TIDMTHRL
RNS Number : 0044M
Target Healthcare REIT Limited
25 April 2018
Target Healthcare REIT Limited and its subsidiaries
("Target Healthcare" or "the Group")
Net Asset Value, update on corporate activity & dividend
declaration
Target Healthcare (LSE: THRL), the UK listed specialist investor
in purpose-built care homes, announces its unaudited quarterly Net
Asset Value (NAV) as at 31 March 2018 and provides an update on its
corporate activity and dividend declaration.
Highlights
-- EPRA NAV per share of 105.0 pence (31 December: 104.4 pence),
resulting in a NAV total return for the period of 2.1%
-- 0.6% increase in like-for-like portfolio value. Total
portfolio value of GBP341.4 million across 53 assets, delivering an
annualised rent roll of GBP23.6 million from 49 operational
properties
-- 12 rent reviews completed at an average uplift of 3.9%
-- Unaudited EPRA Earnings per share for the quarter of 1.39 pence
-- Third interim dividend declared for the year ending 30 June
2018 of 1.6125 pence per share. On an annualised basis, this
reflects a payment of 6.45 pence per share and a dividend yield of
6.0 % based on the 24 April closing share price
Kenneth MacKenzie, CEO of Target Fund Managers Limited,
commented:
"The existing portfolio continues to perform well with stable
rental returns growing with the increased level of inflation that
we are currently seeing in the market. We continue to act as an
engaged landlord with regular site visits and an active tenant
dialogue which gives us additional assurance with regard to the
operational performance of our homes whilst also allowing our
tenants to benefit from our sector specialist knowledge and
experience.
The team is currently highly focused on investing the proceeds
of our recent capital raise. We were delighted to acquire two
exciting opportunities in Lancashire and Shropshire in March and
look forward to providing further updates in due course."
1. Net Asset Value
The Group announces that its unaudited EPRA NAV per share as at
31 March 2018 was 105.0 pence. The NAV total return for the quarter
was 2.1%.
A balance sheet summary and an analysis of the movement in the
EPRA NAV over the quarter is presented in the Appendix.
2. Corporate Update
2a. Portfolio performance
As at 31 March 2018 the Group's portfolio was valued at GBP341.4
million and comprised of 49 operational care homes and 4 sites
being developed via forward fund commitments. Based on current
contracted rental income, the portfolio had an EPRA net initial
yield of 6.58% and an annualised rent roll of GBP23.6 million.
Where rent reviews completed during the quarter, the average
increase was 3.9%, resulting in the passing rent for the portfolio
as a whole increasing by 0.8%. The portfolio's weighted average
unexpired lease term was 28.7 years.
The portfolio value has increased 1.9% over the quarter. Of
this, 1.3% reflects the acquisition of, and further investment in,
the 4 development sites, with a like-for-like movement in the
operational portfolio of 0.6% reflecting predominantly the impact
of rising rents generated by the annual inflation-linked rental
reviews.
2b. Debt facilities & swap arrangements
On 29 January 2018, the Group entered into a new three year
revolving credit facility of GBP40 million with HSBC Bank plc (the
"HSBC facility"). This facility further enhances the flexibility of
the Group's debt arrangements, with the addition of a new lending
partner adding diversification to the financing structure.
The Group used GBP25.0 million of cash from its February equity
issuance to repay revolving credit facilities which had been drawn
to fund acquisitions. As at 31 March 2018, the Group's total
borrowings were GBP66.0 million, giving a gross loan-to-value ratio
of 19.3% (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 care home investments, cash has been
excluded from the calculation).
The Company has available fixed term debt of GBP70 million
provided by RBS and FCB with an additional GBP60m of more flexible
debt available from the revolving facilities provided by HSBC and
RBS. Currently, all of the GBP66m of debt currently drawn is fixed
term and also benefits from fixed interest costs as a result of the
Group's interest rate swap arrangements. The Group's weighted
average cost on its drawn debt, inclusive of amortisation of
arrangement costs, is 2.94% with an average term to expiry of 3.5
years.
