Target Healthcare REIT exits Northern Ireland, sees signs of recovery

UK-listed care homes investor Target Healthcare REIT has announced its results for the second half of 2022 and revealed the recent disposal of four assets.

The firm's portfolio market value decreased by 4.8% to £867.7 mln (€988 mln), compared to the June 2022 value of £911.6 mln, primarily driven by a like-for-like portfolio valuation movement of -5.5% and net acquisitions of 0.7%.

The like-for-like valuation movement consists of a decrease of 7.3%, reflecting the outward shift in yields, offset by a 1.8% increase from inflation-linked rental uplifts.

The firm's contractual rent increased by 2.9% to £57.1 mln, compared to the £55.5 mln of June 2022, including like-for-like rental growth of 1.8%.

The sales reported represented a volume of £22 mln, for above the carrying value and June 2022 valuation, and allowed the firm to fully exit Northern Ireland.

The REIT has reported that the underlying trading performance at the homes is recovering towards pre-pandemic levels. Some 99% of leases benefit from upwards-only inflation-linked rent reviews, with 1% fixed uplifts.

Most recent resident occupancy and rent covers for the mature homes in the portfolio were 84% and 1.5 times, respectively.

Alison Fyfe, chair of the company, said: 'We remain committed to our primary investment objective, producing long-term stable income and attractive total returns, with positive social impact by investing in fit-for-purpose care homes for older people in society.

'There is an increased national focus on supporting people in the community rather than having them experience unnecessary and potentially distressing hospital admission and care homes play a crucial role in this.

'The recent increases in interest rates have impacted on earnings but our tenants’ underlying trading performance is improving and maturing, with this property sector benefitting from significant tailwinds of demographic change and needs-based demand for care.

'With a rebased dividend to reflect the group’s current recurring earnings, we believe the group’s modern portfolio is well positioned to deliver sustainable long-term returns to shareholders.'


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