Target Healthc. Regulatory News (THRL)

To: RNS

From: Target Healthcare REIT Limited

Date: 13 November 2013

Interim Management Statement

Introduction

Target Healthcare REIT Limited ("Target Healthcare" or the "Company"), a specialist investor in UK care homes, is today pleased to issue its Interim Management Statement for the period from 1 July 2013 to 30 September 2013.

Investment objective

The Company's investment objective is to provide shareholders with an attractive level of income together with the potential for capital and income growth from investing in a diversified portfolio of freehold and long leasehold care homes, that are let to care home operators, and other healthcare assets in the UK.

Highlights

· Further care home acquired in September 2013 for £4.0m (including acquisition costs).

· Unaudited Net Asset Value ("NAV") per share as at 30 September 2013 of 94.46 pence.

· Second interim dividend declared of 1.5 pence per share for the period to 30 September 2013.

Performance summary

* Calculated under International Financial Reporting Standards.

(Sources: R&H Fund Services Limited and Bloomberg)

Period commentary

The Company's NAV at 30 September 2013 was 94.46 pence per share and the share price was 105.5p. The NAV per share decreased by 1.54 pence during the period from 30 June 2013 to 30 September 2013 principally as a consequence of the dividend paid to shareholders of 2.0 pence on 30 August 2013.

The Company has a strong level of liquidity and had a positive cash balance at 30 September 2013 of £12.4m.

Property acquisitions

During September 2013 the Company acquired the freehold of a new care home for approximately £4.0m, including acquisition costs. Located in Thirsk, North Yorkshire, the care home is a modern, purpose-built home completed in 2013 and is leased to existing operator Ideal Carehomes Group.

The Company is pleased to report that the aggregate net initial rental yield on acquisition across the portfolio remains ahead of the 7% blended initial yield modelled pre-launch. The rents payable are subject to annual uplifts in line with the retail prices index subject to a cap and collar.

Geographical analysis

Dividends

The Company paid its first interim dividend for the period from launch to 30 June 2013 of 2.0 pence per share on 30 August 2013.

Outlook

During the period to the end of September 2013, the healthcare property sector continued to attract interest from domestic and international investors.

The supply of quality stock being openly marketed across the sector remains limited; however, with the Company's demonstrable success in identifying and sourcing a range of attractive investment opportunities, both on- and off-market, the outlook for the sector and Target Healthcare remains positive.

In this regard, the Company's investment adviser maintains a good pipeline of additional acquisition opportunities.

The Company continues to engage in positive discussions with a number of UK financial institutions with regards to the raising of a modest level of debt funding to supplement the equity it has raised.

Subsequent events

During October 2013 the Company acquired a further two care homes in the North West of England for approximately £11.5m (including acquisition costs). Located in Longridge, near Preston, Lancashire and St Helens, Merseyside, both properties are modern, purpose-built homes.

The care homes will continue to be leased to existing operator Orchard Care Homes for a period of approximately 30 years and the transaction represents an initial yield in excess of 7%. These acquisitions increase the Company's property portfolio to ten care homes and Orchard Care Homes represents the third tenant in the portfolio.

Upon completion of these acquisitions the Company was fully invested. On 9 October 2013 Target Healthcare published a prospectus in connection with a placing and offer for subscription of up to 45 million ordinary shares of no par value at an issue price of 101 pence per ordinary share. On 25 October 2013, the Company announced that the issue was over-subscribed and gross proceeds of approximately £45.5m had been raised.

Following the admission of the ordinary shares to trading on the main market of the London Stock Exchange and to the Official List of the UK Listing Authority, the admission became effective and dealings in the ordinary shares commenced on 28 October 2013.

On 17 October 2013, the Company declared its second interim dividend payment of 1.50 pence per share in respect of the period from 1 July 2013 to 30 September 2013. This will be paid to shareholders on 29 November 2013.

Additionally, the Company declared its third interim dividend payment in respect of the period from 1 October 2013 to 27 October of 0.44 pence per share. It is anticipated that, in the absence of unforeseen circumstances, the Company will pay a further interim dividend of 1.06 pence per share on the same day as the third interim dividend (28 February 2014) for the remainder of the quarter to 31 December 2013.

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