Target Healthcare REIT, a specialist closed-ended company focused on investing in modern, purpose-built care homes, has raised GBP45.5m with its latest placing and offer for subscription.
The company launched in March 2013, subsequently raising gross proceeds of GBP50.3m (excluding the recent placing). Having invested the majority of its available cash reserves with the acquisition of ten quality care homes, the additional GBP45.5m raised will be used to further expand the company’s investment portfolio of care homes across the UK.
In building its portfolio, Target Healthcare REIT seeks to invest in modern, purpose-built homes, thus “future proofing” the assets against obsolescence and benefiting from the trend away from older, typically converted, care home properties. Let to well-established and quality care operators, the properties are located in areas where there is either surplus demand or a predominance of poorer quality facilities. With the demographic in the UK continuing to age, it is the company’s belief there will be an increased demand for care, particularly needs-based, end-of-life and specialist care such as dementia, and consequently this is the area of investment focus for the company.
The existing investment portfolio comprises ten purpose-built care homes, with a market value of approximately GBP46.9m. The properties are let to three quality care home operators, with an average lease period in excess of 30 years. The leases are subject to annual, upward-only rental reviews linked to RPI, subject to a cap and collar.
The company’s investment objective is to provide investors with an attractive level of income together with the potential for capital and income growth. It is currently targeting a gross dividend to shareholders of six per cent per annum, paid quarterly, and it is the board's policy that in paying dividends it should target a high level of dividend cover.
The company’s investment adviser, Target Advisers LLP, has comprehensive links with the operators, agents, private equity players and developers in the healthcare sector. Through this well-developed network, it has been able to source the existing investment portfolio and is currently considering a pipeline of assets across the UK.
Kenneth MacKenzie, managing partner at Target Advisers, says: “We are delighted to have successfully raised an additional GBP45.5m to facilitate the further growth of Target Healthcare REIT. We believe this reflects not only the positive demand drivers for acute elderly healthcare in the UK, but also the quality of the existing investment portfolio and supports our ethos of investing in modern, purpose-built care homes let to high quality operators with a strong focus on resident care.”