Target Healthcare REIT (LN: THRL)

Currency in GBP

Last close As at 26/01/2023

GBP0.82

−0.40 (−0.49%)

Market capitalisation

GBP507m

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.

The care home sector is driven by demographics rather than the economy. A growing elderly population and the need to improve the existing estate point to continuing demand for new, purpose-built homes with flexible layouts and high-quality residential facilities. With its unwavering focus on asset and tenant quality, these are the homes in which THRL invests. It believes that best in class assets, in areas with strong demand/supply characteristics, and sustainable rent levels will always be attractive to existing or alternative tenants and are key to providing sustainable, long-duration income with capital growth.

Sector

Real Estate

Equity Analyst

Martyn King

Martyn King

Director, Financials

Key Management

  • Gordon Bland

    FD

  • Kenneth MacKenzie

    CEO

Balance Sheet

Forecast net debt (£m)

233.9

Forecast gearing ratio (%)

34

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 2.4 2.1 (27.1)
Relative (1.6) (8.2) (29.6)
52 week high/low 119.2p/76.1p

Financials

Target Healthcare REIT delivered strong absolute growth in FY22 and continued its record of positive NAV returns. However, with cash drag from slower than originally planned investment, and weak rent collection from a minority of homes, per share earnings and DPS cover declined. Although now fixed, higher interest rates will weigh on earnings and delay acquisitions, but we expect earnings growth and DPS cover to increase, supported by indexed rent growth and a recovery in rent collection.

Y/E Jun Revenue (£m) EBITDA (£m) PBT (£m) EPS (p) P/E (x) P/CF (x)
2021A 50.0 N/A 26.0 5.46 15.0 15.5
2022A 63.9 N/A 30.2 5.05 16.2 16.1
2023E 68.1 N/A 36.3 5.85 14.0 17.7
2024E 73.1 N/A 37.7 6.08 13.4 13.2

Thematics

Consumer

IPO apocalypse

TMT

ESG, moving beyond the box tick

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free