REG - Target H'care REIT - Disposal of four care homes for £44.5 million

Target Healthcare ReitAnnouncement

27/06/2024 07:00

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RNS Number : 0474U  Target Healthcare REIT PLC  27 June 2024

27 June 2024

Target Healthcare REIT plc and its subsidiaries

("Target Healthcare" or "the Group")

Disposal of four care homes for £44.5 million

Target Healthcare (LSE: THRL) announces that it has completed the disposal of
four UK care homes for £44.5 million to the incumbent tenant. The sale price
reflects a modest premium to the portfolio's carrying value at both 31
December 2023 (the latest date prior to the offer being received) and 31 March
2024, and an implied net initial yield of 5.64%.

Proceeds from the disposal, which represented 326 beds and c.4.6% of the
Group's overall portfolio value, will enable a partial repayment of the
Group's revolving credit facilities and therefore reduce its unhedged interest
cost. Overall, the disposal reduces net LTV by approximately 3.8%.

These assets were originally constructed in 2007/08, and were consequently
amongst the oldest assets in the Group's portfolio, and had a c.12% lower
gross internal floor space per resident than the portfolio's weighted average.
In addition, these assets represented the Group's four shortest lease terms,
with an average of 13.6 years remaining. Following the disposal, the
portfolio's weighted average unexpired lease term increases to 26.3 years from
25.8 years, and the Group's weighting to Yorkshire and the Humber reduces, an
area that was previously its largest geographical exposure.

These properties were originally acquired as part of the significant portfolio
acquisition in December 2021. Despite the relatively short holding period for
a property investment, this disposal enabled the Company to crystalise
significant value from these assets, resulting in an annualised ungeared IRR
in excess of 7% over the period of ownership (including both acquisition and
sales costs) and is a testament to the Group's asset management expertise.

Scott Steven, Head of Asset Management at Target Fund Managers, commented:

"These care homes have been a successful investment for the Group, delivering
a consistent and attractive rental yield over the period of ownership,
combined with the realisation of a capital uplift on disposal. We care deeply
about the quality of our assets and the services they facilitate; however we
are not unduly attached to holding onto the bricks and mortar where we
identify opportunities to improve both the overall portfolio and the Group's
capital structure. This disposal is a clear illustration of our ability to
pro-actively manage the portfolio to provide an attractive and sustainable
level of income, together with the potential for growth, from our diversified
portfolio of modern, purpose-built care homes."

LEI: 213800RXPY9WULUSBC04

 

All enquiries:

 Target Fund Managers Limited                     01786 845 912

 Kenneth MacKenzie / Gordon Bland

 Stifel Nicolaus Europe Limited                   020 7710 7600

 Mark Young / Rajpal Padam / Catriona Neville

 FTI Consulting                                   020 3727 1000

 Dido Laurimore / Richard Gotla / Talia Shirion   TargetHealthcare@fticonsulting.com

 

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 31 March 2024 comprised 98 assets let to 33 tenants
with a total value of £934.8 million.

The Group 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.

 

Important information

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.

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