Target Healthcare REIT proposes fund raising of at least £15m

Target Healthcare REIT has announced a proposal to issue up to 15,652,803 new ordinary shares (9.99% of its existing share capital) by way of a placing. The company says that it will determine the price at which the shares will be placed based on the level of demand from potential investors, with the price expected to be set in the range of 103 to 106 pence per share. However, this will be at a price which represents a premium to the last published NAV (currently 99.2 pence per share), and will therefore be NAV accretive to existing shareholders. The placing is expected to be on 19 November 2015.

As at 30 September 2015, the Group owned 28 care home assets valued at £145.8m and had a NAV of 99.2 pence per share. As announced on 8 October 2015 and 13 November 2015, the Group has completed an acquisition of a further care home in Kingston-Upon-Hull for a total consideration of approximately £6.2m and an acquisition of two purpose-built care homes on Tyneside for approximately £12.8m since the Company last raised new capital in March 2015.

The company says that it continues to be acquisitive and, in addition to the £19m of recent acquisitions, the Group expects by the end of 2015 to complete on £6m of care home assets where terms have already been agreed. In addition, the Group has identified and agreed terms on a further £14m of assets and it hopes to finish its due diligence and complete on the majority of these assets in early 2016. A further pipeline of opportunities estimated at in excess of £40m has been identified and is being actively evaluated although currently no terms have been agreed on these assets.

The Group has cash reserves available for investment of approximately £6.3m with near term investment opportunities and commitments totalling £33.1m. In light of the market opportunities it is currently seeing, the Company says that it intends to raise additional funds to grow the portfolio in an efficient manner, further diversifying the asset base while limiting the impact of cash drag on the Company’s returns in its view. The company says that the average net initial yield on the identified pipeline opportunities is expected to be around 7% and that the new investments should enhance the its income focus as well as providing further asset and income diversification for shareholders.

In the event that the number of New Ordinary Shares applied for under the placing exceeds 15.6m shares that the company proposes to issue in relation to the placing, the Company may sell some or all of the existing shares that are currently held in treasury to satisfy this extra demand.

Target Healthcare REIT proposes fund raising of at least £15m : THRL