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£230 million UK acquisition pipeline for Target Healthcare

The healthcare sector continues to generate a steady cashflow for investors in the UK. Target Healthcare, the UK listed specialist investor in purpose-built care homes, has a £230 million acquisition pipeline and it has entered into an exclusivity agreement to acquire what it described as “a major portfolio” of 18 operational care homes.

The portfolio generates annual contracted rent of £9.1 million and has collected 100% of rent throughout the pandemic, the company said. Due diligence is being completed on a further six assets, three operational homes and three forward-fund, pre-let development projects.

Malcolm Naish, Chairman, Target Healthcare

“At a time of increasing investor appetite for the stable, uncorrelated returns that our portfolio has consistently delivered, we believe these transactions will be transformational both in terms of scaling the company and providing greater diversification by tenant and geography, as well as our mission to take a leading role in supporting and improving the UK care sector”, said Malcolm Naish, chairman, Target Healthcare.

Target is also raising £100 million via a share issue under an existing placing programme, at a price of 115 pence per share, which represents a discount of 5.9% to last week’s closing price and a 4.2% premium to the company’s last reported EPRA NAV per ordinary share of 110.4 pence.

The company’s rental income has been substantially unaffected during the pandemic, providing stable and secure cashflow and demonstrating the defensive nature of the assets. In fact, the Covid-19 health crisis has reinforced the need for high-quality, modern, purpose-built care homes that provide a safe environment for residents, Target said.

“Against by far the most challenging backdrop in the company’s history, our modern, purpose-built care home portfolio has been a consistent and robust performer, with rent collection of 95% for the three most recent quarters, continued valuation uplifts and improving occupancy levels,” said Naish.

Since its IPO in 2013, Target Healthcare has built an investment portfolio of 77 properties, externally valued at £684.8 million as at 30 June 2021.

Separately, the company said it has appointed Vince Niblett, who holds similar roles at Forterra and Big Yellow Group, as an independent non-executive director.