REG - Target H'care REIT - Half-year Report
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RNS Number : 0382X Target Healthcare REIT PLC 18 March 2026
18 March 2026
Target Healthcare REIT plc and its subsidiaries
("Target Healthcare" or "the Group")
HALF-YEAR RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2025
6.8% total accounting return driven by active investment management,
underpinned by a sector-leading real estate portfolio and sectoral tailwinds
Target Healthcare REIT plc (the "Company" or the "Group"), the listed
specialist investor in modern, purpose-built UK care homes, is pleased to
announce its results for the six months ended 31 December 2025.
Strong NTA growth and total accounting returns driven by the quality of the
portfolio, evidenced by continued outperformance of the MSCI Index; robust
balance sheet supported by long-term fixed rate debt; fully covered and
growing dividend
· Total Accounting Return((1)) of +6.8% (2024: +4.5%)
· EPRA NTA per share increased by 4.0% to 119.4 pence (June 2025:
114.8 pence)
· Adjusted EPRA Earnings per share((2)) increased by 8.5% to 3.40 pence
(2024: 3.13 pence), with the recovery of historical rent arrears equating to
0.18 pence per share
· Dividend per share in respect of the period of 3.016 pence, 113%
covered by adjusted EPRA earnings((3)), with the quarterly dividend per share
increased by 2.5%
· Shorter-term debt refinanced on attractive terms, providing certainty
over capital availability and fixing interest rates on the majority of the
Group's drawn debt
· Net loan-to-value ("LTV") of 15.2% (June 2025: 21.8%), with a weighted
average cost of drawn debt at 3.92% (June 2025: 3.84%), an average term to
maturity of 5.6 years (June 2025: 4.2 years) and interest rate hedged on 98%
of drawn debt until at least September 2030
· EPRA Cost Ratio of 12.7% (2024: 16.1%), including the recovery of
historical rent arrears
· Outperformed the MSCI UK Annual Healthcare Property Index by more than
350 basis points for the calendar year, ranking in the top quartile and
maintaining the portfolio's record of outperforming the Index in every year
since IPO
Portfolio returns enhanced by investment management activity; refresh of
modern, purpose-built portfolio providing a strong platform for robust
underlying trading performance with sustainable rent covers backed by
operators weighted towards private fee payers
· Disposal of ten properties at a weighted premium of 11.7% to holding
value at 30 June 2025, providing capital for redeployment into earnings
accretive and portfolio enhancing acquisitions with an attractive and growing
pipeline
· £45 million invested, to acquire three strongly performing modern
operational care homes and with contracts exchanged on a forward commitment to
acquire a fourth, all in prime Central Scotland locations
· Like-for-like portfolio valuation increase of 3.1%, resulting in a
portfolio market valuation of £894.6 million (June 2025: £929.9 million),
primarily driven by:
o +1.6% from inflation-linked rental uplifts;
o +1.0% from gains on disposal;
o +0.3% from re-tenanting and asset management;
o +0.2% from net initial yield tightening
· Contractual rent decreased by 2.7% to £59.5 million, primarily due to
net portfolio disposals (June 2025: £61.2 million) offset by like‑for-like
rental growth of 1.8%
· Key metrics regarding underlying trading performance at the homes
remained strong, with rent collection of 99% from fully let portfolio
· Mature home rent cover of 1.9 times (June 2025: 1.9 times) and
mature home resident spot occupancy at the period end of 86%
· Diversified portfolio and tenant base, with 32 tenants across 86
properties (June 2025: 34 tenants and 93 properties)
· Weighted average unexpired lease term of 26.3 years (June 2025: 25.9
years) remains one of the longest in the sector
Significant differentiation in real estate quality metrics, benefitting from
the dual tailwinds of an ageing UK demographic and a clear trend to quality
real estate:
· 100% properties A or B EPC ratings
· 100% of rooms fully en suite wet-rooms
· Generous 48m(2) of average space per resident
· 97% of properties younger than 2000 build date
Unless otherwise stated in the above, references to 2024 mean the comparative
six month period to 31 December 2024 and references to 2025 mean 30 June 2025,
being the start of the period under review.
( )
((1)) Based on EPRA NTA movement and dividends paid, see alternative
performance measures below.
((2)) For the details of EPRA earnings and adjusted EPRA earnings refer to
note 6 to the Condensed Consolidated Financial Statements.
((3)) See alternative performance measures below.
Alison Fyfe, Chair of the Company, said:
"The Group has delivered a healthy total accounting return of 6.8% for the six
months to 31 December 2025. This represents the highest six-month return since
the Group's launch in 2013, driven by the active asset management of its
carefully curated, best-in-class portfolio and through successful investment
activity that has seen the disposal of 10 assets at an average premium of
11.7% to their holding value at June 2025. Almost half of the proceeds have
already been redeployed into four care homes in attractive geographies and at
attractive net initial yields that will drive future earnings momentum.
"We continue to believe that our robust business model, supported by an
attractive debt book, delivers value and is an attractive, disciplined and
proven approach to investing in UK care home real estate."
A live webcast presentation for analysts will be held at 9.00 a.m. GMT this
morning and can be accessed via the following link:
https://brrmedia.news/THRL_HY26
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fbrrmedia.news%2FTHRL_HY26&data=05%7C02%7Cdonaldc%40targetfundmanagers.com%7Cf4b0ab5345714ec6d3a408de837bf3e3%7Ce31e3be1f59945f4b72d6bfb6c901efc%7C1%7C0%7C639092765577865668%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=0jg5miZGpgZt%2BOMJqA%2BGpiKABbEIZcgtsoCW13pmKHA%3D&reserved=0)
LEI: 213800RXPY9WULUSBC04
Enquiries:
Target Fund Managers Limited Tel: 01786 845 912
Kenneth MacKenzie
James MacKenzie
Alastair Murray
Stifel Nicolaus Europe Limited Tel: 020 7710 7600
Mark Young
Rajpal Padam
Catriona Neville
Panmure Liberum Limited Tel: 020 3100 2000
Jamie Richards
David Watkins
FTI Consulting Tel: 020 3727 1000
Dido Laurimore TargetHealthcare@fticonsulting.com
Richard Gotla
Notes to editors:
UK listed Target Healthcare REIT plc (THRL) is an externally managed Real
Estate Investment Trust which provides shareholders with an attractive level
of income, together with the potential for capital and income growth, from
investing in a diversified portfolio of modern, purpose-built care homes.
The Group's portfolio at 31 December 2025 comprised 86 assets let to 32
tenants with a total value of £894.6 million.
The Group invests in modern, purpose-built care homes that are let to high
quality tenants who demonstrate strong operational capabilities and a strong
care ethos. The Group builds collaborative, supportive relationships with each
of its tenants as it believes working in this way helps raise standards of
care and helps its tenants build sustainable businesses. In turn, that helps
the Group deliver stable returns to its investors.
Chair's Statement
I am pleased to provide this update following six months of successful
investment and asset management activity, which has continued to strengthen
and enhance our property portfolio. The Group has also benefitted from its
robust business model delivering consistent property and financial
performance, underpinned by secure, long-duration, inflation-linked rental
income; a portfolio of modern, purpose-built assets; compelling demographic
tailwinds; and a resilient and efficient debt management structure. These
positive dynamics, supplemented by selective property disposals at attractive
pricing, have enabled the Group to deliver a healthy total accounting return
of 6.8% for the period.
Care homes remain critical in meeting the growing social care needs of an
increasingly elderly UK population which is the key demand driver for our
properties. Our portfolio is comprised of high-quality care home real estate,
attractive to operators and desirable for the residents given the modern
design that facilitates a pleasant living and working environment, and
efficient and effective care provision.
1. Market Overview
The UK real estate market as a whole has been slow to recover from its recent
lows, with stubborn inflation slowing the anticipated reduction in UK interest
rates and persistent concerns remaining around the state of the UK economy.
However, the care home market has seen an increase in deal volumes, with
Savills reporting a record £12 billion of capital deployed into UK healthcare
real estate during 2025. Whilst the usual players remain active, transactional
activity continues to be dominated by WholeCo deals, predominantly driven by
overseas capital attracted by the UK's elderly care demographics. We view
these dynamics as being positive for the sector and the Group, underpinning
our portfolio valuation. Notwithstanding this competitive landscape, we remain
confident in our Investment Manager's ability to identify, and execute on,
attractive opportunities.
2. Portfolio Performance
The portfolio delivered another year of outperformance of the MSCI UK Annual
Healthcare Property Index, with a calendar year total return of 11.1% for
standing assets relative to the index's 7.5%. We have maintained our top
quartile ranking over ten years and continued our consistent record of
outperforming the Index every year since the Group's IPO.
The six months to 31 December 2025 marked a period of significant investment
and asset management activity, with the disposal of ten assets for £94
million, representing an average premium to their holding value at 30 June
2025 of 11.7% and an implied net initial yield of 5.3%. As explained in more
detail in the previous Annual Report, these disposals facilitated a reduction
in the Group's exposure to its largest tenant group, whilst adding 1.6 pence
per share to the EPRA NTA and providing capital for redeployment into earnings
accretive and portfolio enhancing acquisitions. In line with the timetable
previously indicated, in November 2025 the Group redeployed almost half of the
disposal proceeds with the acquisition of three modern, operational care homes
in Central Scotland, a region with compelling underlying demographics,
alongside a forward commitment to acquire a fourth home with the same tenant
operator. The total investment of £45 million across these two transactions
reflected a net initial yield in excess of 6%.
