Target Healthcare REIT posts strong financial performance

Target Healthcare REIT posted a strong financial performance in the end year ending June 2018 with profit up by 44% to £27.6m.

Income for the specialist investor in modern, purpose-built homes rose by 38% to £34.8m with earning per share increasing to 9.77 pence from 7.58 in the previous year.

Company chairman, Malcolm Nash, said: “Our approach to care home investment is focused on the quality of the physical asset, alongside a comprehensive assessment of tenant capabilities before and after investment.

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“The Manager continues to see acquisition opportunities which are attractive based on long-term sustainability of rental income and their ability to contribute to the diversification of the portfolio.”

Portfolio valuation rose by 5.2 pence per share, driven by acquisitions and asset management. Portfolio rent increased by 3.2% on a like for like basis.

The REIT now owns 55 assets, following 10 acquisitions during the year, which are let to 21 tenants. Notable acquisitions included Aura Care Living homes in Cirencester and Camberley, which were developed by Octopus Healthcare (see Target Healthcare REIT acquires Octopus Healthcare homes).

The South-East (17%) and Ideal Carehomes (14%) account for the largest share of the portfolio in geography and tenant terms, respectively.

Diversification is further maintained through a mix of residential and nursing care and privately and publically funded residents with funding is weighted more towards private payers than the national average.

Managing Partner Kenneth MacKenzie told CHP: “An important part of what we are trying to do for the investor community is to give them a diversified income stream so that our rental stream comes from many tenants, not two or three. Our tenant numbers have gone up from 16 to 21 and, as we go forward, some of our forward funding, where we are building new homes with tenants, will add to that number.

“We plan to continue to support the smaller, regional operator because fundamentally we think they do a good job.

“Our business is designed to create a stable, long-term income stream for our investors and to support good operators to bring best in class, purpose-built wet room homes into the market so that its reputation improves in the medium term.”

The REIT has a further five assets in advanced negotiations, equivalent to a value of £79.1m.

Kenneth said acquisitions were slightly biased towards residential, reflecting the challenges of providing nursing care, and operators specialising in dementia because of rising demand.