Acquisition

Target Healthcare REIT Limited

RNS Announcement

3 November 2014

Acquisition of Three Modern, Purpose-Built Care Homes in Yorkshire and Lancashire

Target Healthcare REIT Limited ("the Company"), a specialist investor in UK care homes, announces that it has acquired three purpose-built care homes in Yorkshire and Lancashire, for approximately £13.3 million including acquisition costs.

The three modern, purpose-built homes are located in: Fleetwood, Lancashire; Rastrick, West Yorkshire; and Sutton-in-Craven, North Yorkshire. They were acquired from Clerical Medical (part of Aberdeen Asset Management plc). The acquisition is in accordance with the Company's investment policy.

With a total of 201 rooms, the homes offer residential and nursing care and have generously proportioned rooms with en-suite facilities throughout. The homes all have large communal spaces and facilities such as hairdressing salons. 

The homes will continue to be operated by Orchard Care Homes for a period of approximately 28 years. The transaction represents an initial yield of in excess of 7%. The rent payable under the lease is subject to an annual uplift in line with the retail prices index, subject to a cap and collar. 

Orchard Care Homes was formed in 2005, and operates around 100 care homes and employs around 5,000 staff. This represents the Company's second transaction in homes operated by Orchard, bringing the total number of Orchard homes in the portfolio to five. The Company now has six tenant groups.

This transaction is the first following the Company's recent fundraising and is in line with the details published in the Prospectus of 5 September 2014. This will bring the total funds invested by the Company to £129 million, through a combination of equity raised and the use of term loan and revolving credit facilities provided by the Royal Bank of Scotland plc. 

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

"We are pleased to have completed this acquisition, allowing us to quickly invest funds recently raised into three modern, purpose-built homes. This transaction further develops our relationship with Orchard Care Homes. We have a number of other deals with both regional and national operators in advanced non-binding legal negotiations, and we expect to make further announcements soon."

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