Target Healthcare REIT

Proposed Issue of Equity
RNS Number : 9211O
Target Healthcare REIT PLC
12 February 2021
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION IN PARTICULAR THE UNITED STATES, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN TO PROFESSIONAL INVESTORS IN THE REPUBLIC OF IRELAND OR THE NETHERLANDS), CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND AND JAPAN.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, ANY OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR, ANY SECURITIES IN TARGET HEALTHCARE REIT PLC (THE "COMPANY") OR SECURITIES IN ANY OTHER ENTITY, IN ANY JURISDICTION, INCLUDING THE UNITED STATES, NOR SHALL IT, OR ANY PART OF IT, OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION WHATSOEVER, IN ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A RECOMMENDATION REGARDING ANY SECURITIES.

THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION FOR THE PURPOSES OF THE UK VERSION OF MARKET ABUSE REGULATION (EU) NO. 596/2014, WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

12 February 2021

 

TARGET HEALTHCARE REIT PLC

("Target" or the "Company", together with its subsidiaries, the "Group")

Proposed Issue of Equity

and

Notice of General Meeting

Target Healthcare REIT plc (LSE: THRL), the UK listed specialist investor in modern, purpose-built care homes, announces its intention to raise approximately £50 million by way of an initial placing, offer for subscription and intermediaries offer (together, the "Initial Issue") at an issue price of 111 pence per new Ordinary Share ("New Share").

Highlights

·      The Initial Issue will be conducted at an issue price of 111 pence per New Share (the "Initial Issue Price"), which represents a discount of 4.8 per cent. to the closing share price of 116.6 pence per existing ordinary share in the capital of the Company ("Existing Shares") on 11 February 2021 (being the last business day prior to this announcement) and a 2.6 per cent. premium to the Company's last reported EPRA NAV per Ordinary Share of 108.2 pence as at 31 December 2020

·      The Group's portfolio has continued to demonstrate its high quality and defensive characteristics throughout the COVID-19 pandemic with the Company's rental income remaining substantially unaffected, demonstrating the stable and secure nature of the portfolio's cashflows

·     By 1 February 2021, vaccinations had been made available to residents and staff in all of the Group's care homes, with substantial uptake across both groups. This should allow for increased admissions and, in due course, safer visits and a greater variety of social activities for residents to resume, ultimately enabling occupancy recovery. Target Fund Managers Limited (the "Investment Manager") notes that a number of the Company's tenants have recently reported high levels of enquiries with one of the Company's largest tenants experiencing record levels of new enquiries in January 2021

·    The Investment Manager continues to believe in the underlying long-term fundamentals of the sector, with the pandemic reinforcing the essential requirement for high quality, modern, purpose-built care homes with en-suite wet-room facilities, to provide a safe environment that enables effective infection control and that best provides for residents' needs

·      The Investment Manager has identified an attractive investment pipeline of £224 million consisting of:

£47 million of imminent acquisition assets which consist of three operational modern care homes and one forward funding project

£177 million of near-term pipeline assets which are currently in negotiations and consist of ten operational modern care homes, five forward funding projects and one forward commitment to acquire a pre-let care home upon construction reaching practical completion

·     In October 2020, the Company increased the quarterly dividend in respect of the year ending 30 June 2021 by 0.6 per cent. to 1.68 pence per share. The Company's annual dividend target for the year ending 30 June 2021 is therefore 6.72 pence per share, which represents an implied dividend yield of 6.1 per cent. based on the Initial Issue Price(1)

In conjunction with the Initial Issue, the Directors intend to implement a placing programme to enable the Company to raise additional equity capital through the issue of up to 150 million New Shares in the 12 month period from 4 March 2021 to 11 February 2022 (the "Placing Programme"). The Placing Programme will allow the Company to tailor future equity issuance to its pipeline, providing flexibility and minimising cash drag.

