Target Healthcare has agreed to buy eight care homes and 31 retirement apartments for £81.3m in four separate transactions.
The business has completed the purchase of a portfolio of five care homes, totalling 362 bedrooms, leased to Bondcare on 35-year leases.
In Yorkshire, the company has exchanged contracts to acquire two further care homes in Scarborough and Pudsey, totalling 172 bedrooms. Both are let to a subsidiary of Burlington Care on 35-year leases.
In addition, Target Healthcare has acquired the freehold to 31 retirement living apartments in Cirencester, Gloucestershire, adjacent to one of its existing care homes. Aura Care Living, which operates the care home, will continue to act as management company for the apartments.
The firm has also bought a care home in Christchurch, Dorset, comprising 80 bedrooms. It is let on a 30-year term to a subsidiary of Encore Care Homes.
The acquisitions had been identified in advance of Target Healthcare’s recent £80m equity placing and will be paid for from the money raised from this placing.
John Flannelly, head of investment at Target Fund Managers, said: “Having completed the successful September fundraising, it is very pleasing to have deployed the proceeds so soon after, in a group of assets that meet our strict investment criteria and at yields that are consistent with previous similar acquisitions.
“There is continued strong investor appetite for the stable and sustainable long-duration rental income available from care home real estate, and we continue to develop our pipeline of further opportunities, leveraging our deep sector experience and proprietary in-house research capabilities.”
Q3 results
Target Healthcare has also reported a EPRA NAV per share of 107.9 pence for the third quarter of 2019, resulting in a NAV total return for the period of 2%.
At the end of the September the firm’s portfolio was valued at £511.4m and comprised 63 assets, having increased by more than 2.1% over the quarter. Around 1.4% of this growth was due to acquisitions and further investment into developments, net of portfolio disposals.
The portfolio’s contractual rent increased by 2.2% over the quarter, of which 1.7% is derived from its acquisitions, disposals and completion of developments.
The portfolio’s weighted average unexpired lease term has shortened slightly to 28.91 years and has an EPRA topped-up net initial yield of 6.19% based on an annualised contractual rent on expiry of lease incentives of £32.9m.
Target Healthcare’s total borrowings stood at £130m at the end of September, with a gross loan-to-value ratio of 25.4%.
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