Quarterly Investor Report: | November 2022 |
Quarter ended 30 September 2022 |
Target Healthcare REIT plc and its subsidiaries ('the Group') is a leading investor in modern purpose-built UK care homes with en suite wet rooms. The Group's objective is to provide investors with an attractive quarterly dividend, generated from a portfolio diversified by tenant, geography and end-user payment profile, through responsible investment.
Group at a glance
Properties | Beds | Tenants | Contracted rent | Property Value |
100 | 6,898* | 33 | £55.6m | £913.7m |
Overview | Key ratios & financials | |||||||
Launch date | March 2013** | Investment properties | £913.7 million | |||||
ISIN | GB00BJGTLF51 | Drawn debt | £223.0 million | |||||
SEDOL | BJGTLF5 | EPRA NTA | £695.1 million | |||||
Company name | Target Healthcare REIT plc | EPRA NTA per share | 112.1 pence | |||||
Registered number | Quarterly NAV total return | |||||||
11990238 | 1.3% | |||||||
(including dividend) | ||||||||
Expected quarterly dividend | Feb/May/Aug/Nov | Quarterly Group specific | 1.59 pence | |||||
Financial year end | 30 June | adjusted EPRA earnings per | ||||||
share | ||||||||
Currency | Sterling | Quarterly dividend per share | 1.69 pence | |||||
Website | www.targethealthcarereit.co.uk | Dividend yield (01/11/2022) | 7.6% | |||||
Ordinary share class as at | 01/11/2022 | Loan-to-Value ('LTV')*** | 24.4% (gross); 22.3% (net) | |||||
Shares in issue | 620,237,346 | Management fee rate | 1.05% up to £500m NAV | |||||
Share price | 89.4 pence | 0.95% of £500m - £750m NAV | ||||||
0.85% of £750m - £1,000m NAV | ||||||||
Market capitalisation | £554.5 million | 0.75% of £1,000m - £1,500m NAV | ||||||
0.65% of £1,500m + NAV | ||||||||
Share price discount to EPRA | 20.2% | WAULT | 26.9 years | |||||
NTA | ||||||||
- Including planned beds in development sites
- Originally launched as Target Healthcare REIT Limited (Jersey registered: 112287)
- Gross LTV calculated as total gross debt as a proportion of gross property value. Net LTV calculated as total gross debt less cash, as a proportion of gross property value
Recent news
The recent focus has been to enhance debt arrangements, following an increase in market interest rates, and manage theportfolio to improve rent collection. The Group secured certainty on the remaining unhedged debt through entry into an interest rate cap in October and extended the term of the shortest facility resulting in no debt maturity until 2025. Rent collection improved following arrears collected from a seven- home tenant and initiatives are progressing to re-tenant two homes following covid related challenges.
Performance
The portfolio value increased by 0.2% over the quarter as a result of a like-for-like uplift in the operational portfolio value (+0.1%), further investment into the development portfolio and capital expenditure on existing assets (+0.6%) and the disposal of a non-coreasset (-0.5%).Contractual rent increased by 0.3%due to inflation-linked rent reviews in the quarter and rentalised performance linked payments and capex, again partlyoffset by the asset disposal. The portfolio's weighted average unexpired lease term was 26.9 years (30 June 2022: 27.2 years).
Asset Management and Investment Activity
In the quarter, the Group disposed of a non-core asset which was part of the 18-homeportfolio acquired in December 2021,with real estate standards below the average of that portfolio. It has been sold to the operator for proceeds consistent with the carrying value. Payments totalling £2.8 million were madein respect of contractual commitments on two homes, following strong trading performance. Rent cover thresholds on these homes, agreed at acquisition, have been consistently metover the relevant time period, triggering the payments which are rentalised at a level consistent with the acquisition NIY.
Outlook
The portfolio is modern, ESG compliant and provides long-term, sustainable inflation-linked income. Given these attributes andthe demographic tailwinds within the care home sector, we would expect to see downward valuation movements which are more muted than those anticipated across the wider real estate market. We will remain responsive to economic conditions and will assess the impact of any significant changes on our businessmodel and earnings.
Summary balance sheet
£m | Sep-22 | Jun-22 | ||
Property portfolio* | 913.7 | 911.6 | ||
Cash | 19.6 | 34.5 | ||
Net current assets/(liabilities) | (15.2) | (14.8) | ||
Bank loans | (223.0) | (234.8) | ||
Net assets | 695.1 | 696.5 | ||
EPRA NTA per share (pence) | 112.1 | 112.3 | ||
* Ignores the effect of fixed/guaranteed rent reviews. See note 9 to the Annual Report 2022 for full details.
