Target Healthcare shapes up portfolio to boost rents
Target Healthcare, which invests in purpose-built care homes, has reshaped its property portfolio in a move to deliver strong trading in 2024.
The company’s EPRA net tangible assets per share increased 1.6% to 110.7 pence as of 30 June, up from 109p on 31 March, thanks to the portfolio’s inflation-linked rent reviews as well as disposals made ahead of carrying value.
Target Healthcare sold four UK care homes for £44.5m to the incumbent tenant. The sale price reflected a modest premium to the portfolio’s carrying value at both 31 December 2023 and 31 March 2024, and an implied net initial yield of 5.64%.
Target Healthcare, which invests in purpose-built care homes, has reshaped its property portfolio in a move to deliver strong trading in 2024.
The company’s EPRA net tangible assets per share increased 1.6% to 110.7 pence as of 30 June, up from 109p on 31 March, thanks to the portfolio’s inflation-linked rent reviews as well as disposals made ahead of carrying value.
Target Healthcare sold four UK care homes for £44.5m to the incumbent tenant. The sale price reflected a modest premium to the portfolio’s carrying value at both 31 December 2023 and 31 March 2024, and an implied net initial yield of 5.64%.
Kenneth MacKenzie, chief executive at Target Fund Managers, said: “These four assets were in the lower quartile of our portfolio with respect to age, lease length and overall building quality, with the transaction therefore enhancing our real estate quality and portfolio longevity metrics.”
Following the disposals, the company’s portfolio was valued at £908.5m, down 2.8% over the quarter, and comprised 94 properties, consisting of 92 operational care homes and two prelet sites.
Contracted rent also decreased over the quarter, by 2.1%, but increased by 1% on a like-for-like basis, driven by inflation-linked upwards-only annual rent reviews.
Target Healthcare declared its final quarterly dividend for the year ended 30 June of 1.428 pence per share.
NAV total return totalled 2.8% for the quarter, based on EPRA NTA and including dividend payment.
MacKenzie added: “Following the appointment of a new government, social care is again in focus.
“The more acute problem facing the sector remains the large proportion of care home real estate which is no longer fit-for-purpose, against a backdrop of an ageing UK population. This is why we prioritise investment into modern, purpose-built care homes, with a significant bias to private pay residents, a strategy that continues to underpin our delivery of sustainable shareholder returns.”