The Initial Issue is being conducted in accordance with the terms and conditions to be set out in the prospectus in relation to the Initial Issue and Placing Programme (the "Prospectus"), which is expected to be published by the Company following its approval by the Financial Conduct Authority. Both the Initial Issue and Placing Programme are conditional, amongst other things, on the approval by the Company's shareholders ("Shareholders") in general meeting (the "General Meeting"), further details of which are set out in this announcement and will be set out in the Circular, when published.

Malcolm Naish, Chairman of the Company, said: 

"The very challenging period we have come through has clearly shown that the kinds of assets we own, together with the operational capabilities of our dedicated and professional occupier base, are well-placed to manage the complex requirements of the care home sector and its residents. The momentum behind the underlying fundamentals of the sector remains unchanged, as reflected in the record level of enquiries last month which was reported by one of the Company's largest tenants, and with the roll out of the vaccination programme progressing well, we are in a position now to respond to that demand.

 

"The pandemic has starkly underlined the critical need for more high quality, well designed care homes. While we prudently paused our investment programme in the first half of 2020, we now believe there is sufficient visibility to return to our disciplined acquisition strategy. We have identified a strong pipeline of attractive potential investments and the structure of the fundraise we are announcing today provides us with the flexibility to be selective, but also to act quickly in a competitive market."

Portfolio update

Target was created with the purpose of advancing the much-needed modernisation of the UK's care home real estate, through long-term investment. It has been, since its launch, a promoter of the need to improve real estate standards within this sector in order that the dedicated professionals providing care can do so, providing dignity and safety to residents. While the Company paused its acquisition activity early in the pandemic to ensure flexibility and balance sheet strength, evidence from portfolio performance and activity in the UK care home investment market, as well as progress on the roll-out of vaccinations, provide visibility that the medium-longer term outlook is positive.

 

The Investment Manager's specialist insight and experience as an engaged landlord within the care home sector has been demonstrated throughout the pandemic. There is a clear increase in demand for modern care homes and the Investment Manager continues to work hard in its stewardship of the portfolio and in sourcing a strong pipeline of attractive assets. Throughout the pandemic, the Company's tenants continue to care for their residents with the utmost skill and compassion. The Company has, through the Investment Manager, kept in close communication with its tenants to provide support, share best practice, and to continue its usual monitoring programme as an informed and engaged landlord. In recent months more than ever, the benefits of modern fit-for-purpose care homes were clearly exhibited, allowing for effective infection control and shielding, while ensuring dignity for residents. In addition, the Company gifted tablet devices to each care home to assist residents and carers to stay in touch with loved ones.

With mass testing being made available to all care homes since July 2020 this has increased the proportion of asymptomatic results over the last eight months. As at 1 February 2021, there were confirmed COVID-19 cases in 2.1 per cent. of total portfolio beds across eleven care homes, down from the peak of 3.2 per cent. suspected or confirmed cases across 32 care homes during the third week of April 2020. The substantial progress in rolling out the vaccine in recent weeks has been a source of great encouragement, and by 1 February 2021, vaccinations have been made available to residents and staff in all of the Group's care homes, with substantial uptake across each group. The roll-out of the vaccination programme across the portfolio provides shielding from the worst effects of the virus for residents and staff and allows for increased admissions, in due course, safer visits and a greater variety of social activities for residents to resume, ultimately enabling occupancy recovery from latent demand. This optimism is supported by reports from many of the Company's tenants having recently reported high levels of enquiries with one of the Company's largest tenants experiencing record levels of new enquiries in recent weeks.

The Company's portfolio of modern, purpose-built care home assets diversified by tenant, geography and source of resident fees has demonstrated its robustness and resilience throughout the COVID-19 pandemic, with 94 per cent. of rent due and payable in respect of the period from 11 March 2020 (when COVID-19 was declared a global pandemic by the World Health Organisation) to 31 December 2020 having been collected, demonstrating the stable and secure nature of the portfolio's cashflows. In recent months, positive asset management developments were achieved in relation to two tenants who comprise the majority of recent and ongoing rent arrears. Occupancy and trading is improving towards the levels anticipated by the investment case at one of the two care homes operated by a tenant that is new to the sector. That care home has been paying 100 per cent. of rent in advance over recent months while the other care home has made slower progress in part due to restrictions put in place throughout the pandemic. Progress has also been made towards commitments to replace the other tenant who has been operating two of the Group's care homes, with terms agreed on both a financial settlement in respect of outstanding rental arrears and with an incoming tenant for one of the care homes.  

