TIDMTHRL
RNS Number : 1175W
Target Healthcare REIT PLC
20 December 2021
20 December 2021
Target Healthcare REIT plc and its subsidiaries
("Target Healthcare" or "the Group")
Completion of 18-care home portfolio acquisition; total
investment in quarter of GBP173 million; new GBP63 million
long-term, fixed-rate loan facility
Target Healthcare (LSE: THRL), the UK listed specialist investor
in modern, purpose-built care homes, announces that it has
completed the acquisition of a major portfolio of 18 operational
modern care homes. Combined with the previously noted acquisition
of a pre-let development site in Weymouth, the Group's total
investment during the quarter has been GBP173 million including
costs. The acquisition yields are representative of assets of a
similar standard and location within the Group's portfolio, and the
properties benefit from long-term occupational leases with
RPI-linked caps and collars.
These acquisitions, which formed part of the pipeline of
acquisitions announced as part of the Company's recent GBP125
million equity fund raise, take the Group's portfolio to 98 assets
and to 32 tenants once the development site becomes operational in
June 2022.
Portfolio of 18 operational care homes
Target Healthcare has completed the acquisition of a major
portfolio of 18 operational care homes, representing in excess of
1,200 beds. The Investment Manager has unparalleled knowledge of
the individual assets within the portfolio, having sourced 17 out
of the 18 care homes on behalf of the vendor, as well as having
provided asset management services over the past 11 years.
The portfolio generates annual contracted rent of GBP9.2 million
and has collected 100 per cent. of rent throughout the pandemic.
This is a high-quality real estate portfolio, with an average age
of approximately eleven years. All of the properties are
purpose-built care homes with modern facilities including 100 per
cent. en suite provision, the vast majority of which (96 per cent.)
benefit from full wet-rooms. The portfolio is spread across eight
tenants, three of which are new to the Group, including national
operator, Barchester Healthcare, as well as two regional
operators.
The properties each benefit from long-term occupational leases
with RPI-linked caps and collars, with a weighted average unexpired
lease term of approximately 22 years. The commercial terms of each
of the occupational leases are consistent with equivalent leases in
place across the Group.
Development site in Weymouth
The development is being undertaken by one of the UK's leading
care home developers, LNT Group, and upon reaching practical
completion the care home will be leased to experienced, regional
operator, Chanctonbury Healthcare, on a 35-year, full repairing and
insuring lease. Chanctonbury Healthcare will represent a new tenant
to the Group.
Work on site has already commenced and practical completion is
expected to be reached in June 2022. The development is being
undertaken on a fixed price contract with the developer and, in
line with previous forward funding agreements, the Group will earn
interest on capital deployed through the construction phase.
Long-term institutional debt facility
The Company has completed a GBP63 million committed term loan
facility (the "Facility") with Phoenix Group ("Phoenix"), an
existing lending partner, utilising the full GBP100 million of new
facilities which had been allocated and in diligence. The Facility
carries an aggregate fixed rate of interest of 3.138% per annum on
a 15-year term, maturing in January 2037.
Following the drawdown of the Facility, which is being used to
finance the acquisitions and temporarily repay a portion of the
Group's revolving credit facilities, the Group will have a net LTV
of 21%; a weighted average term to maturity of its debt facilities
of 7.5 years; and a weighted average cost of drawn debt, inclusive
of amortisation of arrangement costs, of 3.08%.
The Group has undrawn flexible debt facilities of GBP97 million
which will be used to fund portfolio commitments and the
acquisition pipeline, to which the Group's investible capital is
allocated.
The Group's total borrowing capacity now stands at GBP320
million comprising the Facility, the existing GBP87 million Phoenix
facilities repayable in 2032 and existing facilities with The Royal
Bank of Scotland plc (GBP70 million committed term loan and
revolving credit facility repayable in 2025) and HSBC plc (GBP100
million revolving credit facility repayable towards the end of
2024).
John Flannelly, Head of Investment at Target Fund Managers,
commented:
"We are pleased to have deployed the proceeds of the recent
equity issuance so quickly, whilst agreement of the new 15-year
term facility, the longest duration yet, will support us in our
objective to provide stable returns to shareholders with long-term
fixed interest costs matched against the inflation-linked long
income that is generated from our portfolio.
"The acquisition of the 18-care home portfolio increases the
size of the Group's existing portfolio by approximately 20 per cent
and demonstrates the Group's ability to undertake transactions of
scale. The quality of the real estate, combined with the
diversified nature of the tenant base and the attractive pricing,
underpins our investment thesis for this acquisition.
"On completion next year, the Weymouth asset will be a
best-in-class care home in a location which demonstrates favourable
demographics, whilst we are also pleased to be further diversifying
our tenant base by partnering with a new, experienced operator in
Chanctonbury Healthcare.
"These two transactions are strongly aligned with the Group's
strict investment criteria as we continue our highly disciplined
approach to the deployment of capital. We have a number of other
transactions at advanced stages of due diligence and expect to be
in a position to make further announcements in due course."
All enquiries: Kenneth MacKenzie / John Flannelly
/ Gordon Bland
Target Fund Managers 01786 845 912
Mark Young / Mark Bloomfield
Stifel Nicolaus Europe Limited 020 7710 7600
Dido Laurimore / Claire Turvey / 020 3727 1000
Richard Gotla targethealthcare@fticonsulting.com
FTI Consulting
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the Market Abuse Regulations (EU) No. 596/2014
which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended. Upon the publication of this
announcement via Regulatory Information Service, this inside
information is now considered to be in the public domain.
Notes to editors:
UK listed Target Healthcare REIT plc (THRL) is an externally
managed Real Estate Investment Trust which provides shareholders
with an attractive level of income, together with the potential for
capital and income growth, from investing in a diversified
portfolio of modern, purpose-built care homes.
The Group's portfolio at 30 September 2021 comprised 79 assets
let to 28 different tenants with a total value of GBP702.7
million.
The Group only invests in modern, purpose-built care homes that
are let to high quality tenants who demonstrate strong operational
capabilities and a strong care ethos. The Group builds
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.
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END
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