Performance - NAV and share price total return
205 | ||||||||||||||||||||||||||||||||||
195 | NAV total return | |||||||||||||||||||||||||||||||||
185 | ||||||||||||||||||||||||||||||||||
175 | Share price total return | |||||||||||||||||||||||||||||||||
165 | ||||||||||||||||||||||||||||||||||
155 | ||||||||||||||||||||||||||||||||||
145 | ||||||||||||||||||||||||||||||||||
135 | ||||||||||||||||||||||||||||||||||
125 | ||||||||||||||||||||||||||||||||||
115 | ||||||||||||||||||||||||||||||||||
105 | ||||||||||||||||||||||||||||||||||
95 | Jun-13 | Sep-13 | Dec-13Mar-14Jun-14Sep-14Dec-14 | Jun-15 | Sep-15 | Dec-15 | Jun-16 | Sep-16 | Dec-16 | Jun-17 | Sep-17 | Dec-17 | Jun-18 | Sep-18 | Dec-18 | Jun-19 | Sep-19 | Dec-19 | Jun-20 | Sep-20 | Dec-20 | Jun-21 | Sep-21 | Dec-21 | Jun-22 | Sep-22 | ||||||||
Mar-13 | Mar-15 | Mar-16 | Mar-17 | Mar-18 | Mar-19 | Mar-20 | Mar-21 | Mar-22 |
Portfolio summary at 30 September 2022
Number of properties by geographic region | |||||||||||||||||||||||||||||
Scotland | North East | ||||||||||||||||||||||||||||
Northern Ireland | Yorkshire & The Humber | ||||||||||||||||||||||||||||
North West | East Midlands | ||||||||||||||||||||||||||||
Wales | East of England | ||||||||||||||||||||||||||||
West Midlands | South East | ||||||||||||||||||||||||||||
South West | |||||||||||||||||||||||||||||
Contracted rent by geographic region | |||||||||||||||||||||||||||||
3% 2%1% | 8 | ||||||||||||||||||||||||||||
5% | |||||||||||||||||||||||||||||
7% | 24% | ||||||||||||||||||||||||||||
7% | |||||||||||||||||||||||||||||
2 | |||||||||||||||||||||||||||||
7% | 4 | ||||||||||||||||||||||||||||
17% | 18 | ||||||||||||||||||||||||||||
12% | |||||||||||||||||||||||||||||
15% | 26 | ||||||||||||||||||||||||||||
13 | |||||||||||||||||||||||||||||
Valuation by geographic region (including developments) | |||||||||||||||||||||||||||||
6 | |||||||||||||||||||||||||||||
Wales | 5 | ||||||||||||||||||||||||||||
North East | 1 | ||||||||||||||||||||||||||||
Northern Ireland | |||||||||||||||||||||||||||||
East of England | |||||||||||||||||||||||||||||
South West | 13 | ||||||||||||||||||||||||||||
West Midlands | 4 | ||||||||||||||||||||||||||||
Scotland | |||||||||||||||||||||||||||||
East Midlands | |||||||||||||||||||||||||||||
North West | |||||||||||||||||||||||||||||
South East | |||||||||||||||||||||||||||||
Yorkshire & The Humber | |||||||||||||||||||||||||||||
0% | 5% | 10% | 15% | 20% | 25% | 30% | |||||||||||||||||||||||
Directors | Investment Manager | Advisers | |||||||||||||||||||||||||||
Malcolm Naish (Chairman) | Target Fund Managers Ltd. | Administrator | Target Fund Managers Ltd. | ||||||||||||||||||||||||||
Richard Cotton | Kenneth MacKenzie, | Depositary | IQ EQ Depositary Company (UK) Ltd. | ||||||||||||||||||||||||||
Gordon Coull | Gordon Bland | Broker | Stifel Nicolaus Europe Ltd. | ||||||||||||||||||||||||||
Alison Fyfe | +44 (0) 1786 845 912 | Legal | Dickson Minto W.S. | ||||||||||||||||||||||||||
Vince Niblett | targetfundmanagers.com | Auditors | Ernst & Young LLP | ||||||||||||||||||||||||||
Dr Amanda Thompsell |
This Report is intended solely for the information of the person to whom it is provided by the Group, the Investment Manager or the Administrator. This Report is not intended as an offer or solicitation for the purchase of shares in the Group and should not be relied on by any person for the purpose of accounting, legal or tax advice or for making an investment decision. The payment of dividends and the repayment of capital are not guaranteed by the Group. Any forecast, projection or target is indicative only and is not guaranteed in any way, and any opinions expressed in this Report are not statements of fact and are subject to change, and neither the Group nor the Investment Manager is under any obligation to update such opinions. Past performance is not a reliable indicator of future performance, and investors may not get back the original amount invested. Unless otherwise stated, the sources for all information contained in this report are the Investment Manager and the Administrator. Information contained in this Report is believed to be accurate at the date of publication, but none of the Group, the Investment Manager and the Administrator gives any representation or warranty as to the Report's accuracy or completeness. This Report does not contain and is not to be taken as containing any financial product advice or financial product recommendation. None of the Group, the Investment Manager and the Administrator accepts any liability whatsoever for any loss (whether direct or indirect) arising from any use of this Report or its contents. Target Healthcare REIT plc, registered in the UK (Registered Number: 11990238). Registered Office: Level 13, Broadgate Tower, 20 Primrose Street, London, EC2A 2EW.
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Target Healthcare REIT plc published this content on 04 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2022 17:21:02 UTC.