Following recent conversations with the Group's tenants as part of its quarterly tenant resiliency review and ahead of the full December 2020 management information being received, it is expected that the next figures in underlying occupancy and profitability will show a decline due to the ongoing lockdown restrictions over recent months impacting the rate of admissions which may lead to requests for rental concessions. The Company will consider any such requests on a case-by-case basis and consider using mitigants such as rental deposits held, where appropriate. Currently one of the Company's tenants has used its rent deposit to pay its most recent rental payment, although the Investment Manager expects the deposit to be paid back in full during February 2021. The Investment Manager has ongoing engagement with the Group's tenants to proactively assist and monitor performance.

Another of the Group's tenants, comprising approximately 4 per cent. of the Group's total rent, has recently requested a rental deferral for the next quarterly payment due in March 2021 and thereafter a partial deferral of payments over the medium term given the difficulties it is facing as a result of the COVID-19 Pandemic. The tenant has presented a mechanism for subsequent payment of the deferred amounts from ring-fenced sums, with the Group having additional protection from 6 months' worth of rental deposit monies held. The Investment Manager is currently reviewing the request, including reviewing the tenants current financial and operational situation. The Investment Manager's expectation is that the Group's rental collection, earnings and dividend cover metrics will not be materially impacted by this requested concession.

The Company is also envisaging the sale of one care home in the near future as the tenant has indicated that it intends to exercise its option to buy back the care home. The market value of this care home represents approximately 1 per cent. of the aggregate market value of the Group's portfolio as at 31 December 2020. The sale would be accretive to NAV and would represent a minimum IRR of 9 per cent. for the Group.

Despite some of the short-term challenges faced by tenants as noted above, the Board believes there will be a strong recovery in underlying occupancy through 2021.

 

Background to the Initial Issue and Placing Programme

The Group listed on the London Stock Exchange's Main Market on 7 March 2013 with an investment remit to focus on a diversified portfolio of modern, purpose-built care homes that are let to high quality tenants who demonstrate strong operational capabilities and an active care ethos, both of which the Company believes are critical to long-term success in the care home business.

The Company's positive impact on the UK's social care sector is at the heart of its investment philosophy. Its environmentally efficient care homes serve their respective local markets at sustainable rental levels, and deliver a high quality offering, with en-suite wet-rooms and good public and private spaces. The Investment Manager continues to be an advocate of the benefits that intelligently designed, modern care homes can bring and wants more residents, care professionals with good governance and local communities to benefit from their positive social impact.

The Group's care homes benefit from favourable local dynamics, including supportive demographics, as well as long leases at sustainable rental levels. These leases are typically structured to include annual rental uplifts (RPI-linked or fixed) and cure rights. Informed by its proprietary research, the Group has built a portfolio of high quality assets in the right locations, with the services and facilities that suit its tenants' needs. This is set against a backdrop of an increasing population of those aged over 85 in the UK, a shift in how society cares for its elderly, and an insufficient supply of en-suite, wet-room accommodation demand for which has been highlighted during the COVID-19 pandemic. There is a chronic undersupply for these fit-for-purpose care homes whereby demand far outstrips supply with a c.273,000 shortage of appropriate quality beds.

