Acquisition of care home in Nottingham

28 June 2019

Target Healthcare REIT Limited and its subsidiaries

("Target Healthcare" or "the Group")

 Acquisition of care home in Nottingham, for £7.6 million

Target Healthcare (LSE: THRL), the UK's listed specialist investor in modern, purpose-built care homes, announces that it has completed the acquisition of a property in the city of Nottingham for approximately £7.6 million, including transaction costs, through a sale and leaseback.

Constructed in 2013, Acorn House comprises 64 bedrooms, each with full en suite wetroom facilities, over three floors.  It is close to the centre of Nottingham in a densely-populated area where the Group's research has shown there is a strong demand for this type of modern home, of which there is low supply.

The investment fully meets the Group's strict criteria, including being recently purpose built with modern facilities and a high quality of care provision, and is backed by a strong trading history with consistently high occupancy providing strong rent cover.

The home has been operated since opening by Acacia Care, a local operator which has three homes, another of which is already owned by Target Healthcare.  They have plans to grow further over the coming years.  The home has been leased back to them on a 35 year lease with an RPI-linked cap and collar.  The yield on acquisition is consistent with the overall yield in the THRL portfolio and, as the home is already trading, there is no rent-free period.

John Flannelly, Head of Investment at Target Fund Managers, commented:

"This acquisition brings the number of assets in our portfolio to 63 including developments, and offers us the opportunity to support the growth of a tenant we regard as an operator of quality.  The home has positive CQC ratings and provides a warm and welcoming environment for its residents.

"In addition to this investment, we have recently seen three forward fund developments in our portfolio open to residents.  The care home market is undersupplied with the quality of asset which we provide, while demand is growing apace, underpinning our conviction in the portfolio we are assembling."

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Notes to editors:

UK listed Target Healthcare REIT Limited (THRL) is an externally managed Real Estate Investment Trust which aims to provide shareholders with an attractive level of income, together with the potential for capital and income growth, through the assembly and management of a portfolio of modern, purpose-built care homes.

The Group's current portfolio at 31 March 2019 comprised 61 assets including five under development with a total portfolio value of £477.1m, with a further acquisition having subsequently completed in April 2019.  On completion of the developments, the Group will have 25 different tenants.  

The Group only invests in modern, purpose-built homes that provide the best environments for residents and their care providers and ensure they are let at a sustainable rent. The Group aims to build 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.