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Generation game: the 'baby' trust playing aging Britain
by Sarah Miloudi on Aug 29, 2013 at 10:23
Target Healthcare Reit is playing aging Britain by snapping up care homes and turning their rents into a dividend.
The investment trust, which launched during the first quarter of the year, sets itself apart from other property funds because its managers have steered clear of central London, an area real estate vehicles are often heavily skewed towards.
Kenneth MacKenzie, Target Advisers' managing partner, said that because the trust is still in its infancy its geographic spread is fairly narrow, though he pointed out that often city dwellers look to leave London ahead of their retirement, so other parts of the UK are a better play on the aging population.
He told Wealth Manager: 'Everybody knows the story of demographics - that people are aging - and with this there is greater need for residential care of some kind.
'We invest in care homes whose operators typically have a variety of income, both from local authorities, private pay and from the national health service. Essentially what we're doing is taking a slice of the profitability, which is a rent, and turn that into a dividend.'
MacKenzie added: 'At this stage we are a baby, we only launched five months or six months ago, we would hope in two or three years time to have assets across the UK, but the first assets we bought were in Scotland and middle and North England. Within London we are not likely to have so many because people don't usually choose to retire and end their days in central London.
'There are plenty of homes in central London, but not many of them.'
Following up on the trust's launch in March, the board this month announced its intention to raise additional capital to boost its £48 million assets and allow it to take advantage of opportunities within the care homes space.
Its shares are currently trading at 105.5p and sit at a premium to net asset value (NAV) of 11.4%.
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