Since IPO, the Group has carefully crafted an investment portfolio which currently consists of 76 properties, including 73 modern care homes with en-suite wet rooms and good public and private spaces, and three pre-let sites, which are being developed through capped forward funding commitments with established development partners. The portfolio has a high level of diversification across its 27 tenant covenants, geography and source of funding through the ultimate end-users. Crucially, whilst the portfolio and tenant base are diversified, the asset quality is unequivocally consistent. In excess of 95 per cent. of beds in the Company's portfolio are housed in modern, fit-for-purpose care homes, characterised by having en-suite wet-rooms throughout, accommodation designed for twenty-first century social care and a wide availability of public space, both indoors and out, for the residents.

The Company, together with its Investment Manager, is passionate about providing high quality environments for the tenants and their residents, whilst noting that modern assets with modern amenities provide a greater level of future-proofing to the business. The long weighted average unexpired lease term of 28.7 years and the potential benefit of annual (RPI or fixed) rental uplifts in the Group's lease contracts are vital in helping to protect the Company's future financial returns. In selecting its assets, the Group looks for buildings that are specifically designed to be operated as homes, not care facilities. Due partly to this specification, as well as other factors such as geography and average fee rates charged by the Company's tenants, the portfolio has a bias towards residents who pay for their care privately (either in whole or through a mix of private and public funding), which provides a measure of financial insulation to the Company's tenants who continue to face various issues arising from, inter alia, the current uncertainty around public sector funding in their sector.

The Group's portfolio was externally valued at £647.7 million as at 31 December 2020. The pandemic continues to affect real estate markets globally. Nevertheless, as at the valuation date some property markets have started to function again, with transaction volumes and other relevant evidence returning to levels where an adequate quantum of market evidence exists upon which to base opinions of value. Accordingly, and for the avoidance of doubt, the Colliers valuation at 31 December 2020 is not reported as being subject to 'material valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS Valuation - Global Standards.

Use of Proceeds

The Company believes the long-term fundamental demand drivers for elderly care have not changed, nor have the advantages of the Group's strong care ethos and strategy of owning modern, purpose-built care homes which house residents in self-contained wings, facilitate enhanced infection control, and, as needed, allow effective isolation of residents in their own rooms safely and effectively through the required provision of private en-suite wet-rooms.

Despite a challenging and competitive environment, the Group has demonstrated that it can continue to grow its portfolio on accretive terms whilst being highly selective with its approach to acquisition opportunities. Since the Group's last equity issuance in September 2019, the Group has acquired 13 modern care homes for a total consideration of c.£134 million.

As at 31 December 2020, the Group's Loan to Value ("LTV") was 22 per cent. After adjusting for commitments relating to the Group's development programme, contingent deferred considerations that may become payable and cash prudently restricted for general corporate purposes, the Group currently has uncommitted capital available of approximately £21 million which can be used for investment into new assets, meaning the Group's LTV upon full investment would be c.31 per cent.

The Investment Manager continues to explore investment opportunities across the market and, owing to its established reputation in this property sub-sector, is well positioned to source opportunities. The Investment Manager is currently in advanced negotiations in relation to four imminent acquisition assets for an aggregate consideration of approximately £47 million (including costs). These assets consist of three operational modern care homes and one forward funding project with a weighted net initial yield of 5.8 per cent. The Investment Manager is also in negotiations in relation to the near term acquisition of some pipeline assets for an aggregate consideration of £177 million, consisting of ten modern operational care homes, five forward funding projects and one forward commitment to acquire a pre-let care home upon construction reaching practical completion. In accordance with the Company's investment strategy, all of these assets are high quality, modern, purpose-built care homes with full en-suite wet-room facilities and are expected to be acquired for yields that are representative of assets of similar quality and location within its portfolio.

The Directors intend to use the net proceeds of the Placing Programme to acquire investments, once identified by the Investment Manager, in accordance with the Company's investment objective and investment policy. The Placing Programme should therefore enable the Investment Manager to make a series of property acquisitions whilst also mitigating the risk of cash drag on Shareholders' funds.

Benefits of the Initial Issue and Placing Programme

The Board believes that the Initial Issue and Placing Programme will have the following benefits for the Shareholders and the Company.

