Target Healthcare REIT secures £37m loan facility

Target Healthcare REIT secures £37m loan facility

UK-listed Target Healthcare REIT has entered into a new long-term £37 million committed term loan facility with Phoenix Group, an existing lending partner.

The facility carries an aggregate fixed rate of interest of 3.13% per annum on a 10-year term, maturing in January 2032, aligned with the group’s existing £50 million facility with Phoenix.

The facility is the first part of new loan facilities for the group, totalling £100 million. Completion of the remaining £63 million, which will have a longer duration and which is in the final stages of the legal and diligence process, is expected to be aligned with the group’s acquisition of a portfolio of 18 modern care homes. Combined, the new facilities will lengthen the group’s weighted average term to maturity and have been secured on attractive and competitive long-term fixed interest rates, providing cash flow certainty to match with the Group’s long income profile.

The group’s total borrowing capacity now stands at £257 million comprising the facility, the existing £50 million Phoenix facility and existing facilities with The Royal Bank of Scotland plc (£70 million committed term loan and revolving credit facility repayable on 5 November 2025) and HSBC plc (£100 million revolving credit facility repayable on 5 November 2023).

Gordon Bland, Finance Director of Target Fund Managers, commented:

“Entering into another facility with Phoenix is testament to both the continued strength of our relationship with our existing lenders and the attractiveness of the Target model.

“The portfolio’s performance during COVID has been robust, with the quality of our real estate and our tenants’ ability to astutely manage their businesses providing an attractive proposition to lenders. This additional debt funding for the group aligns with our strategy of continuing to grow the platform sustainably alongside efficiently managing the capital structure. Importantly, in an environment where the future outlook for interest rates remains uncertain, fixing a significant proportion of our interest costs when combined with our inflation-linked income profile helps us to provide sustainable and progressive long-term returns to shareholders.”