The Group has remaining committed capital available of c.£100 million for
deployment into an attractive and growing pipeline. Outline terms have been
agreed and formal due diligence commenced, subject to final Board approval, on
assets in excess of this amount. This pipeline consists of earnings-enhancing
modern, purpose-built assets across a diverse range of geographies with an
indicative blended net initial yield in excess of 6%. This pipeline also
comprises a mix of standing assets and forward fund developments let to both
existing and new operators to the Group. The investment of the committed
capital available would take the Group's net LTV to c.25%. The additional
deployment of our uncommitted debt accordion facilities into a wider pipeline
of assets on which offers have been made would potentially increase the net
LTV to nearer 30%, should investment conditions be considered appropriate.
In addition to the enhanced returns generated by investment activity, the
underlying performance of the core portfolio has also remained robust.
Combining the impact of investment activity with contracted rental growth; the
completion of asset management initiatives; and a marginal tightening in the
portfolio's net initial yield, resulted in an ungeared capital return from
standing assets of 3.1%, and a total return of 6.5%, over the half year.
Further details on the completed asset management initiatives which
contributed towards this robust return are contained in the Investment
Manager's Report.
This continued focus on asset management activity, without recourse to tenant
incentives, has also improved the overall portfolio position, with rent
collection improving to 99% for the six month period. Those tenants
responsible for the majority of the shortfall in rent collection in the prior
year have now been replaced, facilitated by strong demand from both operators
and residents for our best-in-class purpose-built care home real estate with
100% en suite wet-room provision in attractive geographical locations. Our
trusted landlord status also makes the Group an appealing partner for
established, quality operators.
Rent covers remain strong at 1.9x, close to the highest level achieved since
IPO. This again demonstrates the underlying value of a portfolio of modern,
purpose-built care homes, and supports the Group's preference for operators
deliberately biased towards private pay residents (77%). This enables tenant
operators to absorb cost pressures more easily, including recent increases to
both the national minimum wage and employer national insurance contributions.
In turn, these operator profitability levels support rental payments and
financial resilience.
The Group's portfolio remains best in class, with 97% of homes built or
significantly redeveloped since 2000, 100% en suite wet-room provision, and
generous, sector leading space per resident.
3. Financial Performance
As noted previously, the Group delivered a total accounting return of 6.8% for
the six month period following an EPRA NTA increase of 4.0% to 119.4 pence
(from 114.8 pence) and dividends paid in the period.
Following an increase in operating costs over the previous six months,
primarily driven by the one-off costs of placing a tenant into administration,
the Group's Adjusted EPRA cost ratio for the six months to 31 December 2025
has reduced to 15.4% - albeit that this would have been 18.6% excluding the
recovery of historical rent arrears.
Adjusted EPRA earnings per share increased by 8.5% to 3.40 pence. This
included the non-recurring recovery of historical arrears equating to 0.18
pence per share which is covered in more detail in the Investment Manager's
Report. This improvement in EPRA earnings represents a robust performance from
the underlying portfolio at a time when the Group is focused on re-investing
the disposal proceeds. Although the full benefit of the recent disposals will
not be seen until the available capital is fully redeployed, this base level
of recurring earnings is anticipated to improve over the medium term as the
Group redeploys its available capital into the attractive pipeline of assets
at an anticipated blended net initial yield in excess of c.6%.
The Group has increased its quarterly dividend by 2.5% to 1.508 pence per
share. This is well covered by underlying earnings for the period and
demonstrates the stability and consistency of our business model.
4. Debt Facilities
In September 2025, the Group refinanced its short-term banking facilities on
attractive terms with the incumbent lenders. The existing £170 million
facilities were replaced with £130 million of new committed facilities,
consisting of £50 million of term loans and £80 million of revolving credit
facilities. These new facilities are for a minimum term of three years, with
the option of two further one-year extensions, subject to lender consent. In
addition, the facilities allow for accordion elements which may provide up to
a further £70 million of uncommitted debt funding. This borrowing structure
minimises commitment fees whilst providing flexibility as the Group reinvests
the proceeds of recent disposals.
Leverage at 31 December was 15.2%, below the long-term target of the Group.
Given the capital available, we expect to increase the Group's LTV to c.25%
through further investment as identified in the current pipeline.
5. Investment Manager Alignment
As highlighted in the previous Annual Report, the Board remains keen to
further strengthen the alignment between the interests of the investment
company (and its shareholders as a whole) and those of its external manager.
In this regard, the Board has reached agreement in principle with the
Investment Manager that, over a period of up to three years, the Investment
Manager, including senior members of the management team and their connected
parties, will invest the equivalent of 25% of the annual management fee in
acquiring shares in the Company. Such acquisitions are expected to be
undertaken on an ad hoc basis through the secondary market and will, of
course, remain subject to applicable law and regulations.
6. Outlook
Whilst cognisant of the impact that the current geopolitical events could have
on inflation, interest rates and investor sentiment, we remain committed to
the Group's investment strategy of investing in modern, purpose-built care
home assets with sustainable and inflation-linked rental streams. Our tenants'
focus on private-pay residents facilitates the absorption of continuing
inflation, as demonstrated by operator rent covers remaining robust. This,
combined with the resolution of historical portfolio concerns through the
recent re-tenantings, leaves the Group well placed to deliver near full rent
collection on a fully let portfolio, whilst continuing to benefit from
contractual, inflation-linked, annual rental increases.
The recent disposals, all at above book value, continue to demonstrate the
attractiveness of both the Group's investment strategy and the resulting
portfolio, whilst providing the Group with capital for redeployment in order
to further enhance and modernise the portfolio. With almost half of the
disposal proceeds already committed, and a growing pipeline of
earnings-accretive properties at a blended indicative net initial yield in
excess of 6% under consideration, we believe the Group is well placed to
further enhance shareholder value.
We continue to believe our model delivers shareholder value and is an
attractive, disciplined and proven approach to investing in UK care home real
estate.
Alison Fyfe
17 March 2026
Investment Manager's Report
Portfolio performance
Our purpose remains to accelerate improvements in physical standards of UK
care homes through long term, responsible investment in modern real estate
that delivers attractive returns to shareholders. This has been achieved in
the period through active portfolio management, value-accretive disposals,
redeployment of proceeds into modern fit-for-purpose assets and the
development of a pipeline of near-term attractive assets in line with the
Group's established investment criteria.
This activity has supported a strong total accounting return for the period of
6.8%, like-for-like rental growth of 1.8% and a like-for-like portfolio
valuation increase of 3.1%.
Pence per share
EPRA NTA per share as at 30 June 2025 114.8
Property revaluations 2.7
Property disposals and surrender premium 1.8
Property acquisitions (0.3)
Adjusted EPRA earnings 3.4
Dividends paid (3.0)
EPRA NTA per share as at 31 December 2025 119.4
Asset management
Active investment management continued in the period, with the disposal of ten
homes, across two transactions, all above carrying value, resulting in total
proceeds of £93.9 million and an improvement in the portfolio's tenant
diversification. Almost half of the disposal proceeds were subsequently
redeployed into the acquisition of three operational care homes and one
forward commitment, further improving the modernity and ESG credentials of the
Group's portfolio. The Investment Manager has developed a strong and growing
pipeline of attractive investment opportunities.
The Investment Manager also successfully delivered a number of asset
management initiatives, improving both rent collection and portfolio metrics.
These initiatives included:
· The Group's remaining development property reaching practical
completion and being leased, on pre-agreed terms, to an existing tenant,
thereby adding £0.6 million to the Group's contractual rental income.
· One asset, where the operator had not been paying rent and which the
Group had placed into administration, being re-tenanted in July 2025 to an
existing tenant of the Group at an improved rental level. The cumulative
valuation uplift of over £1.0 million since the completion of the
re-tenanting has covered the cost of placing the tenant into administration,
and there is the potential for further yield tightening as the operating
performance of the home also recovers. More important, however, was securing
the future stability of the care home for both staff and residents.
· Re-tenanting three properties leased to a single tenant, where the
operator was not paying the rent in full, in September 2025 at an unchanged
rental level to two existing tenants of the Group. All agreed rent arrears,
totalling £1.9 million, were subsequently recovered from the previous tenant,
resulting in a non-recurring contribution of 0.18p per share to the Group's
adjusted EPRA EPS over the six-month period.
· Re-tenanting one asset at an unchanged rental level with no tenant
incentives being granted, thereby supporting a tenant who had taken the
strategic decision to exit the elderly care sector and extending the new lease
term to 35 years. The completion of the re-tenanting crystallised the payment
of a surrender premium of £1.4 million, equivalent to 0.23p per share, with
no change in the property value to compensate for the proceeds received.
These portfolio management activities drove an improvement across the
portfolio, as evidenced in the key portfolio metrics which are reflective of
the investment grade characteristics of our modern care home portfolio. Rent
collection has now returned towards 100% on a fully let portfolio primarily as
a result of the re-tenantings.