·     Facilitate the Company to continue with its growth strategy, provide scale to its investment portfolio and increase the liquidity of its shares by increasing the market capitalisation of the Company and further diversifying the shareholder register;

·      Provide additional equity capital which should enable the Company to pursue current attractive investment opportunities in the market and make further investments in accordance with the Company's investment policy and within its strict appraisal criteria further enabling the Company to remain well positioned in the face of increased competition and the anticipated sector-wide flight to high quality care home assets with wet room showers in en-suite facilities;

·      Further diversify the portfolio by introducing new tenants to the Group and operating in geographical locations that are currently under-represented in the portfolio;

·      Deliver a larger equity base over which the fixed costs of the Company may be spread, thereby reducing the Company's ongoing costs per Share; and

·      The Placing Programme will allow the Company to align future equity capital fundraises with its pipeline, providing flexibility and with the intention of minimising cash drag.

The Initial Issue and the Placing Programme will be conditional on Shareholder approval being granted at the General Meeting.

Expected timetable

Publication of the Prospectus and Circular

12 February 2021

Initial Placing, Offer for Subscription and Intermediaries Offer opens

12 February 2021

Latest time and date for receipt of application forms under the Offer for Subscription and Intermediaries Offer

11 a.m. on 24 February 2021

Latest time and date for receipt of forms of proxy in respect of the General Meeting

12 p.m. on 25 February 2021

Latest time and date for receipt of commitments under the Initial Placing

11 a.m. on 25 February 2021

Results of the Initial Issue announced

by close of business on 26 February 2021

General Meeting

12 p.m. on 1 March 2021

Admission and dealings in New Shares commence

8 a.m. on 3 March 2021

The timetable is subject to change at the discretion of the Company, Stifel Nicolaus Europe Limited ("Stifel") and Dickson Minto W.S. ("Dickson Minto" or "DM"). If any of the above times and/or dates change, the revised times and/or dates will be notified to shareholders by announcement through a Regulatory Information Service. References to time in this announcement are to London time.

 

Further information on the Initial Issue and Placing Programme

The Company is proposing to raise gross proceeds of approximately £50 million through the issue of 45,045,046 New Shares at 111 pence per New Share pursuant to the Initial Issue. The Initial Issue Price represents a discount of 4.8 per cent. to the closing price of 116.6 pence per Existing Share on 11 February 2021 (being the last business day prior to the date of this announcement) and a 2.6 per cent. premium to the Company's last reported EPRA NAV per Ordinary Share as at 31 December 2020 of 108.2 pence.

The Company is targeting an issue of approximately £50 million with the Initial Issue size based on the Company's investment pipeline as well as the Company's ongoing focus to minimise any potential cash drag on returns. In the event that the Company has demand from investors which exceeds £50 million, the Company may consider increasing the size of the Initial Issue (subject to a maximum cap of 150 million New Shares, being the total size of the Placing Programme including the Initial Issue). Any decision to upsize would only be made after careful consideration of the prevailing market conditions, the availability and estimated price of the properties that the Investment Manager has identified as being suitable for purchase by the Company and the length of time it would likely take to acquire them.

The Initial Issue may be scaled back by the Directors for any reason, including where it is necessary to scale back allocations to ensure the Initial Issue proceeds align with the Company's post fundraise acquisition and leverage targets.

 

The Offer for Subscription is being made in the UK only but subject to applicable laws the Company may issue and allot New Shares on a private placement basis to applicants in other jurisdictions. The public generally (unless they are located or resident outside the UK) may apply for New Shares through the Offer for Subscription or the Intermediaries Offer.

The Initial Issue, which is not underwritten, is conditional, inter alia, on:

·      Shareholders approving the ordinary resolution to allot up to 150 million New Shares and the special resolution to disapply the pre-emption rights attaching to the issue of such New Shares in relation to the Initial Issue and Placing Programme at the General Meeting;

·      the placing agreement dated 12 February 2021 relating to the Initial Issue and Placing Programme entered into between the Company, the Investment Manager and Stifel (the "Placing Agreement") becoming wholly unconditional (save as to Admission (as defined below)) and not having been terminated in accordance with its terms prior to Admission; and

·      Admission occurring by 8.00 a.m. on 3 March 2021 (or such later date as the Company and Stifel may agree not being later than 31 March 2021).

