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.
Target has continued to deploy available capital resources, including the £50m gross proceeds from the November share placement. In Q2 it committed an aggregate £50.8m (including costs) to three assets and has since completed the £6.9m acquisition of a fourth. All are high quality, purpose-built homes of the type that differentiate Target’s investment policy, all equipped with en-suite wet-room facilities and generous communal space. The portfolio continued to perform well during Q2, increasing 14.9% to £463.9m and generating a 1.6% like-for-like valuation gain. End-Q219 EPRA NAV per share was 106.9p (end-Q119: 106.1p) after deducting the Q119 DPS of 1.6448p. Including DPS paid, the quarterly NAV total return was 2.3% (9.5% annualised). Target benefits from very long leases, mostly RPI-linked, and supported by careful asset and operator selection. We continue to forecast a fully covered dividend in FY20.
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.