Target Healthcare REIT offloads four care homes

Care home real estate investment trust Target Healthcare REIT has offloaded four of the oldest care homes in its portfolio for £44.5m and will use the proceeds to pay down credit facilities.

The company said the four assets, which represented 326 beds and around 4.6% of its total portfolio, were originally constructed in 2007-2008 and had a 12% lower gross internal floor space per resident than the portfolio's weighted average, as well as the shortest lease terms compared with other properties.

The sale price represented a "modest premium" to the portfolio's carrying value at 31 March, with an implied net initial yield of 5.64%.

The disposal of assets, which were originally acquired as part of a wider portfolio takeover of 18 homes in December 2021, will cut the group's net loan-to-value by around 3.8%.

Scott Steven, the head of asset management at Target Fund Managers, said while the company is "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," he said.

The stock was up 0.4% at 78.29p by 0856 BST.