The Initial Issue will only become effective if all of the conditions referred to above are satisfied or waived (as the case may be in respect of condition (ii) above) on or before 3 March 2021 (or such later date as the Company and Stifel may agree not being later than 31 March 2021). If the conditions are not met, the Initial Issue will not proceed and, in such an event, subscription monies will be returned without interest at the risk of the applicant to the bank account from which the money was received.

The Initial Placing will close at 11 a.m. on 25 February 2021 or such later date as the Company, Stifel and Dickson Minto, acting as sponsor to the Company, may agree.

The results of the Initial Issue are expected to be announced on 26 February 2021. The New Shares will be issued and credited as fully paid and will rank pari passu in all respects with the Existing Shares. The New Shares will be issued in registered form and will be capable of being held in both certificated and uncertificated form.

The Company will apply for admission of the New Shares to listing on the premium listing segment of the Official List of the Financial Conduct Authority (the "FCA") and to trading on the Main Market for listed securities of the London Stock Exchange plc (the "London Stock Exchange"). It is expected that settlement of subscriptions in respect of the New Shares and admission will take place and that trading in the New Shares will commence at 8.00 a.m. (London time) on 3 March 2021 ("Admission").

The Initial Issue, which is not underwritten, is conditional upon, inter alia, Admission becoming effective no later than 8.00 a.m. on 3 March 2021 (or such later date as the Company and Stifel may agree in writing, being not later than 8.00 a.m. on 31 March 2021) and the Placing Agreement becoming wholly unconditional (save as to Admission) and not having been terminated in accordance with its terms prior to Admission.

The New Shares, when issued, will rank pari passu for all dividends or other distributions declared, made or paid after Admission and in all other respects will rank pari passu with the Existing Shares. For the avoidance of doubt, based on the current expected timetable, the New Shares will qualify for the quarterly dividend which relates to the period 1 January 2021 to 31 March 2021, which is expected to be paid in May 2021.

The Existing Shares are already admitted to trading on the Main Market and to CREST. It is expected that all New Shares, when issued pursuant to the Initial Issue and/or the Placing Programme, will be capable of being held and transferred by means of CREST.

The Initial Issue will be subject to the terms and conditions set out in the Prospectus which is expected to be published shortly. Further details of the Initial Issue and the Placing Programme will also be set out in the Prospectus.

Placing Programme

In light of the attractive pipeline of investment opportunities, the Directors intend to continue to increase progressively the size and scale of the Company in order to allow it, amongst other things, to maximise its in-built economies of scale. In order to move closer to this objective, whilst also minimising the costs associated with equity issues, the Directors intend to implement a Placing Programme, alongside the Initial Issue. The Placing Programme, if approved, would allow the Directors the flexibility to issue over the course of the next 12 months, in aggregate, up to 150 million Ordinary Shares (less the number of New Shares issued pursuant to the Initial Issue).

Notice of General Meeting

A notice, together with a shareholder circular which sets out further details of the Initial Issue and the Placing Programme (the "Circular"), will be posted to shareholders to convene a general meeting to approve, amongst other things, the Initial Placing, Offer for Subscription and Intermediaries Offer and the Placing Programme.

The Board believes that the Initial Issue and the Resolutions are in the best interests of the Company and Shareholders as a whole. Accordingly, the Board unanimously recommends that you vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings.

A copy of the circular will also be submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

The General Meeting is to be held at 12 p.m. on 1 March 2021 at the offices of Dickson Minto, 16 Charlotte Square Edinburgh EH2 4DF.  Given the risks posed by the spread to COVID-19 and in accordance with the provisions of the Company's articles of association and Government guidance, the Directors are likely to impose entry restrictions on attendance at the General Meeting in order to ensure the health, wellbeing and safety of the Company's shareholders and officers as well as compliance with the venue's security requirements.

