NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN THE UNITED KINGDOM) OR TO ANY NATIONAL, RESIDENT OR CITIZEN OF THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA (OTHER THAN THE UNITED KINGDOM)
This announcement is for information purposes only and shall not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire any ordinary shares of Target Healthcare REIT Limited in any jurisdiction in which any such offer or solicitation would be unlawful.
TARGET HEALTHCARE REIT LIMITED
("Target" or the "Company", together with its subsidiaries, the "Group")
PROPOSED INITIAL PLACING, OFFER FOR SUBSCRIPTION AND PLACING PROGRAMME
Further to its announcement on 12 April 2016, the Board of the Company is pleased to announce a placing programme and the launch of an initial placing (the "Initial Placing") and offer for subscription (the "Offer") to raise gross proceeds of approximately £75 million.
Highlights:
· Proposal to issue up to 71,428,571 new ordinary shares ("New Shares") at 105 pence per New Share by way of the Initial Placing and Offer
· The Group has a near-term pipeline of £68.7 million which includes £14.9 million of assets it has forward committed to fund, and £53.8 million of investment opportunities, the majority of which it hopes to acquire, or to have committed to acquiring, by 30 June 2016
· In addition, as the investment market has improved, the Investment Manager has also made initial indicative offers on an additional £32.3 million of assets, where the timetable for potential completion remains uncertain pending due diligence and vendor negotiations
The Company is currently preparing a prospectus in connection with these proposals which will be published in due course following approval by the UK Listing Authority ("UKLA").
Malcolm Naish, Chairman of the Company, said:
"Target Healthcare REIT has grown its asset base significantly since 2013 against the backdrop of a competitive market. In doing so the Company has also deepened the diversification of its roster of quality tenants, providing further strength and reassurance to our investors. The existing portfolio has delivered strong and sustainable rental returns, coupled with capital growth and the Company remains committed to these aims. This transaction will allow Target Healthcare REIT to take advantage of a substantial pipeline of opportunities in both the near- and longer-term which we believe will provide significant value to shareholders."
Expected timetable
Initial Placing and Offer |
|
Initial Placing and Offer opens |
18 April 2016 |
General Meeting |
12 noon on 6 May 2016 |
Latest time and date for receipt of Application Forms under the Offer |
11 a.m. on 9 May 2016 |
Latest time and date for receipt of commitments under the Initial Placing |
1 p.m. on 9 May 2016 |
Initial Admission and dealings in New Shares commence |
8.00 a.m. on 12 May 2016 |
The dates and times specified above are subject to change without notice. References to times are to London times. Any changes to the expected timetable will be notified by the Company through a Regulatory Information Service.
Terms used and not defined in this announcement bear the meaning given to them in the Prospectus to be published in due course.
Enquiries:
Target Advisers
Kenneth MacKenzie
01786 845 912
Stifel Nicolaus Europe Limited
Mark Young, Neil Winward, Tom Yeadon, Roger Clarke
020 7710 7600
R&H Fund Services Limited
Martin Cassels
0131 550 3760
Quill PR
Fiona Harris, Sam Emery
020 7466 5058 / 020 7466 5056
Background to and benefits of the Proposals
Target listed on the London Stock Exchange's Main Market on 7 March 2013 with an investment remit to focus on a diversified portfolio of modern, purpose-built care homes that are let to quality tenants who demonstrate strong operational capabilities and a strong care ethos.
Target's care homes typically benefit from favourable local dynamics and long leases at sustainable rental levels. These leases are typically structured to include annual rental uplifts (RPI linked or fixed) and cure rights. Target has built a portfolio of quality assets in the right locations with the services and facilities that suit its tenants' needs. This is set against a background of an increasing UK over 85s population, a shift in how society cares for its elderly and the provision of this care, as well as an insufficient new supply of ensuite, fit-for-purpose rooms.
As at 31 March 2016, the Group owned thirty-three care homes with a market value of £184.0 million.
