Target Healthcare acquire specialist care homes in £20.4 million deal

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Target-Care Industry News (250 x 90)Acquisition of Three Purpose-Built Elderly Care Homes and Specialist Care Facilities-announced on the Stock Exchange.

Target Healthcare REIT Limited, a specialist investor in UK care homes, has today announced that it has acquired three purpose-built care homes and four specialist care bungalows from Zest Investment Group for approximately £20.4 million including acquisition costs. The acquisition is in accordance with the Company’s investment policy.

Located in Norfolk and Northern Ireland, each of the care homes offers a combination of residential, nursing and dementia care. One of the homes also provides specialist care for individuals with learning disabilities, autism and complex physical disabilities.

Accommodating up to 255 residents, the properties offer a range of facilities, including generously proportioned single bedrooms with en-suite wetroom facilities; spacious public areas; as well as activity rooms, hair-dressing salons and therapy rooms.

The care homes will continue to be leased to the existing operator, Priory Group, for a period of up to 28 years. The transaction represents an initial yield in excess of 7% and the rents payable under the leases are subject to fixed annual rental uplifts.

Priory Group was established in 1980 and is the UK’s largest provider of mental health and elderly care services. The group operates 279 facilities across four divisions nationally, including acute psychiatric hospitals; secure and step-down mental health units; residential care homes; and specialist schools and colleges. The elderly care division, Amore, was established in 2009.

The completion of this transaction means the Company has now invested in excess of £110 million (including acquisition costs) funded via a combination of equity and bank debt. As announced in the Circular of 18 June 2014 the Company is discussing with its advisers a proposal to raise additional equity.

The selling agents on this transaction were Vector Property Group and Knight Frank.

Kenneth MacKenzie, Managing Partner of Target Advisers LLP, commented on the acquisition:

“Completing this acquisition not only adds a further three purpose-built elderly care homes and specialist care facilities to the portfolio, but also broadens the Company’s tenant base with the inclusion of a well-established, national operator. We continue to grow the Company’s investment pipeline and have approximately £30 million of deals in advanced, non-binding legal negotiations.

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