Shareholders may and are strongly encouraged to participate in the business of the General Meeting by exercising their votes in advance of the General Meeting and may submit any questions by email to info@targetfundmanagers.com or by calling 01786 845 912.

Dealing codes for the Ordinary Shares and the New Shares

Ticker: THRL

ISIN for the New Shares: GB00BJGTLF51

SEDOL for the New Shares: BJGTLF5

The Company's LEI: 213800RXPY9WULUSBC04

A copy of this announcement will be available on the Company's website at www.targethealthcarereit.co.uk. Neither the content of the Company's website, nor the content on any website accessible from hyperlinks on its website for any other website, is incorporated into, or forms part of, this announcement nor, unless previously published by means of a recognised information service, should any such content be relied upon in reaching a decision as to whether or not to acquire, continue to hold, or dispose of, securities in the Company.

 

Terms used and not defined in this announcement bear the meaning given to them in the Prospectus proposed to be published by the Company following its approval by the Financial Conduct Authority.

 

 

Enquiries:

 

 Target Fund Managers Limited (Investment Manager to the Company)                                           

Kenneth MacKenzie

 

+44 1786 845 912

Gordon Bland

 

+44 1786 845 912

 

 

 

Stifel Nicolaus Europe Limited

 

 

Mark Young

mark.young@stifel.com

+44 20 7710 7600

Mark Bloomfield

mark.bloomfield@stifel.com

+44 20 7710 7600

Rajpal Padam

rajpal.padam@stifel.com

+44 20 7710 7600

 

 

 

FTI Consulting

 

 

Dido Laurimore

TargetHealthcare@fticonsulting.com

+44 20 3727 1000

Claire Turvey

 

 

Richard Gotla

 

 

       

 

 

Notes

(1)   Target dividend yield is a target only and not a profit forecast. There is no guarantee that the target dividend yield can be achieved and it should not be taken as an indication of expected or actual future returns.

Important Information

The person responsible for arranging for the release of this announcement on behalf of Target Healthcare REIT plc is Kenneth MacKenzie, Founder and Chief Executive of Target Fund Managers.

The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment from time to time.

This announcement which has been prepared by, and is the sole responsibility of, the Directors of the Company, has been approved solely for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended, ("FSMA") by the Investment Manager, which is authorised and regulated by the Financial Conduct Authority.

This announcement is an advertisement and does not constitute a prospectus relating to the Company and does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to subscribe for, any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract therefor. Copies of the Prospectus published by the Company will be made available from the registered office of the Company, the offices of Stifel and on the Company's website www.targethealthcarereit.co.uk.

Recipients of this announcement who are considering acquiring New Shares are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus which may be different from the information contained in this announcement. Potential investors should read the Prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with the decision to invest in New Shares. The approval of the Prospectus by the Financial Conduct Authority should not be considered as an endorsement of the Company or of the New Shares.

This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The New Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of the New Shares in the United States.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities will be made in any jurisdiction in which such an offer or solicitation is unlawful. The information contained in this announcement is not for release, publication or distribution to persons in the United States, any member state of the EEA (other than to professional investors in the Republic of Ireland or the Netherlands) Canada, Australia, the Republic of South Africa, New Zealand or Japan, and should not be distributed, forwarded to or transmitted in or into any jurisdiction, where to do so might constitute a violation of local securities laws or regulations.

Stifel, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting solely for the Company and no-one else in connection with the transactions and arrangements described in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the transactions and arrangements described in this announcement. Stifel is not responsible to anyone other than the Company for providing the protections afforded to clients of Stifel or for providing advice in connection with the contents of this announcement or the transactions and arrangements described herein.

Dickson Minto, which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of DM or advice to any other person in relation to the matters contained herein.

