Target Healthcare REIT

LN: THRL

£449m market cap

116.4p 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 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.

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 22.3 66.9
2018A 28.4 N/A 14.8 5.54 21.0 13.9
2019E 34.4 N/A 18.8 5.68 20.5 22257.1
2020E 43.1 N/A 25.7 6.71 17.4 15621.0
Last updated on 17/04/2019
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 17/04/2019
Share price graph
Balance sheet
Forecast net debt (£m) 130.8
Forecast gearing ratio (%) 36
Price performance
%
1m
3m
12m
Actual 0.5 9.5 8.5
Relative* (3.3) 0.4 8.2
52-week high/low 118.0p/106.0p
*% relative to local index
Key management
Kenneth MacKenzie CEO
Gordon Bland FD

Content on Target Healthcare REIT