The Board of Directors of Target Healthcare REIT has announced a proposed placing of up to 25,000,000 ordinary shares of no par value in the Company in accordance with the terms and conditions of the Placing Programme established under the prospectus issued on 5 September 2014, as supplemented (the “Placing”).
Over the last six months, the Company has raised gross proceeds of £22.3 million and has fully utilised these proceeds through the acquisition of five purpose-built care homes for gross consideration of £25.8 million. The Company has identified a further pipeline of income accretive investment opportunities with an investment value of over £100 million with an average net initial yield in excess of 7.0%. Target intends to use its Placing Programme to grow its equity base in a disciplined manner. Hence, this Placing will be capped at a fixed amount that matches the cost of the near term pipeline opportunities.
The Placing will be non pre-emptive with the price per New Share to be determined at the close of the book building process which is expected to be on 3 March 2015. The Company, in consultation with Oriel Securities Limited (“Oriel”), will determine the price of the New Shares based on the level of demand from potential investors, with the price expected to be set in the range of 100 to 104 pence per New Share. In any event, the New Shares will be issued at a price which represents a premium to the most recent Net Asset Value (“NAV”) per Ordinary Share and will therefore be NAV accretive to existing shareholders.
Malcolm Naish, Chairman of Target Healthcare REIT, said:
“We have grown our asset base significantly since 2013 and see a strong pipeline of further, high calibre acquisitions over the coming year. We have been particularly pleased with the Group’s performance, with the existing portfolio delivering strong and sustainable rental returns and being well positioned to provide capital growth to the Company.”
Kenneth Mackenzie, Managing Partner of Target Advisers LLP, said:
“To date, we have invested £142.7 million in modern, purpose built care homes in the UK. These are let to selected, high quality operators with a strong focus on resident care. The additional funds raised will facilitate further acquisitions, in line with our robust investment strategy, as we look to continue to grow Target Healthcare REIT. The Group benefits from changing UK demographics with higher numbers of over 85 year olds, raising demand for acute elderly healthcare. We have identified a strong pipeline of future acquisition opportunities with attractive yields, which will bring further value to our shareholders.”