TIDMTHRL
RNS Number : 9842V
Target Healthcare REIT Limited
09 November 2017
9 November 2017
Net Asset Value, Corporate Update & Dividend
announcement
1. Net Asset Value
Target Healthcare REIT Limited (the "Company" and together with
its subsidiaries, the "Group") announces that its unaudited EPRA
NAV per share as at 30 September 2017 was 103.3 pence. The NAV
total return for the quarter was 3.0%.
2. Corporate Update
2a. Portfolio performance
As at 30 September 2017 the Group owned forty-six care homes and
one site subject to a forward fund commitment with a combined
market value of GBP296.6 million. The portfolio had an EPRA net
initial yield of 6.69% (based on contractual net income) and an
annualised rent roll of GBP21.1 million with a weighted average
unexpired lease term of 29.4 years. Portfolio passing rent has
increased by 3.7% during the quarter, 3.1% from additions and asset
management activity, plus 0.6% from rent reviews.
The portfolio value has increased 5.2% over the quarter, with
the like-for-like value up 1.8%. The increase in like-for-like
reflects value generated from our embedded rental uplifts and yield
compression across the portfolio.
A balance sheet summary and an analysis of the movement in the
EPRA NAV over the quarter is presented in the Appendix.
2b. Debt facilities & swap arrangements
As at 30 September 2017, the Group's total borrowings were
GBP49.0 million, giving a loan-to-value ratio of 16.5% (calculated
as total gross debt as a proportion of gross property value). As
the Group expects to invest the vast majority of its current cash
balance in new care homes, cash has been excluded from the
calculation.
On 30 August 2017 the Group entered into a new five year GBP40
million committed term loan facility with First Commercial Bank,
Limited (the "FCB facility"). This provides the Group with total
facilities of GBP90 million, being GBP70 million of term loans and
a GBP20 million revolving credit facility, when combined with the
Group's existing Royal Bank of Scotland PLC facility.
The Group's weighted average interest rate as at 30 September
2017 was 2.16%. Interest costs were fixed on GBP30 million of drawn
debt through interest rate swap arrangements maturing 1 September
2021, with GBP19 million at variable rates based on 3 month LIBOR
plus lender margins.
2c. Investment activity
In the three months to 30 September 2017, the Group's investment
and asset management activities have comprised the acquisition of
two properties for a total value of GBP16.6 million (including
acquisition costs and forward funding commitments):
-- An 88 bed home in Leicestershire in a prominent location
adjacent to the town centre which opened to residents in March
2017. The home was purchased for GBP8.4 million including costs,
and leased back to Melton Care Limited on a 35 year lease with
RPI-linked uplifts with a cap and collar. Melton Care is a joint
venture between Magnum Care, a Leicestershire-based operator, and
the principals behind Care Concern, a national operator the Group
have worked with in a number of homes.
-- A site and forward funding commitment totalling GBP8.2
million including costs, in Birkdale, Merseyside. The site received
planning in early 2017 for a high quality care home which will be
built, under a cost-capped contract, to have 55 large bedrooms with
en-suite facilities with wetroom showers and good public space in
an impressive building on this corner location. The development
will be carried out in partnership with Athena Healthcare, an
existing tenant of the Group, who have entered into an agreement to
lease the property on completion at an agreed rental level. The
lease will again be for 35 years with RPI uplifts subject to cap
and collar.
Yield across the two assets is broadly consistent with that seen
on the Group's existing portfolio. Funds invested in high quality
care homes since the Group's inception total around GBP285 million,
including around GBP105 million committed since the Group's May
2016 equity issuance.
2d. Pipeline and Investment Market
The UK care home real estate sector is seeing a general
contraction in investment yields which has been reflected in the
Group's portfolio. Target continues to believe that homes which are
appropriately located, incorporate modern design standards, and are
well run by operators respected in their local markets provide the
best foundation to support long term value and tenant performance.
We are therefore focused on maintaining our high standards of
selection and diligence irrespective of the short term increased
levels of competition that we are seeing for all types of
assets.
The Group continues to progress a select number of
opportunities, as identified and recommended by its specialist
Investment Manager. Those currently being progressed through
diligence include existing homes, which will contribute to rental
income immediately at acquisition, and commitments to enable the
construction of modern, purpose-built homes to serve their local
markets. All commitments being considered are on a pre-let basis
and at attractive financial returns.
2e. Dividends in the period
The Company paid its fourth interim dividend for the year to 30
June 2017, in respect of the period from 1 April 2017 to 30 June
2017, of 1.570 pence per share on 25 August 2017. This reflects an
annualised payment of 6.28 pence per share and a dividend yield of
5.4% based on the 8 November 2017 closing share price of 117.25
pence.