Rental income, underpinned by long term, inflation-linked contractual
agreements, increased by 1.8% on a like-for-like basis, with 38 rental reviews
in the period completed at an average increase of 3.8%. This rental income is
supported by a diversified tenant base with the Group's care homes being let
to 32 operators, the largest of which accounts for 8.7% of contracted rental
income and the top five accounting for c.40%.
Our tenants continue to generate sustainable earnings with average rent covers
of 1.9x at the period end. Underpinning this performance is the underlying
resident demand for places in our modern, purpose-built homes and our tenants'
commercial proposition being geared towards private-pay. The underlying mature
occupancy remained high and sustainable at 86% with operators continuing to
focus on accepting new residents at fee levels commensurate with the services
provided rather than filling to capacity at uneconomic fees.
The overall portfolio metrics remain positive and attractive. Whilst
contractual rent decreased 2.7% to £59.5 million (June 2025: £61.2 million),
driven by the asset disposals, the redeployment of the disposal proceeds will
increase this back towards historical levels in the current financial year.
Over the six-month period, the portfolio WAULT increased to 26.3 years from
25.9 years, driven by a combination of the disposal of properties with shorter
lease terms, re-tenanting activities, the practical completion and leasing of
the Group's remaining development and the acquisition of three operational
care homes on new 35-year lease terms.
The portfolio like-for-like valuation growth in the period of 3.1% was
primarily driven by inflation-linked rent reviews (1.6%) and gains on disposal
(1.0%). A further 0.3% resulted from re-tenanting and other asset management
initiatives, with the marginal tightening of the portfolio's weighted average
net initial yield contributing the final 0.2%. The latter was primarily driven
by matters relating to individual properties within the Group's portfolio,
with overall market yields having remained relatively static over the period.
Debt facilities
The Group's refinanced banking facilities, combined with the Group's existing
£150 million of long-term fixed-rate debt, results in total committed debt
facilities of £280 million. This comprises £200 million on which the
interest rate has been fixed or hedged until at least September 2030 at a
weighted average rate of 3.9%, and £80 million of revolving credit
facilities. It is anticipated that the Group will hedge the interest rate on
these revolving credit facilities, through the use of interest rate caps, as
monies are redeployed.
Investment market
The current high level of investment activity within the healthcare market is
expected to continue for the foreseeable future, particularly for prime care
home real estate with the characteristics favoured by our investment approach.
However, we anticipate that our knowledge of the sector, performance record
and reputation will ensure we are able to continue to develop a pipeline of
appropriate investment opportunities for the Group, whilst remaining cognisant
of any asset management opportunities that may present themselves within a
highly competitive market.
Health and social care update
Social care reform
The Social Care sector awaits the initial findings of the Casey Commission on
Adult Social Care, led by Baroness Louise Casey. These findings and
recommendations are expected mid-2026, with the full report due to be
published in 2028. While organisations look forward to a spotlight being shone
upon the long-standing frustrations they face, it is likely that the costs
associated with ballooning older-age demographics will be the biggest
challenge in implementing change.
Frustrations also exist between hospitals and community services, and the
Government introduced the 2025 'ten-year health plan' to streamline services.
Operators continue to highlight their availability to relieve pressure in the
system, particularly by way of respite and rehabilitation type 'step-down'
from acute settings (as well as longer term care), but are often underutilised
or restricted by lack of coordination and/or budget squeeze within Local
Authorities and other statutory bodies. The ten-year plan also emphasises the
place for technology in elder care. Our care homes are all fully-equipped
with fast Wi-Fi to allow the implementation of technology-based solutions by
our tenants.
The Government's ultimate vision of all the above is the creation of a
National Care Service ('NCS') for social care, to mirror the National Health
Service ('NHS'), but this goal may prove to be elusive, with Scotland dropping
its pursuit of an NCS in 2025.
Autumn Budget and ADASS survey
Operators and their various associations reacted with disappointment to the
budget in late November 2025, which was felt to hold little for the sector.
Care England, expressing its concern, stated "the NHS cannot deliver its
ten-year plan without a stable and well-funded social care system alongside
it". National Care Forum linked their disappointment to the earlier ADASS
annual survey, in which the President stated - "The underfunding of adult
social care is forcing councils to make impossible choices - trying to balance
financial sustainability with doing the right thing for those who rely on us."
The budget noted 2026 increases in the national living wage (see below) as
well as proposing an apprenticeship scheme for social care, which were both
welcome, but lack of any further announcements on an overall workforce
strategy for the sector were also a disappointment.
Staffing
Staffing and recruitment continue to be relatively stable across the sector as
well as within the Group's homes, albeit there is widespread dismay at the
decision to end the licence scheme for all new (sector) overseas workers
('OW'). Many operators, however, were pleased to note that licence renewals
for OW's were generally taking place smoothly. Increased scrutiny on operators
who use the licence scheme comes with the recent creation of a new 'Sponsor
Assurance Team', set up by UK Visas and Immigration. With the 'Skills for
Care' organisation expecting a need for 430,000 new care workers by 2035, this
policy will likely be another interesting question for the Casey Commission to
address.
Also concentrating minds within the sector is the proposed Fair Pay Agreement
('FPA') which is due to come into force in 2028. The first stage of this, the
Employment Rights Act 2025, achieved Royal Assent during December 2025. With
this legislation will come a raft of improvements to pay and conditions
(welcome if funded), as well as the establishment of the Adult Social Care
Negotiating Body. The Government has committed an initial £500 million
towards the FPA. Changes to Statutory Sick Pay in April 2026 flag the first of
several proposed changes.
Costs and Fees
Care home fees are generally reviewed in April, coinciding with Local
Authorities' budget renewal and fee setting of publicly funded residents.
Latterly, particularly where homes had a higher ratio of private fee payers,
operators who were experiencing challenging inflationary cost pressures were
also implementing an autumn review, resulting in four years of particularly
high private fee increases - often close to, if not into, double figures in
percentage terms. The principal of a leading client-facing sector website
recently stated, "paying privately has become the norm, not the exception".
Operators this year are keeping a close eye on the aforementioned FPA
proposals and, as the national living wage itself rises by 4.1% in April 2026
(2025: 6.7%), we expect fee inflation will be in the mid-to-high single
digits. Public fees will likely again struggle to keep pace, putting some
pressure on older homes where operators are less likely to attract private fee
payers. Continued cost inflation, particularly of food and energy, will add to
the pressures.
Regulatory
The English Care Regulator (the 'CQC'), continues to find progress
challenging, after losing both its CEO (Sir Julian Hartley) and its Chair
(Professor Sir Mike Richards) in the last six months. Despite stepping back
from a failed IT system in 2025 to a more simplified, even traditional
approach, the organisation continues to face headwinds both with the timely
processing of registration requests by operators, as well as routine
inspections of care homes, despite otherwise good progress made on these
during the year.
Target Fund Managers Limited
17 March 2026
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 December
2025
Six months ended Six months ended
31 December 2025 31 December 2024
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Revenue
Rental income 30,287 5,222 35,509 29,770 5,487 35,257
Other rental income - 1,435 1,435 - - -
Other income 4 - 4 7 - 7
Total revenue 30,291 6,657 36,948 29,777 5,487 35,264
8
Gain on revaluation of investment properties
- 10,258 10,258 - 5,908 5,908
Gain on investment properties realised 8
- 9,456 9,456 - - -
Total income 30,291 26,371 56,662 29,777 11,395 41,172
Expenditure
Investment management fee 2 (4,040) - (4,040) (3,909) - (3,909)
Credit loss allowance and bad debts 3 949 - 949 (180) - (180)
Other expenses 3 (1,607) - (1,607) (1,581) - (1,581)
Total expenditure (4,698) - (4,698) (5,670) - (5,670)
Profit before finance costs and taxation
25,593 26,371 51,964 24,107 11,395 35,502
Net finance costs
Interest income 305 - 305 225 - 225
Finance costs 4 (4,943) (280) (5,223) (5,362) (403) (5,765)
Net finance costs (4,638) (280) (4,918) (5,137) (403) (5,540)
Profit before taxation 20,955 26,091 47,046 18,970 10,992 29,962
Taxation 5 - - - - - -
Profit for the period 20,955 26,091 47,046 18,970 10,992 29,962
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss
Movement in fair value of interest rate derivatives designated as cash flow
hedges
- (745) (745) - (796) (796)
Total comprehensive income for the period
20,955 25,346 46,301 18,970 10,196 29,166
Earnings per share (pence) 6 3.38 4.21 7.59 3.06 1.77 4.83
The total column of this statement represents the Group's Condensed
Consolidated Statement of Comprehensive Income, prepared in accordance with UK
adopted IAS 34 'Interim Financial Reporting'. The supplementary revenue return
and capital return columns are both prepared under guidance published by the
Association of Investment Companies.
All revenue and capital items in the above statement are derived from
continuing operations.
No operations were discontinued in the period.
