Target Healthcare REIT (THRL) H1 2023 earnings summary

Executive summary

• Portfolio of 100 care homes valued at £867.7m, with 6,701 beds and 33 tenants, generating £57.1m in annual rent; 97% of homes have en suite wet-rooms and 93% are EPC A or B rated.

• Adjusted EPRA earnings per share rose 27.5% to 3.01p compared to the same period last year; dividend per share held at 3.38p, with dividend cover improving to 89%.

• IFRS loss of £34.2m driven by a 5.5% like-for-like portfolio valuation decrease, reflecting higher yields in the real estate market.

• Rent collection remained robust at 96%, with full recovery from a previously impaired tenant; portfolio occupancy for mature homes at 84% and rent cover at 1.5x.

• Board rebasing annual dividend to 5.60p per share from May 2023 to ensure full earnings cover and support sustainable returns.

Financial highlights

• EPRA NTA per share fell 8.3% to 103.0p from 112.3p at June 2022; accounting total return for the period was -5.4%.

• Adjusted EPRA EPS increased to 3.01p (from 2.36p year-over-year); EPRA EPS at 3.89p (from 3.08p).

• Dividend per share unchanged at 3.38p; dividend cover on adjusted EPRA earnings improved to 89% (from 65%).

• Net LTV increased to 25.1% (from 22.0% at June 2022); average cost of drawn debt 3.8% with 96% hedged.

• IFRS loss of £34.2m (vs. £18.7m profit prior year) due to £58.1m revaluation loss on investment properties.

Outlook and guidance

• Portfolio trading and occupancy are improving, with mature homes at 84% occupancy and rent cover at 1.5x.

• Board expects sustainable long-term returns, supported by demographic trends and needs-based demand for care.

• Dividend rebased to 5.60p per share to ensure full cover and allow for future growth.