Target Healthcare REIT (THRL) H2 2024 earnings summary

Executive summary

• Portfolio comprises 94 care homes with nearly 6,500 beds, valued at over £900 million and generating just under £60 million in contracted rent, with a net EPRA top-up net initial yield of 6.2%.

• Achieved 11.8% accounting total return for 2024 and ranked #1 in the MSCI UK Annual Healthcare Property Index.

• Highly diversified tenant base, with the largest tenant accounting for only 16% of rent and 33 additional tenants.

• Portfolio quality is high, with 99% of EPC ratings at A or B and 99% of beds featuring en suite wet rooms.

• Disposals of older, less efficient assets improved portfolio metrics and provided capital for new developments.

Financial highlights

• EPRA NTA per share rose 5.9% to 110.7p; sixth consecutive quarter of NTA growth.

• Adjusted EPRA EPS up 2% to 6.13p; adjusted EPRA earnings increased 2% to £38.0m.

• Net rental income grew 4% to £58.6m; interest from development projects doubled to £1.8 million.

• Dividend per share was 5.712p, with 107% cover and a 7.3% yield.

• Net debt to EBITDA at 4.6x, trending down and supporting refinancing ability.

Outlook and guidance

• Pro-forma contracted rent expected to rise to £61.4m by June 2025, driven by rent reviews and new developments.

• Dividend growth guidance of 3% for 2024/25; asset liquidity and £85m available capital provide flexibility.

• Lower inflation assumed for 2025, with rent uplifts at minimum collar rate.

• Strong demand for modern, purpose-built care homes expected to support stable or tightening yields.