Condensed Consolidated Statement of Financial Position
As at 31 December 2025
As at As at
31 December 30 June
2025 2025
(unaudited) (audited)
Notes £'000 £'000
Non-current assets
Investment properties 8 809,696 840,432
Trade and other receivables 9 97,351 101,861
907,047 942,293
Current assets
Trade and other receivables 9 2,286 3,682
Interest rate derivatives 12 - 572
Cash and cash equivalents 11 67,173 39,639
69,459 43,893
Total assets 976,506 986,186
Non-current liabilities
Loans 12 (200,939) (148,439)
Interest rate derivatives 12 (454) -
Trade and other payables 13 (12,818) (12,695)
(214,211) (161,134)
Current liabilities
Loans 12 - (91,852)
Trade and other payables 13 (22,011) (20,740)
(22,011) (112,592)
Total liabilities (236,222) (273,726)
Net assets 740,284 712,460
Share capital and reserves
Share capital 14 6,202 6,202
Share premium 256,633 256,633
Merger reserve 47,751 47,751
Distributable reserve 142,054 160,531
Hedging reserve (454) 291
Capital reserve 127,590 101,499
Revenue reserve 160,508 139,553
Equity shareholders' funds 740,284 712,460
Net asset value per ordinary share (pence) 6 119.4 114.9
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2025
(unaudited)
Distrib-utable
Share capital Share premium Merger reserve reserve Hedging Capital reserve Revenue reserve
Note reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2025 6,202 256,633 47,751 160,531 291 101,499 139,553 712,460
Profit for the period - - - - - 26,091 20,955 47,046
Other comprehensive income - - - - (745) - - (745)
Total comprehensive income
- - - - (745) 26,091 20,955 46,301
Transactions with owners recognised in equity:
Dividends paid 7 - - - (18,477) - - - (18,477)
At 31 December 2025 6,202 256,633 47,751 142,054 (454) 127,590 160,508 740,284
For the six months ended 31 December 2024 (unaudited)
Distrib-utable
Share capital Share premium Merger reserve reserve Hedging Capital reserve Revenue reserve
Note reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2024 6,202 256,633 47,751 170,347 1,741 77,668 128,951 689,293
Profit for the period - - - - - 10,992 18,970 29,962
Other comprehensive income - - - - (796) - - (796)
Total comprehensive income
- - - - (796) 10,992 18,970 29,166
Transactions with owners recognised in equity:
Dividends paid 7 - - - - - - (17,981) (17,981)
At 31 December 2024 6,202 256,633 47,751 170,347 945 88,660 129,940 700,478
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December
2025
Six months ended Six months ended
31 December 31 December
2025 2024
(unaudited) (unaudited)
Notes £'000 £'000
Cash flows from operating activities
Profit before tax 47,046 29,962
Adjustments for:
Interest income (305) (225)
Finance costs 5,223 5,765
Revaluation gain on investment properties and movements in lease
incentives, net of acquisition costs written off
(15,480) (11,395)
Gain on investment properties realised (9,456) -
Decrease in trade and other receivables 248 1,832
Increase in trade and other payables 1,565 676
28,841 26,615
Interest paid (4,969) (5,049)
Interest received 305 225
(4,664) (4,824)
Net cash inflow from operating activities 24,177 21,791
Cash flows from investing activities
Purchase of investment properties, including acquisition costs
(32,028) (9,805)
Disposal of investment properties, net of lease incentives 93,531 -
Net cash inflow/(outflow) from investing activities 61,503 (9,805)
Cash flows from financing activities
Drawdown of bank loan facilities 21,575 10,000
Repayment of bank loan facilities (60,075) (5,000)
Cost of refinancing of bank loan facilities (1,205) -
Dividends paid (18,441) (17,952)
Net cash outflow from financing activities (58,146) (12,952)
Net increase/(decrease) in cash and cash equivalents 27,534 (966)
Opening cash and cash equivalents 39,639 38,884
Closing cash and cash equivalents* 11 67,173 37,918
Transactions which do not require the use of cash
Movement in fixed or guaranteed rent reviews 8 5,222 5,487
Movement in lease incentives 8 383 (119)
Fixed or guaranteed rent reviews derecognised on disposal or re-tenanting
8 (10,194) -
Total (4,589) 5,368
*The closing cash and cash equivalents balance at 31 December 2025 includes
£50,187,000 (31 December 2024: £23,208,000) which is restricted cash held in
secured accounts related to the Group's loan facilities. See note 11 for
further details.
Notes to the Condensed Consolidated Financial Statements
1. Basis of Preparation
The condensed consolidated financial statements have been prepared in
accordance with UK-adopted IAS 34 'Interim Financial Reporting' and the
accounting policies set out in the statutory financial statements of the Group
for the year ended 30 June 2025.
The condensed consolidated financial statements do not include all of the
information required for a complete set of IFRS financial statements and
should be read in conjunction with the consolidated financial statements of
the Group for the year ended 30 June 2025, which were prepared under full
UK-adopted International Financial Reporting Standards ('IFRS') requirements.
These are not full statutory accounts in terms of Section 434 of the Companies
Act 2006 and are unaudited. Statutory accounts for the Company for the year
ended 30 June 2025, which received an unqualified audit report and which did
not contain a statement under Section 498 of the Companies Act 2006, have been
lodged with the Registrar of Companies. No full statutory accounts, for either
the Company or Group, in respect of any period after 30 June 2025 have been
reported on by the Company's auditor or delivered to the Registrar of
Companies.
The Interim Report and Condensed Consolidated Financial Statements for the six
months ended 31 December 2025 will be posted to shareholders and made
available on the website: www.targethealthcarereit.co.uk. Copies may also be
obtained from the Company Secretary, Target Fund Managers Limited, 1st Floor,
Glendevon House, Castle Business Park, Stirling FK9 4TZ.
Going concern
The condensed consolidated financial statements have been prepared on the
going concern basis. In assessing the going concern basis of accounting the
Directors have had regard to the guidance issued by the Financial Reporting
Council. The Directors have continued to place a particular focus on the
appropriateness of adopting the going concern basis in preparing the financial
statements for the period ended 31 December 2025.
The Group's going concern assessment particularly considered that:
· The value of the Group's portfolio of assets significantly exceeds
the value of its liabilities;
· The Group is contractually entitled to receive rental income which
significantly exceeds its forecast expenses and loan interest; and
· The Group remains within its loan covenants, with a weighted average
term to maturity of 5.6 years at 31 December 2025 and an earliest repayment
date of September 2028.
The Group has a significant balance of cash and undrawn debt available and the
Group's current policy is to prudently retain a proportion of this to ensure
it can continue to pay the Group's expenses and loan interest in the unlikely
scenario that the level of rental income received deteriorates significantly.
The proportion retained will be kept under review dependent on portfolio
performance and market conditions.
Based on these considerations, the Directors consider that the Group has
adequate resources to continue in operational existence for the foreseeable
future and at least the next twelve months from the date of issuance of this
report. For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
2. Investment Management Fee
For the six month For the six month
period ended period ended
31 December 2025 31 December 2024
£'000 £'000
Investment management fee 4,040 3,909
The Group's Investment Manager and Alternative Investment Fund Manager
('AIFM') is Target Fund Managers Limited. The Investment Manager is entitled
to an annual management fee on a tiered basis based on the net assets of the
Group as set out below. Where applicable, VAT is payable in addition.
Net assets of the Group Management fee percentage
Up to and including £500 million 1.05
Above £500 million and up to and including £750 million 0.95
Above £750 million and up to and including £1 billion 0.85
Above £1 billion and up to and including £1.5 billion 0.75
Above £1.5 billion 0.65
The Investment Management Agreement can be terminated by either party on 24
months' written notice. Should the Company terminate the Investment Management
Agreement earlier then compensation in lieu of notice will be payable to the
Investment Manager. The Investment Management Agreement may be terminated
immediately upon the occurrence of certain events, including the insolvency of
either party or if the Investment Manager becomes legally prohibited from
carrying on investment business or performing its duties under the Investment
Management Agreement.
3. Other expenses
For the six month period ended For the six month period ended
31 December 2025 31 December 2024
£'000 £'000
Total movement in credit loss allowance (1,454) 180
Bad debts written off 505 -
Credit loss allowance (credit)/charge (949) 180
Valuation and other professional fees 901 969
Secretarial and administration fees 116 109
Directors' fees 122 114
Other 468 389
Total other expenses 1,607 1,581
4. Finance costs
For the six month period ended For the six month period ended
31 December 2025 31 December 2024
£'000 £'000
Interest paid on loans 4,585 5,050
Amortisation of loan costs 358 312
Finance and transaction costs relating to the interest rate cap
280 403
Total 5,223 5,765
5. Taxation
The Directors intend to conduct the Group's affairs such that management and
control is exercised in the United Kingdom and so that the Group carries on
any trade in the United Kingdom.
The Group has entered the REIT regime for the purposes of UK taxation. Subject
to continuing relevant UK-REIT criteria being met, the profits from the
Group's property rental business, arising from both income and capital gains,
are exempt from corporation tax.
6. Earnings per share and Net Asset Value per share
Earnings per share
For the six month For the six month
period ended period ended
31 December 2025 31 December 2024
Pence per share Pence per share
£'000 £'000
Revenue earnings 20,955 3.38 18,970 3.06
Capital earnings 26,091 4.21 10,992 1.77
Total earnings 47,046 7.59 29,962 4.83
Average number of shares in issue 620,237,346 620,237,346
The European Public Real Estate Association ('EPRA') is an industry body which
issues best practice reporting guidelines for financial disclosures by public
real estate companies and the Group reports an EPRA NAV quarterly. EPRA has
issued best practice recommendations for the calculation of certain figures
which are included below.
