Target Healthcare REIT (THRL) H1 2022 earnings summary

Executive summary

• Portfolio expanded to 98 homes valued at £870m, with 31 tenants and 6,522 beds, following acquisition of an 18-home portfolio and new developments.

• IFRS profit for the period rose 18.3% to £18.7m compared to the same period last year; accounting total return was 3.4%.

• Strong rent collection (96%) and resilient trading despite COVID-19 and Omicron variant impacts; occupancy growth resumed late in the period.

• £125m equity issuance and £100m long-term debt secured, supporting portfolio growth and balance sheet strength.

Financial highlights

• EPRA NTA per share increased 0.4% to 110.8p; NAV total return was 3.4% for the period.

• Adjusted EPRA EPS fell 11.3% to 2.36p due to temporary cash drag from capital raise; EPRA EPS was 3.08p.

• Dividend per share increased 0.6% to 3.38p; dividend cover was 65% on adjusted EPRA earnings.

• Portfolio value grew by £186m (27.1%) with £171m in acquisitions and developments; contractual rent up 29.6%.

• Net loan-to-value at 20.7%; average cost of drawn debt 3.1% with 7.4 years average term to maturity.

Outlook and guidance

• Progressive dividend policy maintained; clear path to full dividend cover as new investments contribute to earnings.

• Well-positioned for higher inflation and interest rates due to inflation-linked leases and fixed-rate debt.

• Sector fundamentals remain strong with ongoing demand for high-quality care homes; cautious optimism as Omicron wanes.