Target Healthcare REIT acquires Scottish care home and Buckinghamshire development site for GBP33m

Target Healthcare (LSE: THRL), a UK listed specialist investor in modern, purpose-built care homes, has completed the acquisition of an established luxury care home in Scotland and has also acquired a site in Buckinghamshire and contracted to forward fund the subsequent development of a pre-let care home.

The total investment for the completed homes is GBP33 million including transaction costs.  The acquisition yields are representative of assets of a similar standard and location within the Group’s portfolio and both homes benefit from long-term occupational leases with RPI-linked cap and collars.
 
The home in Scotland is well established as one of the best homes in the region with strong occupancy largely comprised of private fee paying residents.  It is situated in a densely populated area and has large bedrooms with full en-suite wetroom facilities, exceptional living space for the residents and impressive outdoor space on all floors.

The care home will be operated on a 35 year lease by Caring Homes group, a well-respected family-run group with care homes throughout the UK.  Caring Homes is an existing tenant who operates two other homes in the Group’s portfolio.
 
The Group has also acquired a development site in Olney, Buckinghamshire and has entered into a development agreement to deliver a new pre-let care home. On completion, the care home will benefit from the favourable underlying demographic characteristics and affluence of the local area and will be leased to Kingsley Healthcare, an existing Target Healthcare tenant, on a 35 year, full repairing and insuring lease. The residents will benefit from high quality facilities, easily accessible outside space on all floors and, in line with the Group’s strict investment criteria, full en-suite wetroom facilities.
 
Having received planning consent in March 2021, construction work is due to commence in H2 2021 with practical completion targeted for H1 2023. The development will be undertaken on a fixed-price contract with the developer, a separate Kingsley Healthcare entity. In line with previous forward funding agreements, the Group will earn interest on capital deployed through the construction phase.
 
John Flannelly, Head of Investment at Target Fund Managers, says: “We are very pleased to announce the completion of these two transactions. The Scottish care home, which was part of the pipeline of assets included in our most recent equity fundraise, adds a market-leading care home to the Group’s portfolio – one which provides impressive facilities for its residents and allows the delivery of great care in outstanding surroundings – and we are delighted to be further developing our relationship with Caring Homes.
 
“The Buckinghamshire asset will be a best in class care home and we are excited to be collaborating with Kingsley on this development which is expected to be the first in a series of new projects with this highly regarded operator.
 
“These two transactions are fully aligned with the Group’s strict investment criteria as we continue our highly disciplined approach to the deployment of capital. All the equity raised in March 2021 is allocated to Board approved acquisitions that are in advanced stages of due diligence.”