Acquisition in Bricket Wood, St Albans

Target Healthcare REIT Limited

RNS Announcement

11 February 2016

Acquisition in Bricket Wood, St Albans

Target Healthcare REIT Limited and its subsidiaries ("the Group"), the only listed specialist investor in UK care homes, announces that it has exchanged contracts to acquire a 12-bed specialist care home in Bricket Wood, St Albans for approximately £2.3 million including acquisition costs.

A former NHS clinic, the care home has been re-designed and extensively refurbished, and when opened will provide the highest quality residential care and supported living accommodation. The care home comprises three linked bungalows, each with four bedrooms, en-suite wetroom showers, an open-plan resident day room and kitchen facilities, and staff accommodation. Externally there are landscaped gardens as well as staff and visitor parking.

Upon expiry of the planning judicial review period in March, the Group will acquire the care home which will be leased back to specialist care provider, HSN Care ("HSN"), for a period of 50 years. The transaction represents a net initial yield in excess of 7% and the rent payable under the lease is subject to upwards-only annual uplifts in line with the retail prices index, subject to a cap and collar.

As part of the agreed terms, the Group is to provide a short-term loan facility to HSN in order to fund the land acquisition and refurbishment of the property with any delays in timing or cost overruns remaining the responsibility of HSN. The loan facility attracts an accrued coupon of 8.85% per annum and the loan capital and accrued interest will be repayable from the consideration proceeds once the acquisition completes.

HSN was established to provide specialist care to adults with physical and / or learning disabilities.

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

"We are delighted to announce the acquisition of this care home, adding as it does another quality property to the Group's portfolio in a southern location as well as further diversifying the tenant base. The Group is working on a number of opportunities and we hope to announce further acquisitions in the coming months."

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