Target Healthcare REIT has published results for the six months ended 31 December 2014 that show the company’s net asset value rising by 0.8% to 95.5p on property values that rose by 2.7% on a like for like basis. Revenue earnings increased by 91.6% to 3.2p. they paid two quarterly dividends of 1.53p, up 2%.
The company has been raising additional capital and investing money in new care homes, adding ten during the year, taking the portfolio to 27 homes worth £135.6m with a rent roll of £10.5m by the end of December 2014. The homes are modern and purpose-built. Each of the properties in the portfolio is less than nine years old, with the majority of the homes having been constructed in 2011 and 2012. Each of the 1,772 bedrooms has en-suite facilities, almost all with wet-room showers, and the homes also include additional on-site facilities, such as hair-dressing salons, libraries, cinemas and spa facilities. The portfolio was fully occupied at the end of December 2014. They have undertaken at least bi-annual inspections of each of the care homes during the period.
The homes are let to seven care home operators. The largest tenant is Ideal Carehomes with 32.5% of the portfolio as at 31 December 2014 by passing rent. As the Group grows, however, they expect this to be rebalanced. The leases are each long-term Full Repairing and Insuring leases and include annual rental increases, either linked to RPI or through fixed rental uplifts. The weighted unexpired lease term across the portfolio was 30.2 years. The net initial yield on acquisitions across the portfolio remains ahead of the 7.0 per cent. blended initial yield modelled pre-launch, supporting the Company’s stated dividend policy.
During January 2015 the Group acquired a further care home asset in Swaffham, Norfolk for c£4.5m (including acquisition costs).
As at 31 December 2014, the loan-to-value ratio of the Group was 19.9% and it remains the Board’s intention that the long-term average loan-to-value ratio will be approximately 20.0%.
Target say they have a strong pipeline of additional investment opportunities valued at over £100m across single and multi-asset acquisitions located across the UK, these would enable the Group to diversify both in terms of geographic reach and tenant spread.
THRL : Target Healthcare expansion plans on track