After the consideration of its ongoing working capital and corporate requirements together the Group's cash reserves and the remaining headroom in its bank facility provide the Group with approximately £30 million of available cash for new investments. The Group has a deferred consideration payment due in relation to the Sutton Care Home and has entered into forward commitment arrangements in relation to a care home in Tonbridge, Kent and a care home in Sheffield, together totalling £14.9 million. The Group has also entered into negotiations in relation the acquisition of eight further care homes situated in Cheltenham, Sutton-in-Ashfield, Thorne, Halifax, Southport, Frinton, Warrenpoint and Camberley for an aggregate amount of £53.8 million (including costs). These acquisitions will, if they are all completed, introduce four new operating tenants to the Group's property portfolio. Although the Company has not entered into any legally binding contracts in relation to any of these eight properties, the Company is expecting to acquire or commit to acquiring the majority of these properties by 30 June 2016.
Target Advisers is also currently in early stage discussions and has made indicative initial offers in respect of a number of further attractive acquisition opportunities with an aggregate cost of approximately £32.3 million.
The Board believes the Initial Placing and Offer will confer the following benefits for shareholders and the Company:
· providing additional capital will enable the Company to take advantage of current investment opportunities in the market and make further investments in accordance with the Company's investment policy and within its appraisal criteria;
· as the Company is actively considering a number of specific property opportunities, the Initial Placing and Offer will assist in matching the capital requirements of the Company to the investment opportunities identified;
· the average net initial yield on the identified pipeline opportunities is expected to be approximately 7%. The new investments should therefore enhance the Company's income focus and provide further asset and income diversification for shareholders;
· the Initial Placing and Offer should allow all the Company's UK shareholders to participate in the fundraise, subject to the terms and conditions of the Initial Placing and Offer as set out in the Prospectus
· providing a larger equity base over which the fixed costs of the Company may be spread, thereby reducing the Company's ongoing costs per share; and
· further diversification of the shareholder register, potentially enhancing liquidity in the Company's shares.
The Initial Placing and Offer
The Company is proposing to issue up to 71,428,571 New Shares at 105 pence per share to raise gross proceeds of approximately £75 million.
In the event that the number of New Shares applied for under the Initial Placing and Offer exceeds 71,428,571, the Board reserves the right to increase the size of the Initial Placing and Offer up to 100 million shares, taking into account the time it would take to invest the additional proceeds. In the event that the Board decides not to increase the size of the Initial Placing and Offer, or the number of applications continues to exceed the number of available New Shares post any increase, it will be necessary to scale back applications under the Initial Placing and Offer. In such event, New Shares will be allocated at the discretion of the Board. The Board is mindful of the support it has received from existing shareholders and will have regard for their existing shareholdings when determining the final allocations.
The Initial Placing and Offer will be subject to the terms and conditions set out in the Prospectus which is expected to be published by the Company in due course.
The New Shares, when issued, will rank in full for all dividends or other distributions declared, made or paid after the Initial Admission and in all other respects will rank pari passu with the existing Ordinary Shares. For the avoidance of doubt, the New Shares will not qualify for the dividend declared on 15 April 2016 in respect of the period from 1 January 2016 to 31 March 2016.
The Initial Placing and Offer are conditional on:
(i) the Placing Agreement becoming wholly unconditional (save as to Initial Admission) and not having been terminated in accordance with its terms prior to Initial Admission;
(ii) Initial Admission occurring by 8.00 a.m. on 12 May 2016 (or such later date as the Company and the Placing Agent may agree in writing, being not later than 8.00 a.m. on 27 May 2016); and
(iii) Shareholders approving the special resolution to disapply the pre-emption rights attaching to up to 100 million New Shares at the General Meeting.
The Board intends to apply the net proceeds of the Initial Placing and Offer in accordance with the Company's investment objective and policy (to which the Board intends to propose amendments as detailed below). The Initial Placing and Offer is not being underwritten.
