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Target Healthcare hit by loss of tenant

Target Healthcare hit by loss of tenant – Target Healthcare REIT has received notice from one of its tenants, Orchard Care Homes, which operates six homes in the Target portfolio, of its intention to exit these six leasehold homes as part of a wider business restructuring.

Target says that it is continually preparing for such contingencies and is in active discussions with alternative care home operators to ensure an orderly handover of operations with minimal disruption to the residents. Target expects to continue to receive rental income from the six assets up until the end of the year and has a further four months of rental deposits held in reserve.

Target has 26 different tenants across its 63 homes. It says that it has a successful track record of replacing operators with no disruption to the residents and a minimal value impact.

The homes operated by Orchard have recently generated (on average) rent cover that exceeded the equivalent rental obligation.by a low amount. However, Target expects to see management and rent covers improve at these assets when the new tenants are signed up. The six assets were valued at an average net initial yield of 7.15 per cent., as at 30 June 2019, reflecting a significant discount to the portfolio average net initial yield of 6.26 per cent. Having spoken to its independent valuer, the company does not believe this event will have a material impact on the value of the homes.

THRL : Target Healthcare hit by loss of tenant

 

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