The EPRA earnings are arrived at by adjusting for the revaluation movements on
investment properties and other items of a capital nature and represents the
revenue earned by the Group.
The Group's specific adjusted EPRA earnings adjusts the EPRA earnings for
rental income arising from recognising guaranteed rental review uplifts and
for development interest received from developers in relation to monies
advanced under forward fund agreements which, in the Group's IFRS financial
statements, is required to be offset against the book cost of the property
under development. The Board believes that that Group's specific adjusted EPRA
earnings represents the underlying performance measure appropriate for the
Group's business model as it illustrates the underlying revenue stream and
costs generated by the Group's property portfolio. The reconciliations are
provided in the table below:
For the six month period ended For the six month period ended
31 December 2025 31 December 2024
£'000 £'000
Earnings per IFRS Consolidated Statement of Comprehensive Income
47,046 29,962
Adjusted for gains on investment properties realised (9,456) -
Adjusted for revaluations on investment properties (10,258) (5,908)
Adjusted for finance and transaction costs on the interest rate cap
280 403
Adjusted for other capital items (1,435) -
EPRA earnings 26,177 24,457
Adjusted for rental income arising from recognising guaranteed rent review
uplifts
(5,222) (5,487)
Adjusted for development interest under forward fund agreements
130 469
Group specific adjusted EPRA earnings 21,085 19,439
Earnings per share ('EPS') (pence per share)
EPS per IFRS Consolidated Statement of Comprehensive Income
7.59 4.83
EPRA EPS 4.22 3.94
Group specific adjusted EPRA EPS 3.40 3.13
Earnings for the period ended 31 December 2025 should not be taken as a guide
to the results for the year to 30 June 2026.
6. Earnings per share and Net Asset Value per share (continued)
Net Asset Value per share
The Group's net asset value per ordinary share of 119.4 pence (30 June 2025:
114.9 pence) is based on equity shareholders' funds of £740,284,000 (30 June
2025: £712,460,000) and on 620,237,346 (30 June 2025: 620,237,346) ordinary
shares, being the number of shares in issue at the period end.
The three EPRA NAV metrics are shown below. Further details are included in
the glossary.
As at 31 December 2025 As at 30 June 2025
EPRA NRV EPRA NTA EPRA NDV EPRA NRV EPRA NTA EPRA NDV
£'000 £'000 £'000 £'000 £'000 £'000
IFRS NAV per financial statements 740,284 740,284 740,284 712,460 712,460 712,460
Fair value of interest rate derivatives 454 454 - (572) (572) -
Fair value adjustment to loans - - 25,493 - - 27,929
Estimated purchasers' costs 60,219 - - 62,175 - -
EPRA net assets 800,957 740,738 765,777 774,063 711,888 740,389
EPRA net assets (pence per share) 129.1 119.4 123.5 124.8 114.8 119.4
7. Dividends
Amounts paid as distributions to equity shareholders during the period.
For the six month period ended For the six month period ended
31 December 2025 31 December 2024
Pence £'000 Pence £'000
Fourth interim dividend for prior year 1.471 9,124 1.428 8,857
First interim dividend 1.508 9,353 1.471 9,124
Total 2.979 18,477 2.899 17,981
A second interim dividend in respect of the year to 30 June 2026, of 1.508
pence per share, was paid on 27 February 2026 to shareholders on the register
on 13 February 2026 and amounted to £9,353,000.
8. Investment properties
As at
31 December
2025
Freehold and Leasehold Properties £'000
Opening market value 929,940
Opening fixed or guaranteed rent reviews (79,138)
Opening lease incentives (10,370)
Opening carrying value 840,432
Disposals - proceeds (93,531)
- gain on sale 25,203
Purchases and capital expenditure 32,200
Acquisition costs capitalised 687
Acquisition costs written off (687)
Unrealised gains realised during the period (15,747)
Revaluation movement - gains 18,550
Revaluation movement - losses (2,000)
Movement in market value (35,325)
Fixed or guaranteed rent reviews derecognised on disposal 10,194
Movement in fixed or guaranteed rent reviews (5,222)
Movement in lease incentives (383)
Movement in carrying value (30,736)
Closing market value 894,615
Closing fixed or guaranteed rent reviews (74,166)
Closing lease incentives (10,753)
Closing carrying value 809,696
The investment properties can be analysed as follows:
As at As at
31 December 30 June
2025 2025
£'000 £'000
Standing assets 894,615 921,080
Developments under forward fund agreements - 8,860
Closing market value 894,615 929,940
Changes in the valuation of investment properties For the six month period ended For the six month period ended
31 December 31 December
2025 2024
£'000 £'000
Gain on sale of investment properties 25,203 -
Unrealised gain realised during the period (15,747) -
Gain on investment properties realised 9,456 -
Revaluation movement 16,550 11,281
Acquisition costs written off (687) (5)
Movement in lease incentives (383) 119
Movement in fixed or guaranteed rent reviews (5,222) (5,487)
Gain on revaluation of investment properties 10,258 5,908
8. Investment properties (continued)
At 31 December 2025, the investment properties were valued at £894,615,000
(30 June 2025: £929,940,000) by CBRE Limited ('CBRE'), in their capacity as
external valuers. The valuation was undertaken in accordance with the RICS
Valuation - Global Standards, issued by the Royal Institution of Chartered
Surveyors ('RICS') on the basis of Market Value, supported by reference to
market evidence of transaction prices for similar properties. CBRE has recent
experience in the location and category of the investment properties being
valued.
The fair value of the properties after adjusting for the movement in the fixed
or guaranteed rent reviews and lease incentives was £809,696,000 (30 June
2025: £840,432,000). The adjustment consisted of £74,166,000 (30 June 2025:
£79,138,000) relating to fixed or guaranteed rent reviews and £10,753,000
(30 June 2025: £10,370,000) of accrued income relating to the recognition of
rental income over rent free periods subsequently amortised over the life of
the lease, which are both separately recorded in the financial statements as
non-current and current assets within 'trade and other receivables' (see note
9).
The Group is required to classify fair value measurements of its investment
properties using a fair value hierarchy, in accordance with IFRS 13 'Fair
Value Measurement'. This hierarchy reflects the subjectivity of the inputs
used, and has the following levels:
-- Level 1: unadjusted quoted prices in active markets for identical assets or
liabilities that the entity can access at the measurement date;
-- Level 2: observable inputs other than quoted prices included within level
1;
-- Level 3: use of inputs that are not based on observable market data.
The Group's investment properties are valued by CBRE on a quarterly basis. The
valuation methodology used is the yield model, which is a consistent basis for
the valuation of investment properties within the healthcare industry. This
model has regard to the current investment market and evidence of investor
interest in properties with income streams secured on healthcare businesses.
On an asset-specific basis, the valuer makes an assessment of: the quality of
the asset; recent and current performance of the asset; and the financial
position and performance of the tenant operator. This asset specific
information is used alongside a review of comparable transactions in the
market and an investment yield is applied to the asset which, along with the
contracted rental level, is used to derive a market value.
In determining what level of the fair value hierarchy to classify the Group's
investments within, the Directors have considered the content and conclusion
of the position paper on IFRS 13 prepared by the European Public Real Estate
Association ('EPRA'), the representative body of the publicly listed real
estate industry in Europe. This paper concludes that, even in the most
transparent and liquid markets, it is likely that valuers of investment
property will use one or more significant unobservable inputs or make at least
one significant adjustment to an observable input, resulting in the vast
majority of investment properties being classified as level 3.
Observable market data is considered to be that which is readily available,
regularly distributed or updated, reliable and verifiable, not proprietary,
and provided by independent sources that are actively involved in the relevant
market. In arriving at the valuation the external valuers make adjustments to
observable data of similar properties and transactions to determine the fair
value of a property and this involves the use of judgement. Considering the
Group's specific valuation process, industry guidance, and the level of
judgement required in the valuation process, the Directors believe it
appropriate to classify the Group's investment properties within level 3 of
the fair value hierarchy.
The key unobservable inputs made in determining the fair values are:
· Contracted rental level: the rent payable under the lease agreement at
the date of valuation or, where applicable, on expiry of the rent free period;
and
· Yield: the yield is defined as the initial net income from a property
at the date of valuation, expressed as a percentage of the gross purchase
price including the costs of purchase.
8. Investment properties (continued)
The contracted rental level and yield are not directly correlated although
they may be influenced by similar factors. Rent is set at a long-term,
supportable level and is likely to be influenced by property-specific matters.
The yield also reflects market sentiment and the strength of the covenant
provided by the tenant, with a stronger covenant attracting a lower yield.
The Group's investment properties, which are all care homes, are considered to
be a single class of assets. The weighted average net initial yield ('NIY') on
these assets, as measured by the EPRA Topped-up Net Initial Yield, is 6.2 per
cent (30 June 2025: 6.2 per cent). The yield on the majority of the individual
assets ranges from 5.6 per cent to 8.9 per cent (30 June 2025: 5.6 per cent to
8.9 per cent). The average annual contracted rent per bed is £10,111 (30 June
2025: £9,696) with the annual contracted rent per bed on individual assets
ranging between £5,296 and £21,874 (30 June 2025: between £5,093 and
£21,033). There have been no changes to the valuation technique used through
the period, nor have there been any transfers between levels.
