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 31 December 2019 (Q220). Q220 EPRA NAV increased to 108.1p and including DPS paid, the EPRA NAV total return was 1.8%. Along with acquisitions and development completions, RPI-driven rental growth supported property income and valuations, with the latter also benefiting from yield tightening. Since completing the oversubscribed £80m capital raise in September 2019 investments with an aggregate value of £92m have completed, all meeting the company’s strict acquisition criteria. Reflecting the quality and attractiveness of the assets in the portfolio, all six care homes previously let to Orchard Care Homes have been re-tenanted to two existing tenants with no material change in rental income and resulting in a small valuation uplift.

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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