The Group's unaudited EPRA Earnings per share for the quarter
were 1.53 pence, excluding the effects of the performance fee
accruals as noted in the Appendix.
The Company had 252,180,851 ordinary shares in issue at 30
September 2017 and has not issued or bought back any shares since
that date.
3. Announcement of First Interim Dividend for the year ending 30
June 2018
The Company has today declared its first interim dividend
payment for the year ending 30 June 2018, in respect of the period
from 1 July 2017 to 30 September 2017 of 1.6125 pence per share as
detailed in the schedule below:
Interim Property Income Distribution (PID) 1.6125 pence per share
Ex-Dividend Date: 16 November 2017
Record Date: 17 November 2017
Pay Date: 30 November 2017
4. Other
4a. Investor relations
The Group has recently launched its new website where
shareholders will find the latest Group information, at:
https://www.targethealthcarereit.co.uk/
4b. Quarterly investor report
The Group's quarterly investor report for September 2017 will
shortly be available on its website at:
https://www.targethealthcarereit.co.uk/investor-relations/reports-and-presentations/financial-reporting
Kenneth MacKenzie, CEO of Target Fund Managers Limited,
commented on the Group's activity during the period:
"The portfolio continues to perform well with the stable rental
returns which underpin the Group's dividends also supported by
growth in capital values. We note the significant investor interest
in the market, with participation from a range of investor types.
We will continue to identify and assess investment opportunities
using our specialist sector knowledge, only recommending
acquisitions when our criteria supporting long-term sustainable
income returns are met."
Enquiries:
Kenneth MacKenzie, Gordon Bland
Target Fund Managers Limited
01786 845 912
Mark Young, Neil Winward, Tom Yeadon
Stifel Nicolaus Europe Limited
020 7710 7600
Martin Cassels
Maitland Administration Services (Scotland) Limited
0131 550 3760
Fiona Harris/Sam Emery
Quill PR
020 7466 5058 / 020 7466 5056
Important information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
APPIX
Analysis of movement in EPRA NAV
The following table provides an analysis of the movement in the
unaudited EPRA NAV per share for the period from 1 July 2017 to 30
September 2017:
Pence per share
------------------------------------------------------------------ --------------------
EPRA NAV per share as at 30 June 2017 101.9
Property revaluation 1.8
Property acquisition costs & other capital items (0.2)
Movement in revenue reserve (excluding performance fee accruals) 1.5
Movement in performance fee accruals* (0.1)
Fourth interim dividend payment for the year to 30 June 2017 (1.6)
------------------------------------------------------------------ --------------------
EPRA NAV per share as at 30 September 2017 103.3
------------------------------------------------------------------ --------------------
Percentage change in the 3 month period 1.4%
------------------------------------------------------------------ --------------------
*To recognise: (1) a quarterly accrual of GBP0.2 million for a
performance fee, if due, for the year from 1 January 2017 to 31
December 2017. The accrued amount is estimated based on historic
portfolio performance relative to the IPD UK Annual Healthcare
Property Index. The final performance fee for the year to 31
December 2017 will be calculated once the Index figures for the
year to 31 December 2017 are available.
The EPRA NAV provides a measure of the fair value of a company
on a long-term basis. As at 30 September 2017 the EPRA NAV stated
above differed from that calculated under International Financial
Reporting Standards of 103.4 pence per share. This was due to the
valuation of the Group's interest rate derivative contracts used to
hedge its exposure to variable interest rates, which is excluded
from the calculation of the EPRA NAV.
SUMMARY BALANCE SHEET (Unaudited)
Sept-17 Jun-17 Mar-17 Dec-16
GBPm GBPm GBPm GBPm
Investment properties 296.6 282.0 274.6 253.1
Cash 16.8 10.4 11.6 26.7
Net current assets
/ (liabilities) (3.8) 4.5 (0.1) (1.9)
Bank loan (49.0) (40.0) (30.0) (21.0)
------------ ------- ------- -------
Net assets 260.6 256.9 256.1 256.9
------------ ------- ------- -------
EPRA NAV per share
(pence) 103.3 101.9 101.5 101.8
Ignores the re-allocation of fixed/guaranteed
rent reviews
The next quarterly valuation of the property portfolio will be
conducted by Colliers International Healthcare LLP during December
2017 and the unaudited EPRA NAV per share as at 31 December 2017
will be announced in January 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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