The lease agreements on the properties held within the Group's property
portfolio generally allow for annual increases in the contracted rental level
in line with inflation, within a cap and a collar. An increase of 1.0 per cent
in the contracted rental level will increase the fair value of the portfolio,
and consequently the Group's reported income from unrealised gains on
investments, by £8,946,000 (30 June 2025: £9,299,000); an equal and opposite
movement would have decreased net assets and decreased the Group's income by
the same amount.
A decrease of 0.25 per cent in the net initial yield applied to the property
portfolio will increase the fair value of the portfolio by £37,139,000 (30
June 2025: £38,690,000), and consequently increase the Group's reported
income from unrealised gains on investments. An increase of 0.25 per cent in
the net initial yield will decrease the fair value of the portfolio by
£34,292,000 (30 June 2025: £35,718,000) and reduce the Group's income.
9. Trade and other receivables
As at As at
31 December 30 June
2025 2025
Non-current trade and other receivables £'000 £'000
Fixed rent reviews 74,166 79,138
Rental deposits held in escrow for tenants 12,818 12,695
Lease incentives 10,367 10,028
Total 97,351 101,861
As at As at
31 December 30 June
2025 2025
Current trade and other receivables £'000 £'000
Lease incentives 386 342
VAT recoverable 32 47
Accrued income - net rent receivable 311 1,089
Accrued development interest under forward fund agreements - 809
Other debtors and prepayments 1,557 1,395
Total 2,286 3,682
10. Investment in subsidiary undertakings
The Group included 55 subsidiary companies as at 31 December 2025 (30 June
2025: 50). All subsidiary companies were wholly owned, either directly or
indirectly, by the Company and, from the date of acquisition onwards, the
principal activity of each company within the Group was to act as an
investment and property company. Other than one subsidiary which is
incorporated in Jersey, two subsidiaries incorporated in Gibraltar and two
subsidiaries incorporated in Luxembourg, all subsidiaries are incorporated
within the United Kingdom.
11. Cash and cash equivalents
All cash balances at the period-end were held in cash, current accounts or
deposit accounts.
As at As at
31 December 30 June
2025 2025
£'000 £'000
Cash at bank and in hand 16,762 11,302
Short-term deposits 224 111
Short-term deposits held in secured accounts related to loan facilities 50,187 28,226
Total 67,173 39,639
At 31 December 2025, the Group held £50,187,000 (30 June 2025: £28,226,000)
in secured accounts in relation to the loan from Phoenix Group following the
property disposals made by the Group. The use of this cash is restricted until
the Group either partially repays the loan or pledges replacement assets as
security. As at 31 December 2025, the Group had sufficient unencumbered assets
which could be pledged as additional security in order to release these funds.
12. Loans
As at As at
31 December 30 June
2025 2025
Non-current loans £'000 £'000
Principal amounts outstanding 203,500 150,000
Set-up costs (3,624) (2,413)
Amortisation of set-up costs 1,063 852
Total 200,939 148,439
As at As at
31 December 30 June
2025 2025
Current loans £'000 £'000
Principal amounts outstanding - 92,000
Set-up costs - (2,107)
Amortisation of set-up costs - 1,959
Total - 91,852
On 23 September 2025, the Group entered into a £20,000,000 committed term
loan and £30,000,000 revolving credit facility with the Royal Bank of
Scotland plc ('RBS') which is repayable in September 2028, with the option of
two one-year extensions thereafter subject to the consent of RBS. The facility
also includes an accordion option that, subject to the consent of RBS, would
increase the total quantum of the facility to £80,000,000. Interest accrues
on the drawn element of the bank loan at a variable rate, based on SONIA plus
margin and mandatory lending costs, and is payable quarterly. The margin on
the facility is 1.50 per cent per annum for the duration of the loan. A
non-utilisation fee of 0.75 per cent per annum is payable on any undrawn
element of the facility. As at 31 December 2025, the Group had drawn
£23,500,000 under this facility (30 June 2025: £42,000,000).
12. Loans (continued)
On 23 September 2025, the Group entered into a £30,000,000 committed term
loan and £50,000,000 revolving credit facility with HSBC Bank plc ('HSBC')
which is repayable in September 2028, with the option of two one-year
extensions thereafter subject to the consent of HSBC. The facility also
includes an accordion option that, subject to the consent of HSBC, would
increase the total quantum of the facility to £120,000,000. Interest accrues
on the drawn element of the bank loan at a variable rate, based on SONIA plus
margin and mandatory lending costs, and is payable quarterly. The margin on
the facility is 1.50 per cent per annum for the duration of the loan. A
non-utilisation fee of 0.60 per cent per annum is payable on any undrawn
element of the facility. As at 31 December 2025, the Group had drawn
£30,000,000 under this facility (30 June 2025: £50,000,000).
In January 2020 and November 2021, the Group entered into committed term loan
facilities with Phoenix Group of £50,000,000 and £37,250,000, respectively.
Both these facilities are repayable on 12 January 2032. The Group has a
further committed term loan facility with Phoenix Group of £62,750,000 which
is repayable on 12 January 2037. Interest accrues on these three loans at
aggregate annual fixed rates of interest of 3.28 per cent, 3.13 per cent and
3.14 per cent, respectively and is payable quarterly. As at 31 December 2025,
the Group had drawn £150,000,000 under these facilities (30 June 2025:
£150,000,000).
The following interest rate derivatives were in place during the period ended
31 December 2025:
Notional Value Starting Date Ending Date Interest paid Interest received Counterparty
30,000,000 5 November 2020 5 November 2025* 0.30% Daily compounded SONIA (floor at -0.08%) RBS
50,000,000 1 November 2022 5 November 2025 nil Daily compounded SONIA above 3.0% cap HSBC
20,000,000 24 Sept 2025 23 Sept 2030 3.76% Daily compounded SONIA RBS
30,000,000 24 Sept 2025 23 Sept 2030 3.82% Daily compounded SONIA HSBC
* Terminated early on 24 September 2025.
At 31 December 2025, inclusive of the interest rate derivatives, the interest
rate on £200,000,000 of the Group's borrowings has been hedged, including the
amortisation of loan arrangement costs, at an all-in rate of 3.89 per cent per
annum until at least 23 September 2030. The remaining £80,000,000 of debt, of
which £3,500,000 was drawn at 31 December 2025, would, if fully drawn, carry
interest at a variable rate equal to daily compounded SONIA plus a weighted
average lending margin, including the amortisation of loan arrangement costs,
of 1.81 per cent per annum.
The aggregate fair value of the interest rate derivatives held at 31 December
2025 was a liability of £454,000 (30 June 2025: asset of £572,000). The
Group categorises all interest rate derivatives as level 2 in the fair value
hierarchy as they are valued with reference to published interest rates (see
Note 8 for further explanation of the fair value hierarchy).
At 31 December 2025, the nominal value of the Group's loans equated to
£203,500,000 (30 June 2025: £242,000,000). Excluding the interest rate
derivatives referred to above, the fair value of these loans, based on a
discounted cashflow using the market rate on the relevant treasuries plus an
estimated margin based on market conditions at 31 December 2025, totalled, in
aggregate, £178,007,000 (30 June 2025: £214,071,000). The loans are
categorised as level 3 in the fair value hierarchy given the estimated margin
is not observable market data.
12. Loans (continued)
The fixed rate loans are repayable at the higher of their par value of
£150,000,000 (30 June 2025: £150,000,000), or a calculation based on a
Modified Spens clause. At 31 December 2025, the par value was higher than the
Modified Spens calculation and therefore the repayment cost would have been
£150,000,000 (30 June 2025: £150,000,000). In relation to the bank
facilities of £130,000,000 (30 June 2025: £170,000,000), an early repayment
charge will apply if any proportion of the facilities are cancelled or
prepaid. At 31 December 2025, this potential early repayment charge, which
would have been in addition to the par value of the drawn bank loans of
£53,500,000 (30 June 2025: £92,000,000) and any early termination costs that
may have arisen as a result of breaking or reducing the interest rate swaps,
equated to a maximum aggregate sum of £1,550,000 (30 June 2025: £nil) and
will decline over the remaining term of the bank facilities.
The RBS loan is secured by way of a fixed and floating charge over the
majority of the assets of the THR Number One plc Group ('THR1 Group') which
consists of THR1 and its five subsidiaries. The Phoenix Group loans of
£50,000,000 and £37,250,000 are secured by way of a fixed and floating
charge over the majority of the assets of the THR Number 12 plc Group ('THR12
Group') which consists of THR12 and its eight subsidiaries. The Phoenix Group
loan of £62,750,000 is secured by way of a fixed and floating charge over the
majority of the directly held assets of THR Number 43 plc ('THR43'). The HSBC
loan is secured by way of a fixed and floating charge over the majority of the
assets of the THR Number 15 plc Group ('THR15 Group') which consists of THR15
and its 18 subsidiaries. In aggregate, the Group has granted a fixed charge
over properties with a market value of £685,470,000 as at 31 December 2025
(30 June 2025: £754,390,000).
