Target Healthcare REIT invests in modern, purpose-built residential care homes in the UK let on long leases to high-quality care providers. It selects assets according to local demographics and intends to pay increasing dividends underpinned by structural growth in demand for care.
The care home sector is driven by demographics rather than the economy, generating a positive demand outlook for new, ESG-compliant, purpose-built homes with flexible layouts and high-quality residential facilities. With its unwavering focus on asset and tenant quality, these are the homes in which Target invests. It believes best-in-class assets, in areas with strong demand/supply characteristics, and sustainable rent levels will always be attractive to existing or alternative tenants and are key to providing sustainable, long-duration income with capital growth.
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Alison Fyfe
Chairman
Gordon Bland
FD
Kenneth MacKenzie
CEO
Forecast net debt (£m)
250
Forecast gearing ratio (%)
37
% | 1M | 3M | 12M |
---|---|---|---|
Actual | (1.7) | (2.3) | 5.8 |
Relative | (4.4) | (8.6) | 0.8 |
52 week high/low | 88.0p/66.5p |
Indexed rent reviews are driving increased earnings and property values. H2 income will also benefit from development completions. Tenant profitability continues to strengthen, reflected in a new high level of rent cover (1.9x) and 99% rent collection. H124 DPS of 2.856p, covered 1.07x by adjusted EPRA earnings. EPRA net tangible assets per share increased 2.0% to 106.7p and including dividends paid the accounting total return was 4.9%. Reflecting strong investor demand for high quality assets, the tight yield spread over funding costs is frustrating THRL’s ambitions to grow its portfolio, but a strong, liquid balance sheet positions it well for a change in market conditions.
Y/E Jun | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (p) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 63.9 | N/A | 30.2 | 5.0 | 16.0 | 16.0 |
2023A | 67.7 | N/A | 37.2 | 6.0 | 13.4 | 16.6 |
2024E | 69.0 | N/A | 37.2 | 6.0 | 13.4 | 11.8 |
2025E | 73.8 | N/A | 39.3 | 6.3 | 12.7 | 12.1 |