Target Healthcare REIT

LN: THRL

£431.3m market cap

112p 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’s portfolio of high-quality purpose-built care homes continued to grow and perform well in the three months ended 30 September 2019 (Q120), and significant progress has since been made with deploying the £80m gross proceeds from September’s oversubscribed issue of new shares at a price of 110.5p. Q120 EPRA NAV total return was 2.0% including DPS paid and a 0.4% increase in EPRA NAV to 107.9p. Property income and valuations continued to benefit from RPI-driven rental growth with property yields stable in the period. Since the period-end, Target agreed the acquisition of eight new care homes (two now completed) and 31 retirement apartments for £81.3m (including costs), completed on a forward purchase agreed in September 2018 and acquired the site for the development of a new pre-let home that it will forward fund at a total cost of £9.7m. All of the new homes meet Target’s strict acquisition criteria, including full en-suite wet-room facilities.

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 90.4
2018A 28.4 N/A 14.8 5.54 20.9 14.8
2019E 33.2 N/A 18.0 5.37 21.6 41.4
2020E 43.0 N/A 25.9 6.78 17.1 18.3
Industry outlook

The UK population over the age of 85 is expected to double by 2041, which, combined with a current shortage of high-quality care homes, suggests a strong investment demand in years to come.

Last updated on 05/08/2019
Share price graph
Balance sheet
Forecast net debt (£m) 81.1
Forecast gearing ratio (%) 20
Price performance
%
1m
3m
12m
Actual (2.3) (3.6) (0.4)
Relative* 2.1 (1.1) 6.2
52-week high/low 118.2p/106.0p
*% relative to local index
Key management
Kenneth MacKenzie CEO
Gordon Bland FD

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