REG - Target H'care REIT - Net Asset Value, Corporate Update & Dividend

Target Healthcare ReitAnnouncement

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RNS Number : 1159D  Target Healthcare REIT PLC  06 May 2026

6 May 2026

Target Healthcare REIT plc and its subsidiaries

 

("Target Healthcare" or "the Company" or,

together with its subsidiaries, "the Group")

 

Net Asset Value, update on corporate activity and dividend declaration

 

Target Healthcare (LSE: THRL), the UK listed specialist investor in modern,
purpose-built care homes, announces its unaudited quarterly Net Asset Value
('NAV') as at 31 March 2026, an update on corporate activity and its third
interim dividend for the year ending 30 June 2026.

 

Corporate activity highlights

 

Continued EPRA NTA and earnings growth driven by contractual,
inflation-linked, annual rent increases and value-enhancing asset management
activities.

 

·    EPRA Net Tangible Assets ('NTA') per share increased 1.0% to 120.6
pence (31 December 2025: 119.4 pence), reflecting mainly a like-for-like
valuation uplift of 0.8% driven primarily by inflation-linked rent reviews

·     Total accounting return of 2.3% for the quarter (based on EPRA NTA
and including dividend payment)

·    EPRA "topped-up" net initial yield of 6.23% (31 December 2025: 6.23%)
based on an annualised contractual rent of £60.1 million (31 December 2025:
£59.5 million)

·     Adjusted EPRA EPS for the quarter of 1.60 pence per share (31
December 2025: 1.58 pence, excluding the non-recurring contribution from
historical rent arrears recovered during the December 2025 quarter)

·      Fully covered quarterly dividend of 1.508 pence per share

·     Net LTV of 15.2% as at 31 March 2026 (31 December 2025: 15.2%),
below the Group's target level of c.25% as it continues to redeploy the
disposal proceeds from the previous quarter. The Group has total capital
available of c.£100 million, excluding the uncommitted accordion facility

·     Total debt facilities weighted average term of 5.4 years (31
December 2025: 5.6 years). Interest costs are fixed on £200 million of debt
until at least September 2030, at a weighted average cost of 3.89% (inclusive
of amortisation of arrangement costs)

·    The Investment Manager continues to build an attractive pipeline, in
excess of the capital available, of high-quality investment opportunities,
with further acquisitions expected to be committed prior to the June 2026 year
end. The pipeline has an indicative blended net initial yield in excess of 6%

·    Rent collection of 99% for the quarter. Subsequent to the quarter end,
the Group sold at carrying value the property which had been responsible for
the uncollected rent in the quarter

 

Continued strong operational performance, with targeted capex enhancing the
ESG credentials of a sector leading portfolio.

 

·    Diversified portfolio of 86 operational care homes (let to 31 tenants)
valued at £903.2 million (31 December 2025: £894.6 million)

·    Contracted rent increased by 0.9% on a like-for-like basis, primarily
due to inflation-linked upwards-only annual rent reviews, with a further
increase of 0.1% due to the rentalisation of capital expenditure across the
existing portfolio

·      WAULT of 26.1 years (31 December 2025: 26.3 years)

·      High quality, modern and sustainable real estate portfolio:

o  100% of the portfolio rated EPC A or B, and therefore the portfolio is
compliant with the minimum energy efficiency standards anticipated to apply
from 2030

o  Positive social impact from sector-leading real estate standards: 100% en
suite wet-rooms; generous 48 sqm space per resident; sustainable rent of £211
per sqm

·     Average rent cover on mature homes remained high, at 1.9x for the
December 2025 quarter (most recent quarter of tenant data) (2.0x for the
September 2025 quarter)

 

 

Kenneth MacKenzie, CEO of Target Fund Managers, commented:

 

"We continue to curate a best-in-class portfolio through value-enhancing asset
management and capital redeployment activities.

 

"We re-tenanted one home to an existing tenant delivering a valuation uplift,
from a combination of increased rent and yield shift, more than offsetting the
rental incentive provided. Our continued investment in PV panels, with the
corresponding increase in rents that this generates, is now supported by a
full year's collection of energy usage data demonstrating this to be an
attractive investment for landlord and tenant alike. In addition, we are
investing in an extension at one home, to increase the number of beds by four
to 72, fully rentalising the expenditure.

 

"I am also pleased to note that, subsequent to the quarter end, we disposed of
one home which was responsible for the rent arrears in the current quarter and
would expect the portfolio to return to full rent collection in the quarter to
30 June 2026.

 

"We remain focused on executing on our pipeline of opportunities as we look to
re-deploy the remaining c.£40m of disposal proceeds from the sub portfolio
sale late last October. We have agreed terms and are in legals for purchases
at a value in excess of those disposal proceeds and expect these disposal
proceeds to have been materially committed by the end of the Company's
financial year."

 

Portfolio performance

The portfolio value increased by 1.0% over the quarter with the movement
comprised of a:

·      0.8% like-for-like increase from inflation-linked rent reviews;

·      0.1% like-for-like increase from the re-tenanting of a property,

·      (0.1)% like-for-like decrease from a marginal softening in the
portfolio's net initial yield; and

·      0.2% increase due to capital expenditure.

 

Contractual rental income increased by 1.0% over the quarter with the movement
comprised of a:

·      0.8% like-for-like increase from 21 inflation-linked upwards-only
rent reviews with an average uplift of 3.7%;

·      0.1% like-for-like increase due to re-tenanting activities; and

·      0.1% increase due to the rentalisation of capital expenditure.

