23rd Sep 2019 14:57
(Alliance News) - Target Healthcare REIT PLC on Monday said that Orchard Care Homes.Com Ltd, an existing tenant, will move out of six leasehold homes.
Target said it is "continually preparing for such contingencies" and is in active discussions with alternative operators.
The financial impact on the real estate investment trust, if any, will be small. Target will continue to receive rental income from the six assets until the end of 2019 and has a further four months of rental deposits in reserve.
Target added: "The company has a diversified portfolio and currently benefits from 26 different tenants across its 63 homes. The company also has a successful track record of replacing operators with no disruption to the residents and a minimal value impact.
"Whilst the homes operated by Orchard have recently had on average poorer rent covers, the level of earnings before interest, tax, depreciation, amortisation and management charges over the last year has still exceeded the equivalent rental obligation."
Target expects an improvement from management and rent covers at the six assets. The trust said it was "already conservatively valued" at an average net initial yield of 7.2% at 30 June 2019, "reflecting a significant discount to the portfolio average net initial yield of 6.3%".
Shares in the company were 0.9% higher at 111.60 pence each in London on Monday afternoon.
By Eric Cunha; [email protected]
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