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Target Healthcare REIT buys in Yorks and Lancs

11
2018
July

Target Healthcare REIT buys in Yorks and Lancs – Target Healthcare has completed the acquisition of two properties for a total value of GBP13.9 million (including acquisition and forward funding costs):

Target acquired the freehold of Cantley Grange, a modern purpose-built care home in Doncaster, South Yorkshire.  The 40-bed home, which opened in 2007, has full en suite wetroom facilities and is operated by Orchard Care Homes.  The home is let on a 35-year full repairing and insuring lease, with 24 years left to run and is subject to annual RPI-linked rent increases subject to a cap and collar. Orchard is an established care operator with homes across the UK and is an existing tenant of the Group across five of its assets.

They say that Cantley Grange provides a high standard of accommodation for residents in an area where the Group’s research demonstrates a shortage of modern market-standard care facilities.  It has been acquired at a yield which is similar to other Orchard assets in the Group’s portfolio and slightly higher than the Group’s overall average property yield.

Target has also acquired a development site and entered into a forward funding agreement in Burscough, Lancashire, just outside Ormskirk.  The site has planning consent for an 80-bed care home.  The development will be funded under a capped development contract, to create a high-quality facility that meets the investment requirements of the Group.  They believe that the wealth characteristics and demographics of the local area are supportive of such a home, which will offer nursing care once complete.

The development will be carried out in partnership with Athena Healthcare, an existing tenant of the Group in two other locations where they say they have demonstrated a strong care ethos and excellent commercial acumen.  On completion of the building, which is expected in Q4 2019, the home will be let to Athena for 35 years on a full repairing and insuring lease with RPI-linked rent increases subject to a cap and collar.   Athena is a growing operator with five operating homes and several others in development, including a site in Merseyside with the Group.

The yield is consistent with the overall average for the portfolio.

John Flannelly, head of investment at Target Fund Managers, commented: “We are pleased to see completion of these transactions, adding further quality assets to the Group’s portfolio and enabling us to extend our relationship with two proven operators who deliver well-run homes and high-quality care in line with our ethos.  Combined with the Aura Care Living transaction announced in June and the acquisitions announced in March, the Group has now deployed around 70% of the equity raised in February of this year.  The remainder of available capital is expected to be committed in the near future.”

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