Under the covenants related to the loans, which are tested quarterly, the
Group is to ensure that:
· the loan to value percentage for each of THR1 Group and THR15 Group
does not exceed 50 per cent (30 June 2025: 50 per cent);
· the loan to value percentage for THR12 Group and THR43 does not
exceed 60 per cent (30 June 2025: 60 per cent);
· the interest cover for THR1 Group is greater than 200 per cent on any
calculation date (30 June 2025: 225 per cent);
· the interest cover for THR15 Group is greater than 165 per cent on any
calculation date (30 June 2025: 200 per cent); and
· the debt yield for each of THR12 Group and THR43 is greater than 10
per cent on any calculation date (30 June 2025: 10 per cent).
All loan covenants have been complied with during the period.
13. Trade and other payables
As at As at
31 December 30 June
2025 2025
Non-current trade and other payables £'000 £'000
Rental deposits 12,818 12,695
Total 12,818 12,695
As at As at
31 December 30 June
2025 2025
Current trade and other payables £'000 £'000
Rental income received in advance 11,588 10,463
Property acquisition and development costs accrued 3,267 3,218
Interest payable 1,841 2,225
Investment Manager's fees payable 2,017 1,979
Other payables 3,298 2,855
Total 22,011 20,740
The Group's payment policy is to ensure settlement of supplier invoices in
accordance with stated terms.
14. Share capital
Allotted, called-up and fully paid ordinary shares of £0.01 each Number of shares £'000
Balance as at 30 June 2025 and 31 December 2025 620,237,346 6,202
During the period to 31 December 2025, the Company did not issue any ordinary
shares (period to 31 December 2024: nil). The Company did not buyback or
resell any ordinary shares (period to 31 December 2024: nil).
At 31 December 2025, the Company did not hold any shares in treasury (30 June
2025: nil).
15. Capital Commitments
The Group had capital commitments as follows:
As at As at
31 December 30 June
2025 2025
£'000 £'000
Amounts due to complete forward fund developments - 912
Other capital expenditure commitments 1,049 1,113
Total 1,049 2,025
The Group also has a forward commitment to acquire a property company for
£13.4 million, including acquisition costs, following practical completion of
the property which the acquiree is currently developing. The development,
which is pre-let to an existing tenant of the Group, is well advanced and is
expected to reach practical completion in summer 2026.
16. Contingent assets and liabilities
As at 31 December 2025, one property (30 June 2025: one property) within the
Group's investment property portfolio contained a performance payment clause
which provided that, subject to contracted performance conditions being met, a
further capital payment of £1,785,000 (30 June 2025: £1,785,000) may be
payable by the Group to the vendor/tenant of the property. The potential
timing of this payment is also conditional on the date(s) at which the
contracted performance conditions are met and is therefore uncertain.
It is highlighted that any performance payments subsequently paid will result
in an increase in the rental income due from the tenant of the relevant
property. As the net initial yield used to calculate the additional rental
which would be payable is not significantly different from the investment
yield used to arrive at the valuation of the properties, any performance
payment made would be expected to result in a commensurate increase in the
value of the Group's investment property portfolio.
Having assessed the clause, the Group has determined that the contracted
performance conditions had not been met in relation to the property and
therefore at 31 December 2025 no liability was recognised (30 June 2025:
£nil). Had a liability been recognised, an equal but opposite amount would
have been recognised as an asset in 'investment properties' in Note 8 to
reflect the increase in the investment property value that would be expected
to arise from the payment of the performance payment(s) and the resulting
increase in the contracted rental income.
17. Related parties and transactions with the Investment Manager
The Board of Directors is considered to be a related party. No Director has an
interest in any transactions which are, or were, unusual in their nature or
significant to the nature of the Group.
The Directors of the Group received fees for their services. Total fees for
the period were £122,000 (period ended 31 December 2024: £114,000) of which
£nil (31 December 2024: £nil) remained payable at the period end.
17. Related parties and transactions with the Investment Manager (continued)
The Investment Manager received £4,040,000 (inclusive of irrecoverable VAT)
in management fees in relation to the period ended 31 December 2025 (period
ended 31 December 2024: £3,909,000). Of this amount £2,017,000 remained
payable at the period end (31 December 2024: £1,957,000. The Investment
Manager received a further £101,000 (inclusive of irrecoverable VAT) during
the period ended 31 December 2025 (period ended 31 December 2024: £96,000) in
relation to its appointment as Company Secretary and Administrator, of which
£50,000 (31 December 2024: £48,000) remained payable at the period end.
Certain employees of the Investment Manager are directors of some of the
Group's subsidiaries. Neither they nor the Investment Manager receive any
additional remuneration in relation to fulfilling this role.
There were related party transactions within the Group and its wholly-owned
subsidiaries which are eliminated upon consolidation.
18. Operating segments
The Board has considered the requirements of IFRS 8 'Operating Segments'. The
Board is of the view that the Group is engaged in a single segment of
business, being healthcare property investment, and in one geographical area,
the United Kingdom, and that therefore the Group has only a single operating
segment. The Board of Directors, as a whole, has been identified as
constituting the chief operating decision maker of the Group. The key measure
of performance used by the Board to assess the Group's performance is the EPRA
NTA. The reconciliation between the NAV, as calculated under IFRS, and the
EPRA NTA is detailed in Note 6.
The view that the Group is engaged in a single segment of business is based on
the following considerations:
· One of the key financial indicators received and reviewed by the Board
is the total return from the property portfolio taken as a whole;
· There is no active allocation of resources to particular types or
groups of properties in order to try to match the asset allocation of the
benchmark; and
· The management of the portfolio is ultimately delegated to a single
property manager, Target.
Directors' Statement of Principal Risks and Uncertainties
The risks, and the way in which they are managed, are described in more detail
in the Strategic Report within the Annual Report and Financial Statements for
the year to 30 June 2025. Other than as disclosed in the Chair's Statement and
Investment Manager's Report, the Group's principal risks and uncertainties
have not changed materially since the date of the report and are not expected
to change materially for the remainder of the Group's financial year.
Statement of Directors' Responsibilities in Respect of the Interim Report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance
with IAS 34 'Interim Financial Reporting' and gives a true and fair view of
the assets, liabilities, financial position and profit of the Group;
• the Chair's Statement and Investment Manager's Report (together
constituting the Interim Management Report) include a fair review of the
information required by the Disclosure Guidance and Transparency Rules ('DTR')
4.2.7R, being an indication of important events that have occurred during the
period and their impact on the financial statements;
• the Statement of Principal Risks and Uncertainties referred to above is a
fair review of the information required by DTR 4.2.7R; and
• the condensed set of financial statements includes a fair review of the
information required by DTR 4.2.8R, being related party transactions that have
taken place in the period and that have materially affected the financial
position or performance of the Group during the period.
On behalf of the Board
Alison Fyfe
Chair
17 March 2026
Independent Review Report to Target Healthcare REIT plc
Conclusion
We have been engaged by Target Healthcare REIT plc ("the Company") to review
the consolidated set of financial statements in the Interim Report and
Financial Statements for the six months ended 31 December 2025 which comprises
the Condensed Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated Statement
of Changes in Equity, Condensed Consolidated Statement of Cash Flows and the
related notes 1 to 18 to the Condensed Consolidated Financial Statements. We
have read the other information contained in the Interim Report and Financial
Statements and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the consolidated set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the consolidated set of financial statements in the Interim
Report and Financial Statements for the six months ended 31 December 2025 are
not prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34 and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
consolidated set of financial statements included in this Interim Report and
Financial Statements has been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the Interim Report and Financial
Statements in accordance with the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
In preparing the Interim Report and Financial Statements, the Directors are
responsible for assessing the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the Interim Report and Financial Statements, we are responsible
for expressing to the Company a conclusion on the consolidated set of
financial statements in the Interim Report and Financial Statements. Our
conclusion, including our Conclusions Relating to Going Concern, are based on
procedures that are less extensive than audit procedures, as described in the
Basis for Conclusion paragraph of this report.
Use of our Report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) 'Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
17 March 2026
Alternative Performance Measures
The Company uses Alternative Performance Measures ('APMs'). APMs do not have a
standard meaning prescribed by GAAP and therefore may not be comparable to
similar measures presented by other entities. The definitions of all APMs used
by the Company are highlighted in the glossary below, with detailed
calculations, including reconciliation to the IFRS figures where appropriate,
being set out below.
Discount or Premium - the share price of an Investment Company is derived from
buyers and sellers trading their shares on the stock market. This price is not
identical to the NAV. If the share price is lower than the NAV per share, the
shares are trading at a discount and, if the share price is higher than the
NAV per share, are said to be at a premium. The figure is calculated at a
point in time and, unless stated otherwise, the Company measures its discount
or premium relative to the EPRA NTA per share.
31 December 30 June
2025 2025
pence Pence
EPRA Net Tangible Assets per share (see note 6) (a) 119.4 114.8
Share price (b) 97.6 104.2
Discount = (b-a)/a (18.3)% (9.2)%
Dividend Cover - the percentage by which earnings for the period cover the
dividend paid.
Period ended Period ended
31 December 31 December
2025 2024
£'000 £'000
EPRA earnings for the period (see note 6) (a) 26,177 24,457
Group-specific adjusted EPRA earnings for the period
(see note 6) (b) 21,085 19,439
First interim dividend 9,353 9,124
Second interim dividend 9,353 9,124
Dividends paid in relation to the period (c) 18,706 18,248
Dividend cover based on EPRA earnings = (a/c) 140% 134%
Dividend cover based on Group-specific adjusted EPRA earnings
= (b/c) 113% 107%
EPRA Cost Ratio - the EPRA cost ratios are produced using EPRA methodology,
which aims to provide a consistent base-line from which companies can provide
additional information, and include all property expenses and management fees.
