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Target Healthcare acquiring two under-development care homes
Specialist care home investor Target Healthcare has entered into contracts to acquire and forward-fund two new care homes located near Shrewsbury, Shropshire and in Preston, Lancashire, for a cost of around £15.6m, it announced on Monday.
The London-listed real estate investment trust said the completed care homes would be let to Rotherwood Healthcare and L&M Healthcare respectively.
Both properties received planning consent in 2017, with Target intending to fund the development of the sites into 68-bed and a 74-bed homes respectively.
Both properties would comprise full en-suite wet room facilities, large public spaces and a high-quality fit-out.
The developments were to be undertaken on the basis of fixed-price contracts with the developers, and the completed homes would be let on long-term, RPI-linked leases of at least 30 years each, subject to caps and collars.
Consistent with its previous forward funding opportunities, Target would earn a coupon through the construction phase which would support its progressive dividend objective.
The Shropshire home would replace an existing 45-bed home, being one of six care homes currently operated by Rotherwood Healthcare.
On practical completion, the Preston care home would become the fifth care home operated by L&M Healthcare in the north west of England.
Both operators would be new tenants to the group.
Target said both homes were due to open during 2019, with the yields across the transactions said to be consistent with those outlined to shareholders in the recent capital raise.
"Having discussed both of these assets with shareholders in the recent capital raise, we are delighted to announce the completion of these transactions within the timetable we outlined," said Target Fund Managers head of investment John Flannelly.
"These transactions allow us to add additional high-quality, purpose-built homes to the portfolio, and work further with the operators to leverage their experience and grow their offerings in their respective geographic areas.
"We continue to progress other opportunities and expect to make more announcements in the near future."