 

Portfolio update

During the quarter, the following investment and asset management initiatives
were undertaken:

·      The successful re-tenanting of one asset, representing 0.9% of
the total rent roll, to an existing tenant of the Group. A rent free period of
12 months was granted in exchange for an increase in the contractual rent of
more than 6%, an extension of the remaining lease term by c.14 years to 35
years and the inclusion of additional green lease clauses. A capital
expenditure facility of £1.6 million was granted to the tenant in order to
fund further improvements to the real estate which, if utilised, would be
rentalised at a similar investment yield;

·    The Group rentalised capital expenditure of c.£1.2 million, across
seven properties, in relation to recent real estate improvements, such as the
installation of photovoltaic (PV) panels. The blended investment yield
resulting from this capital expenditure was in excess of the portfolio net
initial yield of 6.2%.

 

Debt facilities

As at 31 March 2026, the Group had committed debt facilities of £280 million,
of which £203.5 million was drawn, representing a net LTV of 15.2% (31
December 2025: 15.2%). Given the current pipeline and capital available, the
Group expects to increase the LTV to around 25% through further investment in
modern, purpose-built assets.

 

The Group's debt facilities at 31 March 2026 consisted of:

·     £150 million of drawn Fixed Rate Loans with a weighted average term
of 7.9 years and a weighted average interest rate of 3.18%;

·    £50 million of drawn Term Loan bank facilities with a remaining term
of 2.5 years, with the option of two one-year extensions thereafter subject to
lender consent, and a weighted average interest rate of 5.30% that has been
fixed through the use of interest rate swaps until September 2030; and

·    £80 million of revolving credit facilities ("RCF") with a remaining
term of 2.5 years, with the option of two one-year extensions thereafter
subject to lender consent, which carry a variable interest rate of SONIA plus
a margin of 1.50%. £3.5 million of the RCF was drawn at 31 March 2026.

 

All interest rates quoted above are exclusive of the amortisation of
arrangement fees.

 

A balance sheet summary and an analysis of the movement in the EPRA NTA over
the quarter is shown in the Appendix of this announcement.

 

 

Announcement of third interim dividend

 

The Company today declares its third interim dividend for the year ending 30
June 2026, in respect of the period from 1 January 2026 to 31 March 2026, of
1.508 pence per share as detailed in the schedule below:

 

Interim Property Income Distribution (PID):    1.508 pence per share

Interim ordinary
dividend:
nil

 

 Ex-Dividend Date:  14 May 2026
 Record Date:       15 May 2026
 Payment Date:      29 May 2026

 

Shareholders entitled to elect to receive distributions without deduction for
withholding tax may complete the declaration form which is available on
request from the Company through the contact details provided on its website
www.targethealthcarereit.co.uk (http://www.targethealthcarereit.co.uk) , or
from the Company's registrar. Shareholders who qualify for gross payments are,
principally, UK resident companies, certain UK public bodies, UK charities, UK
pension schemes and the managers of ISAs, PEPs and Child Trust Funds, in each
case subject to certain conditions. Individuals and non-UK residents do not
qualify for gross payments of distributions and should not complete the
declaration form.

LEI: 213800RXPY9WULUSBC04

 

ENDS

 

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 FTSE 250
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 March 2026 comprised 86 assets let to 31 tenants
with a total value of £903.2 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.

Important information

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the Market
Abuse Regulations (EU) No. 596/2014, which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, as amended. Upon the publication of this
announcement via Regulatory Information Service, this inside information is
now considered to be in the public domain.

APPENDIX

 

1.     Analysis of movement in EPRA NTA

 

The following table provides an analysis of the movement in the unaudited EPRA
NTA per share for the period from 1 January 2026 to 31 March 2026:

 

                                                                   Pence per share
 EPRA NTA per share as at 31 December 2025                         119.4

 Revaluation gains / (losses) on investment properties             1.1
 Movement in revenue reserve                                       1.6
 Second interim dividend payment for the year ending 30 June 2026  (1.5)
 EPRA NTA per share as at 31 March 2026                            120.6
 Percentage change in the quarter                                  1.0%

 

At 31 March 2026, including the valuation ascribed to the Group's interest
rate derivative contracts used to hedge its exposure to variable interest
rates, which are excluded from the calculation of the EPRA NTA, the unaudited
NAV calculated under International Financial Reporting Standards was 120.7
pence per share.

 

 

 2.     Summary balance sheet (unaudited)

                                      Mar-26        Dec-25        Sept-25       Jun-25
                                      £m            £m            £m            £m
 Property portfolio*                  903.2         894.6         948.3         929.9
 Cash                                 66.1          67.2          44.4          39.7
 Net current assets / (liabilities)*  (17.7)        (17.6)        (15.2)        (15.7)
 Loans                                (203.5)       (203.5)       (247.6)       (242.0)
 Net assets                           748.1         740.7         729.9         711.9

 EPRA NTA per share (pence)           120.6         119.4         117.7         114.8

 

*Properties within the portfolio are stated at the market value provided by
the external valuer and the IFRS effects of fixed/guaranteed minimum rent
reviews are not reflected.

 

3.     External Valuer

The valuation of the property portfolio as at 31 March 2026 was conducted by
CBRE Limited.

 

4.     EPRA NIY profiles and unwind of rent-free period

 

The Group currently has one asset with a rent-free period. As this unwinds,
assuming no other changes including inter alia the portfolio valuation or
rental profile, the EPRA yield profiles for the portfolio will be as follows:

 

                         31 March  30 June  30 September  31 December 2026  31 March

                         2026      2026     2026                            2027
 EPRA "topped-up" NIY    6.23%     6.23%    6.23%         6.23%             6.23%
 EPRA NIY                6.18%     6.18%    6.18%         6.18%             6.23%
 Contractual rent (£m)   60.1      60.1     60.1          60.1              60.1
 Passing rent (£m)       59.6      59.6     59.6          59.6              60.1

 

 

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