The Group did not have any vacant properties during the periods and therefore
separate measures excluding direct vacancy costs are not presented. Consistent
with the Group specific adjusted EPRA earnings detailed in note 6 to the
Condensed Consolidated Financial Statements, similar adjustments have been
made to also present the adjusted Cost Ratio which is thought more appropriate
for the Group's business model.
Period ended Period ended
31 December 2025 31 December
£'000 2024
£'000
Investment management fee 4,040 3,909
Credit loss allowance and bad debts written off (949) 180
Other expenses 1,607 1,581
EPRA costs (including direct vacancy costs) (a) 4,698 5,670
Specific cost adjustments, if applicable - -
Group specific adjusted EPRA costs (including direct vacancy costs)
(b) 4,698 5,670
Gross rental income per IFRS (c) 36,948 35,264
Adjusted for rental income arising from recognising guaranteed rent review
uplifts
(5,222) (5,487)
Adjusted for surrender premiums recognised in capital (1,435) -
Adjusted for development interest under forward fund arrangements
130 469
Group specific adjusted gross rental income (d) 30,421 30,246
EPRA Cost Ratio (including direct vacancy costs) = (a/c) 12.7% 16.1%
EPRA Group specific adjusted Cost Ratio (including direct vacancy costs)
= (b/d) 15.4% 18.7%
Net Debt to EBITDA ratio - a leverage ratio that measures the net earnings
available to address debt obligations.
Period ended Period ended
31 December 2025 31 December
£'000 2024
£'000
Net debt (see below) (a) 156,438 227,809
Group-specific adjusted EPRA earnings for the period 21,085 19,439
Net finance costs 4,638 5,137
EBITDA (b) 25,723 24,576
Net debt to EBITDA ratio = a/(b*2) 3.0 times 4.6 times
EPRA Loan-to-Value ('LTV') - A shareholder-gearing measure to determine the
percentage of debt comparing to the appraised value of the properties. EPRA
LTV is calculated as total gross debt (adding net trade payables and less
cash) as a proportion of gross property value.
31 December 2025 30 June
£'000 2025
£'000
Borrowings 203,500 242,000
Net payables 20,111 17,400
Cash and cash equivalents (67,173) (39,639)
Net debt (a) 156,438 219,761
Investment properties at market value 894,615 929,940
Total property value (b) 894,615 929,940
EPRA Loan-to-Value = (a/b) 17.5% 23.6%
EPRA Net Initial Yield and EPRA Topped-up Net Initial Yield - EPRA Net Initial
Yield is calculated as annualised rental income based on the cash rents
passing at the balance sheet date, less non-recoverable property operating
expenses, divided by the market value of the property, increased with
(estimated) purchasers' costs. The EPRA Topped-up Net Initial Yield
incorporates an adjustment in respect of the expiration of rent-free periods
(or other unexpired lease incentives).
31 December 30 June
2025 2025
£'000 £'000
Annualised passing rental income based on cash rents (a) 58,896 59,369
Notional rent expiration of rent-free periods or other lease incentives
605 1,800
Topped-up net annualised rent (b) 59,501 61,169
Standing property assets (see note 8) 894,615 921,080
Allowance for estimated purchasers' costs 60,219 62,175
Grossed-up completed property portfolio valuation (c) 954,834 983,255
EPRA Net Initial Yield = (a/c) 6.17% 6.04%
EPRA Topped-up Net Initial Yield = (b/c) 6.23% 6.22%
Total Return - the return to shareholders calculated on a per share basis by
adding dividends paid in the period to the increase or decrease in the Share
Price or NAV. The dividends are assumed to have been reinvested in the form of
Ordinary Shares or Net Assets.
Period ended Period ended
31 December 2025 31 December 2024
EPRA NTA IFRS NAV Share price EPRA NTA IFRS NAV Share price
(pence) (pence) (pence) (pence) (pence) (pence)
Value at start of period (a) 114.8 114.9 104.2 110.7 111.1 78.5
Value at end of period (b) 119.4 119.4 97.6 112.7 112.9 84.0
Change in value during the period (b-a)
(c) 4.6 4.5 (6.6) 2.0 1.8 5.5
Dividends paid (d) 3.0 3.0 3.0 2.9 2.9 2.9
Additional impact of dividend reinvestment
(e) 0.2 0.1 - 0.1 0.1 (0.1)
Total gain in period (c+d+e)
(f) 7.8 7.6 (3.6) 5.0 4.8 8.3
Total return for the period = (f/a) 6.8% 6.6% (3.4)% 4.5% 4.3% 10.6%
Glossary of Terms and Definitions
Contractual Rent The annual rental income receivable on a property as at the balance sheet
date, adjusted for the inclusion of rent currently subject to a rent free
period.
Discount/ The amount by which the market price per share of a Closed-end Investment
Company is lower or higher than the net asset value per share. The discount or
Premium* premium is expressed as a percentage of the net asset value per share.
Dividend Cover* The absolute value of Group specific adjusted EPRA Earnings, or EPRA earnings,
divided by the absolute value of dividends relating to the period of
calculation.
Dividend Yield* The annual Dividend expressed as a percentage of the share price at the date
of calculation.
Earnings Yield* The annualised Group specific adjusted EPRA Earnings per Share for the period
expressed as a percentage of the share price at the end of the relevant
period.
Energy Performance Certificate ('EPC') An Energy Performance Certificate (EPC) rates how energy efficient a building
is using grades from A to G (with 'A' the most efficient grade). All
commercial properties leased to a tenant must have an EPC. All EPCs are valid
for 10 years.
EPRA Cost Ratio* Reflects the relevant overhead and operating costs of the business. It is
calculated by expressing the sum of property expenses (net of service charge
recoveries and third-party asset management fees) and administration expenses
(excluding exceptional items) as a percentage of gross rental income.
EPRA Group specific adjusted Cost Ratio* The EPRA Cost Ratio adjusted for items thought appropriate for the Group's
specific business model. The adjustments made are consistent with those made
to the Group specific adjusted EPRA earnings as detailed in note 6.
EPRA Earnings Recurring earnings from core operational activities. A key measure of a
company's underlying operating results from its property rental business and
per Share* an indication of the extent to which current dividend payments are supported
by earnings. A reconciliation of the earnings per IFRS and the EPRA earnings,
including any items specific to the Group, is contained in note 6.
EPRA Net Disposal Value ('NDV')* A measure of Net Asset Value which represents the shareholders' value under a
disposal scenario, where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability, net of any
resulting tax.
EPRA Net Reinstatement Value ('NRV')* A measure of Net Asset Value which assumes that entities never sell assets and
aims to represent the value required to rebuild the entity. The objective is
to highlight the value of net assets on a long-term basis. Assets and
liabilities that are not expected to crystallise in normal circumstances, such
as the fair value movements on financial derivatives, are excluded and the
costs of recreating the Group through investment markets, such as property
acquisition costs and taxes, are included.
EPRA Net Tangible Assets ('NTA')* A measure of Net Asset Value which assumes that entities buy and sell assets,
thereby crystallising certain levels of unavoidable deferred tax.
EPRA Net Initial Annualised rental income based on the cash rents passing at the balance sheet
date, less non-recoverable property operating expenses, divided by the market
Yield* value of the property, increased with (estimated) purchasers' costs. EPRA's
purpose is to provide a comparable measure around Europe for portfolio
valuations.
EPRA Topped-up Incorporates an adjustment to the EPRA Net Initial Yield in respect of the
expiration of rent-free periods (or other unexpired lease incentives).
Net Initial Yield*
Loan-to-Value A measure of the Group's Gearing level. Gross LTV is calculated as total gross
debt as a proportion of gross property value. Net LTV is calculated as total
('LTV')* gross debt less cash (including any cash held as security in relation to the
debt facilities) as a proportion of gross property value.
Mature Homes Care homes which have been in operation for more than three years. Homes which
do not meet this definition are referred to as 'immature'.
Portfolio or Passing Rent* The annual rental income currently receivable on a property as at the balance
sheet date, excluding rental income where a rent free period is in operation.
The gross rent payable by a tenant at a point in time.
Rent Cover* A measure of a tenant's ability to meet its rental liability from the profit
generated by their underlying operations. Generally calculated as the tenant's
EBITDARM (earnings before interest, taxes, depreciation, amortisation, rent
and management fees) divided by the contracted rent.
Total Return* The return to shareholders calculated on a per share basis by adding dividends
paid in the period to the increase or decrease in the Share Price or NAV. The
dividends are assumed to have been reinvested in the form of Ordinary Shares
or Net Assets.
Total Accounting Return* The return to shareholders calculated on a per share basis by adding dividends
paid in the period to the increase or decrease in the EPRA NTA. The dividends
are assumed to have been reinvested at the prevailing net asset value per
share at the date of the dividend payment.
WAULT* Weighted average unexpired lease term. The average lease term remaining to
expiry across the portfolio weighted by contracted rental income.
* Alternative Performance Measure
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