March 5, 2019 Finance

Target Healthcare REIT announces its results for the six months to 31st December 2018


Target Healthcare REIT’s latest results show significant investment activity delivering further portfolio diversification in the structurally compelling care home sector

Target Healthcare REIT Limited, is a listed specialist investor in modern, purpose-built UK care homes, they have just announced their results for the six months to 31 December 2018.

Financial Highlights
EPRA NAV per share up 1.1% to 106.9 pence (2018: 105.7 pence)
4.2% EPRA NAV total return (2017: 5.7%)
22.1% increase in Group specific adjusted EPRA earnings1 to £9.5 million (2017: £7.8 million)
Dividend increased by 2.0% to 3.2895 pence in respect of the period (2017: 3.225 pence), underpinned by investment programme and portfolio rental uplift
Group loan-to-value (LTV), based on gross debt, of 15.3% (2018: 17.1%)
Group loan-to-value (LTV), based on net debt, of 9.1% (2018: 6.4%)
£50 million of equity raised in November 2018 and £40 million increase to debt facilities secured after the period end

Portfolio Highlights
Total portfolio value of £464 million (2018: £386 million), comprising 61 assets, including 2.8% increase in like-for-like value of operational portfolio
Agreements during the period to acquire seven assets, a mix of operational homes and forward fund developments, for a total commitment of £81.8 million (including costs), acquired at yields representative of assets of similar standard and location within the Group’s existing portfolio
7.9% increase in contractual rent to £28.0 million (2018: £26.0 million)
1.3% like-for-like increase in portfolio passing rent (2017: 1.3%)
21 current tenants, which will increase to 26 upon completion of developments and commitments to acquire properties
Weighted average unexpired lease term (‘WAULT’) steady at 28.5 years (2018: 28.5 years)

Market Outlook
Favourable demand supply dynamics supporting both investor and operator activity in the sector, with the number of people aged 65 or over in England forecast to increase by 65 per cent in the next 25 years
Company’s acute focus on best in class, purpose-built homes with full ensuite wetrooms, remains an attractive differentiator. Sector wide, over 75% of UK care home rooms do not currently offer ensuite wetrooms

Unless otherwise stated in the above, references to 2017 mean the comparative six month period to 31 December 2017 and references to 2018 mean 30 June 2018, being the start of the period under review.

1 For the details of adjusted earnings refer to note 4 to the Condensed Consolidated Financial Statements.

Malcolm Naish, Chairman of the Company, said:
“Consistent with our belief in the medium to long-term future undersupply of the type of home we invest in, we agreed during the period to acquire four new development assets, two operating assets and signed an agreement to acquire a home at construction completion. These further complement our existing diversification by tenant, geography and end-user payment profile. The long-term, stable nature of the returns anticipated from our portfolio, when allied with the Group’s revised fee arrangements and flexible capital structure, should enhance earnings and allow the Group to fully cover the progressive dividend it anticipates delivering to shareholders.”


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