Stirling-based investment trust Target Healthcare has announced the purchase of its eighth care home in seven months, and promised more deals to come with the remainder of a £50.2 million war chest.
The firm, which joined the stock exchange in March, had already snapped up new-build homes in Dundee, Arbroath and Huntly, as well as four sites in the north of England and East Midlands, as it seeks rental returns from the UK’s burgeoning care of the elderly market.
It said the new site, at Thirsk in North Yorkshire, had cost around £4m and would be leased back to existing operator Ideal Carehomes for 35 years at an initial yield of more than 7%.
The company, chaired by former Scottish Widows head of real estate Malcolm Naish, says it invests in “best-in-class” homes.
It raised £45.6m from institutional investors, wealth managers and private individuals when it joined the market, and added a further £4.6m through a second share placing in June.
With almost three-quarters of that cash committed and fresh deals expected to be completed in the coming month, Target has extended its ambitions and is now aiming to raise more cash for a new tranche of acquisitions.
“The company has now invested approximately £36.0m of the £50.3m raised from institutional investors, wealth managers and private investors, and has entered into advanced legal negotiations to acquire further properties,” it said in an update yesterday.
“Consequently . . . the company is in discussions with its advisers regarding a proposal to raise additional equity, at a price which would not be dilutive to existing shareholders, by means of a placing of new ordinary shares.”
Trust board member and managing partner of investment manager Target Advisers LLP Kenneth MacKenzie said: “We are delighted to have completed this acquisition, continuing our support of an existing tenant who demonstrates a strong care ethos.”
Target’s growing property portfolio means it now owns the roof over the head of around 430 older people across the UK.
Its three Scottish sites Monkbarns in Arbroath, St Ronan’s in Dundee’s Dalkeith Road, and Huntly Care Home care for 119 people at full capacity, and were bought from Tony Banks’ Balhousie Care Group earlier this year for a total of £14.2m.
Balhousie will lease back the sites on 30-year deals, for an aggregate rent of around £1.1m a year.
The trust, which counts Stirling University dementia specialist Professor June Andrews as a non-executive director, says it invests “significant time in understanding the culture of healthcare providers” and only chooses to invest in those with values consistent to its own.
“Care homes with excellent care standards tend to perform much more profitably than those that don’t,” Target says.
“Investment in maintaining the quality of the facilities and training of staff is reflected in the bottom line.”