outside Ormskirk. The site has planning consent for an 80-bed care home. The development will be funded under a capped development contract, to create a high-quality facility that meets the investment requirements of the Group. The wealth characteristics and demographics of the local area are supportive of such a home, which will offer nursing care once complete.

The development will be carried out in partnership with Athena Healthcare, an existing tenant of the Group in two other locations where they have demonstrated a strong care ethos and excellent commercial acumen. On completion of the building, which is expected in Q4 2019, the home will be let to Athena for 35 years on a full repairing and insuring lease with RPI-linked rent increases subject to a cap and collar. Athena is a growing operator with five operating homes and several others in development, including a site in Merseyside with the Group.

The yield is consistent with the overall average for the Group's portfolio.

John Flannelly, Head of Investment at Target Fund Managers, commented:

"We are pleased to see completion of these transactions, adding further quality assets to the Group's portfolio and enabling us to extend our relationship with two proven operators who deliver well-run homes and high-quality care in line with our ethos. Combined with the Aura Care Living transaction announced in June and the acquisitions announced in March, the Group has now deployed around 70% of the equity raised in February of this year. The remainder of available capital is expected to be committed in the near future."

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Notes to editors:

UK listed Target Healthcare REIT Limited (THRL) is an externally managed Real Estate Investment Trust which aims to provide shareholders with an attractive level of income, together with the potential for capital and income growth, through the assembly and management of a portfolio of modern, purpose built care homes.

The Group's current portfolio comprises 53 assets with a total value of circa £341.4 million (31 March 2018), plus two Aura Care Living assets acquired in June 2018 and the two in this announcement. In total these homes are let to 21 tenants.

The Group only invests in modern, purpose built homes that provide the best environments for residents and their care providers and ensure they are let at a sustainable rent. The Group aims to build collaborative, supportive relationships with each of its tenants as it believes working in this way helps raise standards of care and helps its tenants build sustainable businesses. In turn, that helps the Group deliver stable returns to its investors.