Applications will be made to the UKLA for admission of the New Shares to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities ("Initial Admission"). It is expected that the Initial Admission will become effective and that unconditional dealings in the New Shares will commence at 8.00 a.m. (London time) on, or around, 12 May 2016.
The New Shares will be issued in registered form and may be held in uncertificated form. The New Shares allocated will be issued to Placees through the CREST system unless otherwise stated. The New Shares will be eligible for settlement through CREST with effect from Initial Admission.
The Company is also proposing today a placing programme (the "Placing Programme") (under which the Initial Placing will form the first tranche) to provide the Group with operational flexibility and allow it to react quickly in relation to the acquisition opportunities noted above. Any subsequent placings under the Placing Programme will only be at a premium to the last published EPRA net asset value per share.
Dickson Minto, W.S. will be acting as the Company's sponsor in respect of the Initial Placing and Offer and the Placing Programme.
Further details of the Initial Placing and Offer and of the Placing Programme will be set out in the Prospectus which is expected to be published in due course.
Notice of General Meeting
A notice, together with a shareholder circular which sets out further details of the Initial Placing and Offer and the Placing Programme (the "Circular"), will be posted to shareholders to convene a general meeting to approve, amongst other things, the Initial Placing and Offer and the Placing Programme. The general meeting is to be held at the offices of Dickson Minto W.S., 16 Charlotte Square, Edinburgh EH2 4DF at 12 noon on 6 May 2016.
The Group remains focused on selectively securing further assets, at the right price. The Circular sets out resolutions further to the above which, if passed, will allow for certain amendments to the Company's investment policy and give the Group greater flexibility to execute this objective. Amendments proposed will allow for:
· Limited investment in assets which require development or are under development and which when completed would fall within the Company's investment policy, including by means of forward funding of developments, in addition to its existing ability to make forward commitments to purchase completed developments. The Company will not undertake speculative development (being where there is no lease arrangement in place in respect of the majority of the asset) and any investment of such nature will be limited to the extent that the gross budgeted development costs to the Group of all such developments, including forward funding and forward commitments, will not exceed 25% of the Group's gross assets at the commencement of the relevant development.
· An increase in the investment limit in relation to the other healthcare assets from 10% to 15% of gross assets, measured at the time of investment, in order to provide further flexibility to the Company.
Important Information
The content of this announcement, which has been prepared by, and is the sole responsibility of, Target Healthcare REIT Limited, has been approved by Target Advisers LLP solely for the purposes of section 21 (2)(b) of the Financial Services and Markets Act 2000 (as amended).
The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment from time to time.
Stifel Nicolaus Europe Limited, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Stifel Nicolaus Europe Limited or advice to any other person in relation to the matters contained herein.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, Target Advisers LLP and Stifel Nicolaus Europe Limited expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
None of the Company, Target Advisers LLP or Stifel Nicolaus Europe Limited, or any of their respective affiliates, accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, Target Advisers LLP and Stifel Nicolaus Europe Limited, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.
This announcement does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the prospectus being considered for publication by the Company in due course, conditional on relevant shareholder approvals being granted. The contents of such prospectus will, if published, supersede the information in this announcement.
This announcement is an advertisement and not a prospectus and is strictly confidential, may not be distributed to the press or any other person, may not be reproduced in any form and may not be published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. Nothing in this document constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Copies of the prospectus, if published, will be available from the Company's website www.targethealthcarereit.co.uk
The shares have not been, nor will they be, registered under the US Securities Act of 1933, as amended or with any securities regulatory authority of any state or other jurisdiction of the United States or under the applicable securities laws of any member state of the European Economic Area (other than the United Kingdom), Australia, Canada, Japan or South Africa. Subject to certain exceptions, the shares may not be offered or sold in any member state of the European Economic Area (other than the United Kingdom), the United States, Australia, Canada, Japan or South Africa or to or for the account or benefit of any national, resident or citizen of any member state of the European Economic Area (other than the United Kingdom), Australia, Canada, Japan or South Africa or any person located in the United States. The issue and the distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.
