Target delivers portfolio diversification with investments

Target delivers portfolio diversification with investments
Malcolm Naish, chairman, Target Healthcare

Target Healthcare REIT invested £81.8m in development assets and care homes during the six months to 31 December 2018, as it continued to diversify its profile.

It acquired two operational care homes and four development sites and exchanged contracts to buy a pre-let property. One of the development sites opened in January.

Its interim report showed that total income rose 10.2% to £19.5m during the period (2017: £17.7m), while pre-tax profit grew to £14.9m, up from £14.4m in the corresponding period in 2017.

Target Healthcare’s portfolio of 61 assets was valued at £463.9m at 31 December 2018. Its 54 operational homes were let to 21 tenants, providing 3,725 beds for residents, and generating a contractual rent of £28m per annum.

Its rent roll rose by 7.9%, comprising a 6.6% increase from acquisitions and completed development sites as well as like-for-like growth of 1.3% from the group’s upwards-only annual rent reviews.

Other financial highlights showed its European Public Real Estate Association net asset value per share was up 1.1% to 106.9 pence, while its dividend increased by 2% to 3.29 pence.

The report said the sector would require ‘extensive ongoing investment’ as smaller homes, often family run, were leaving the market, leading to the need for more modern properties. It said: ‘Progressive operators and their experienced investors such as Target will navigate through the furore of funding woes, Brexit, and not least, ‘lost’ green papers.’

Group chairman Malcolm Naish said: ‘Consistent with our belief in the medium to long-term future undersupply of the type of home we invest in, we agreed during the period to acquire four new development assets, two operating assets and signed an agreement to acquire a home at construction completion. These further complement our existing diversification by tenant, geography and end-user payment profile.

‘The long-term, stable nature of the returns anticipated from our portfolio, when allied with the group’s revised fee arrangements and flexible capital structure, should enhance earnings and allow the group to fully cover the progressive dividend it anticipates delivering to shareholders.’

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Deven Pamben has more than 15 years’ experience as a journalist, working on newspapers, trade magazines and online publications. A Criminology graduate, Deven worked for Hertfordshire Constabulary before becoming a journalist. He began his journalism career at a local newspaper in Hertfordshire before moving into trade magazines in permanent roles or as a freelancer. Titles he has reported and edited on include Law Society Gazette, Harpers Wine and Spirit, and Health Club Management. Deven has also written travel features for the Sunday People, and spent two years working in Beijing for the official press agency of the People’s Republic of China.