Target Healthcare has completed the disposal of four UK care homes for £44.5m to the incumbent tenant.
The sale price reflects a modest premium to the portfolio’s book value and an implied net initial yield of 5.64%.
Proceeds from the disposal of the assets, which were built in 2007/8 and are amongst the oldest in the group’s portfolio, will enable a partial repayment of Target’s revolving credit facilities and will reduce its unhedged interest cost.
The assets, which provide 326 beds, have a circa 12% lower gross internal floor space per resident than the portfolio’s weighted average and represent the group’s four shortest lease terms, with an average of 13.6 years remaining.
Scott Steven, head of asset management at Target Fund Managers, said: “These care homes have been a successful investment for the group, delivering a consistent and attractive rental yield over the period of ownership, combined with the realisation of a capital uplift on disposal. We care deeply about the quality of our assets and the services they facilitate; however we are not unduly attached to holding onto the bricks and mortar where we identify opportunities to improve both the overall portfolio and the group’s capital structure.
“This disposal is a clear illustration of our ability to pro-actively manage the portfolio to provide an attractive and sustainable level of income, together with the potential for growth, from our diversified portfolio of modern, purpose-built care homes.”
