Target Healthcare has sold nine UK care homes to an institutional investor for £85.9m.
The sale, which represents the company’s largest disposal since its IPO in 2013, transacted at a 11.6% premium to the group’s carrying value as at 30 June 2025, and the sale price represents an implied net initial yield of 5.24%.
The care homes provide 537 beds and account for circa 8.3% of the group’s overall portfolio value as at 30 June 2025. The deal reduces the group’s exposure to its current largest tenant, HC‑One/Ideal Carehomes, from circa 16.0% to circa 8.8% based on rental income. Target Healthcare said the transaction would create a more balanced tenant diversification across its portfolio.
The company has also refinanced its banking facilities at improved terms with The Royal Bank of Scotland and HSBC UK replacing its existing £170m facilities with these banks, which were due to expire in November 2025.
As part of the refinancing, the company has also agreed accordion facilities of a further £70m with these banks providing the ability to increase the banking facilities to an aggregate of £200m, subject to lender consent.
Kenneth MacKenzie, CEO of Target Fund Managers, said: “We are delighted to announce this landmark disposal of nine homes, at a substantial premium to carrying value. The sale further underlines the desirability and demand for the modern, purpose-built care home portfolio we have carefully curated over the years.
“The decision to divest these assets was primarily driven by our desire to actively manage the portfolio – including reducing our largest tenant exposure to under 10% – and to take advantage of a favourable market opportunity. As well as crystallising an attractive return for shareholders, it is also a strong validation of our portfolio valuation.
“Refinancing the group’s banking facilities at a reduced margin, extending the long-term relationship we have with our lenders, is also a significant milestone. We have improved the terms, reflecting the strength of our business and the compelling fundamentals underpinning purpose-built care homes.
“The disposal proceeds combined with the new debt facilities provide us with significant financial flexibility to invest in new assets and improve the quality and scale of the portfolio, whilst benefiting from the yield differential we expect to achieve. We look forward to setting this out in more detail at our full year results in October.”
