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Target Healthcare REIT acquires Kingsmead House in Mytchett, near Camberley, for £6.5m

Target Healthcare REIT has announced that it has acquired Kingsmead House, a care home in Mytchett, near Camberley, Surrey, for £6.5m including acquisition costs. The company says that Kingsmead House (pictured) is a modern, purpose built care home that was completed in 2015 and offers luxurious accommodation with bedrooms looking onto peaceful landscaped gardens.

Kingsmead House has 40 bedrooms over three floors, each with full en-suite wetroom facilities, and each floor also has its own lounge. The home has hairdressing facilities, a putting green and a café/bar and large dining room that acts as the social hub of the home.

The company says that, upon acquisition, the home was leased back to the existing tenant, Care Concern Group, who has operated the home since its opening. The lease is for a term of 35-years and is subject to an RPI-linked cap and collar. The company says that the net initial yield on the transaction is broadly consistent with the overall average of the Group’s portfolio and that Kingsmead house will be the fifth home, in the Group’s portfolio, leased to Care Concern. Of these, two homes are currently operating, whilst contracts have been exchanged on a further two in Yorkshire and Essex.

The company’s most recent fundraising, in May 2016, raised £84m. The company say that the Kingsmead House transaction brings its total funds committed, since the fundraising, to over £57m and that it continues to progress other opportunities.

Separately, the company has announced that it has agreed with The Royal Bank of Scotland to amend and restate the terms of its existing £30m committed term loan and £20m revolving credit facility extending their terms from June 2019 to August 2021. The amendment also provides an option of two further one year extensions thereafter, subject to the consent of RBS. Interest is payable under the Facilities at a rate equal to three month LIBOR plus a lending margin of 1.5% per annum. The company says that this represents a reduction of 50 basis points on the previous margin of 2% and that there are no other material amendments to the facilities.

The company say that the new facilities will allow it to manage its capital structure in line with its investment policy (that is, borrowings over the medium term will represent approximately 20% of the Group’s gross assets at the time of draw down, whilst the revolving credit facility will also provide shorter-term flexible capital to fund the growth of the Group’s property portfolio). It says that, in the event that the full amount is drawn down under the Facilities the Group’s gearing is expected to be approximately 17% of the Group’s gross assets.

Target Healthcare REIT acquires Kingsmead House in Mytchett, near Camberley, for £6.5m : THRL

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