In the case of any New Shares being offered to a financial intermediary as that term is used and defined in section 86(7) of the Financial Services and Markets Act 2000, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the New Shares acquired by it in the Initial Issue have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any New Shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the Company or Stifel has been obtained to each such proposed offer or resale. Each of the Company and Stifel and their respective affiliates will rely on the truth and accuracy of the foregoing representation, acknowledgement and agreement.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, the Investment Manager, DM and Stifel expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Regulation Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.

None of the Company, the Investment Manager, DM or Stifel, or any of their respective affiliates, accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, the Investment Manager, DM and Stifel, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

Information to Distributors

 

Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Requirements") and/or (where applicable to EEA investors and EEA firms) the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("Directive 2014/65/EU"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing Directive 2014/65/EU; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK MiFIR Product Governance Requirements or the MiFID II Product Governance Requirements, as applicable) may otherwise have with respect thereto, the New Shares have been subject to a product approval process, which has determined that the New Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as respectively defined in paragraphs 3.5 and 3.6 of the FCA Handbook Conduct of Business Sourcebook or the MiFID II Product Governance Requirements, as applicable; and (ii) eligible for distribution through all permitted distribution channels (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the New Shares may decline and investors could lose all or part of their investment; the New Shares offer no guaranteed income and no capital protection; and an investment in the New Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Initial Issue and the Placing Programme.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapters 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook or the MiFID II Product Governance Requirements, as applicable; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the New Shares and determining appropriate distribution channels.

 

Marketing disclosures pursuant to UK AIFMD and the AIFMD (as defined below)

The Company is an externally managed alternative investment fund and has appointed Target Fund Managers Limited as its alternative investment fund manager (the "AIFM") for the purposes of UK AIFMD.

Pursuant to: (i) the requirements of the Financial Conduct Authority Rules implementing the EU Alternative Investment Fund Managers Directive (2011/61/EU) ("AIFMD") in the United Kingdom and related UK laws (including Commission Delegated Regulation (EU) No 231/2013, as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018) (together, "UK AIFMD"), which continue to apply notwithstanding the United Kingdom's withdrawal from the European Union; and (ii) the requirements of the AIFMD, the AIFM is required to make available to persons in the United Kingdom and the European Union who are invited to and who choose to participate in the Initial Issue, by making an oral or written offer to subscribe for New Shares, including any individuals, funds or others on whose behalf a commitment to subscribe for New Shares is given (the "Subscribers") certain information (the "Article 23 Disclosures"). For the purposes of the Initial Issue, the AIFM has made the Article 23 Disclosures available to Subscribers in the 'Investor Disclosure' footnote of the Company's website at: www.targethealthcarereit.co.uk.

 

PRIIPS

In accordance with the UK version of Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (the "PRIIPs Regulation"), the AIFM has prepared a key information document (the "KID") in respect of the ordinary shares of £0.01 each in the capital of the Company ("Ordinary Shares"). The KID is made available by the AIFM to "retail investors" in the United Kingdom prior to them making an investment decision in respect of the Ordinary Shares at www.targetfundmanagers.com.

If you are distributing Ordinary Shares, it is your responsibility to ensure that the KID is provided to any clients that are "retail clients" in the United Kingdom.

The AIFM is the only manufacturer of the Ordinary Shares for the purposes of the PRIIPs Regulation and none of Stifel, DM or the Company are manufacturers for these purposes. None of Stifel, DM or the Company makes any representations, express or implied, or accepts any responsibility whatsoever for the contents of the KID prepared by the AIFM nor accepts any responsibility to update the contents of the KID in accordance with the PRIIPs Regulation, to undertake any review processes in relation thereto or to provide the KID to future distributors of Ordinary Shares.  Each of Stifel, DM and the Company and their respective affiliates accordingly disclaim all and any liability whether arising in tort or contract or otherwise which it or they might have in respect of the key information documents prepared by the AIFM. Investors should note that the procedure for calculating the risks, costs and potential returns in the KID are prescribed by laws. The figures in the KID may not reflect actual returns for the Company and anticipated performance returns cannot be guaranteed.

 

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