Target Healthcare REIT

LN: THRL

£446.7m market cap

116p last close

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.

Investment summary

Target Healthcare REIT has published interim results for the six months ended 31 December 2018 (H119), providing the detail behind the Q4 NAV update published in January. This showed the portfolio performing well (H119 EPRA NAV total return 4.2%) and good progress being made with deployment of the November placing proceeds. The attractive dividend yield is backed by very long leases, mostly RPI linked, and supported by careful asset and operator selection. We continue to forecast a fully covered dividend in FY20.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 23.6 N/A 12.2 5.23 22.2 66.6
2018A 28.4 N/A 14.8 5.54 20.9 13.9
2019E 34.4 N/A 18.8 5.68 20.4 22142.6
2020E 43.1 N/A 25.7 6.71 17.3 15540.7
Last updated on 22/03/2019
Industry outlook

The UK population over the age of 85 is expected to increase by 140% from 2014 to 2039 which, combined with a current shortage of high-quality care homes, suggests a strong investment demand in years to come.

Last updated on 22/03/2019
Share price graph
Balance sheet
Forecast net debt (£m) 130.8
Forecast gearing ratio (%) 36
Price performance
%
1m
3m
12m
Actual 0.4 8.9 14.3
Relative* 0.3 1.4 11.5
52-week high/low 118.0p/103.0p
*% relative to local index
Key management
Kenneth MacKenzie CEO
Gordon Bland FD

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