Target Healthcare REIT, an investor in UK care homes, has completed its first acquisition since listing its shares on the London Stock Exchange’s Main Market on 7 March 2013.
For a total consideration of GBP14.2m, the company has acquired a portfolio of three purpose built care homes, all constructed in 2012, which are located in Dundee, Arbroath and Huntly.
The homes contain 66, 65 and 60 single, en suite, bedrooms respectively and they have a high ratio of private payers, which befits the quality of the care homes, operator and locations.
These care homes are all let to the existing operator Balhousie Care for a period of 30 years for an aggregate rent of approximately GBP1.1m which represents an initial yield in excess of seven per cent. The rent payable under these leases is subject to an annual uplift in line with the retail prices index subject to a cap and collar.
These properties are in accordance with the company's investment policy and the terms of this acquisition are consistent with the terms that were set out in the prospectus published by the company on 22 February 2013.
Balhousie is Scotland's largest private provider of residential care with over 800 highly dedicated staff devoted to around 800 residents in 22 residential care homes.
Target Healthcare recently raised GBP45.6m from institutional investors, wealth managers and private investors, and intends to have these funds fully invested by around October this year. The company is expecting to pay dividends on a quarterly basis, with an initial dividend of approximately 8p per share in respect of its first financial period to 30 June 2014 (which equates to a dividend yield of 6.0 per cent. per annum).
Kenneth MacKenzie, managing partner of Target Advisers, says: "We are delighted to have completed such an excellent acquisition in the same week as the company was admitted to Official List and to trading on the main market of the London Stock Exchange. This acquisition is typical of the investments the company intends to make. We are looking to acquire the buildings of care home operators that are best-in-class, operators who put the care and welfare of residents, and the staff who provide it, at the very heart of their management philosophy and we believe that there remains strong potential deal flow to invest the proceeds of the recent successful placing."