Target Healthcare REIT

LN: THRL

Market Cap£600m

Last Close 116p

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.

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Investment summary

Continuing the consistent trend of positive returns, in the three months to 31 March (Q321) EPRA NAV per share increased 0.8% to 109.1p and including DPS paid the quarterly NAV total return was 2.5%. Inflation-indexed like-for-like rent growth continued to support income and capital returns and property valuation yields tightened further. With the care home vaccination programme well advanced, COVID cases remained low (<1% of beds) and occupancy within the homes was stable, with strong enquiries a positive indicator for recovery. Rent collection has remained robust and progress has been made with the small number of underperforming homes; with one re-tenanted on favourable terms that immediately enhance its value. The company expects to announce acquisitions in the near term as due diligence approaches completion.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 34.3 N/A 20.1 5.45 21.5 24.0
2020A 44.3 N/A 23.2 5.27 22.2 24.6
2021E 49.8 N/A 26.1 5.55 21.1 21.2
2022E 56.4 N/A 33.6 6.57 17.8 16.7
Industry outlook

Care home demand is driven by demographics and care needs with a shortage of quality care homes suggesting a strong investment demand in years to come. The pandemic has presented a significant near-term challenge to the sector but does not change the underlying demographic-driven fundamentals while highlighting its critical role in supporting the NHS and the importance of long-term investment.

Last updated on 11/02/2021
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Share price graph
Balance sheet
Forecast net debt (£m) 132
Forecast gearing ratio (%) 24
Price performance
%
1m
3m
12m
Actual 3.0 1.7 7.9
Relative* (0.9) (2.9) (12.8)
52-week high/low 118.2p/106.0p
*% relative to local index
Key management
Kenneth MacKenzie CEO
Gordon Bland FD