2c. Investment activity
In the three months to 31 March 2018, the Group has entered into
contracts to acquire and forward-fund the development of three new
care homes. Consistent with previous forward-funding opportunities,
the Group will earn a coupon through the construction phase which
will support its progressive dividend objective.
-- A 70 bed home in Earl Shilton, Leicestershire, for a total
cost of c. GBP6.3 million. The development will be carried out
under a fixed price contract with the Care Concern Group, an
existing tenant, who will lease the property on a 35-year
RPI-linked lease subject to a cap and collar.
-- Two new care homes located near Shrewsbury, Shropshire and in
Preston, Lancashire, for a combined cost of approximately GBP15.6
million. The completed 64 and 74 bed homes will be let to
Rotherwood Healthcare and L&M Healthcare respectively, both new
tenants to the Group. Construction is to be undertaken on the basis
of fixed price contracts with the developers, and the completed
homes will be let on long-term (30+ years), RPI-linked leases
subject to caps and collars.
2d. Pipeline and Investment Market
During February 2018 the Group raised gross proceeds of GBP94.0
million through the issue of 87,037,038 Ordinary Shares ("New
Shares") by way of a Placing, Open Offer and Offer for Subscription
(together the "Share Issue"). The Group has subsequently acquired
two assets for a total consideration of GBP15.6 million (which
excludes approximately GBP3.0m of potential deferred consideration)
in Shropshire and Lancashire and has a wider identified investment
pipeline of GBP91.0 million which is currently in due diligence.
The Group therefore remains on track to announce significant
further acquisitions over the next few months.
2e. Dividends in the period
The Company paid its second interim dividend for the year to 30
June 2018, in respect of the period from 1 October 2017 to 31
December 2017, of 1.6125 pence per share on 23 February 2018 to
shareholders on the register on 2 February 2018.
The dividend reflects an annualised payment of 6.45 pence per
share and a dividend yield of 6.0% based on the 24 April 2018
closing share price of 107.5 pence.
The Company had 339,217,889 ordinary shares in issue at 31 March
2018 and has not issued or bought back any shares since that
date.
3. Announcement of Third Interim Dividend for the year ending 30
June 2018
The Company has today declared its third interim dividend
payment for the year ending 30 June 2018, in respect of the period
from 1 January 2018 to 31 March 2018 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: 3 May 2018
Record Date: 4 May 2018
Pay Date: 25 May 2018
4. Other
4a. Investor relations
Shareholders will find the latest Group information, including
its quarterly investor report for March 2018, at its website:
https://www.targethealthcarereit.co.uk/
S
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
Dido Laurimore; Claire Turvey; Richard Gotla
FTI Consulting
020 3727 1000
TargetHealthcare@fticonsulting.com
Notes to editors:
UK listed Target Healthcare REIT Limited (THRL) is an externally
managed Real Estate Investment Trust which aims to provide
shareholders with an attractive level of income, together with the
potential for capital and income growth, through the assembly and
management of a portfolio of modern, purpose built care homes.
The Group's current portfolio comprises 53 assets with a total
value of circa GBP341.4 million (31 March 2018), which are let to
20 tenants.
The Group only invests in modern, purpose built homes that
provide the best environments for residents and their care
providers and ensure they are let at a sustainable rent. The Group
aims to build 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 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 January 2018 to
31 March 2018:
Pence per share
------------------------------------------------------------------- --------------------
EPRA NAV per share as at 31 December 2017 104.4
Property revaluation 0.5
Property acquisition costs & other capital items (0.1)
Net effect of equity issuance 0.3
Movement in revenue reserve (excluding performance fee accruals)* 1.2
Movement in performance fee accrual (0.1)
Second interim dividend payment for the year to 30 June 2018 (1.2)
------------------------------------------------------------------- --------------------
EPRA NAV per share as at 31 March 2018 105.0
------------------------------------------------------------------- --------------------
Percentage change in the 3 month period 0.6%
------------------------------------------------------------------- --------------------
*The movement in revenue reserve includes (1) GBP0.15m (0.06
pence per share) to recognise an under-accrual of performance fee
payable to the Manager in respect of the year to 31 December 2017,
and (2) a quarterly accrual of GBP0.18m (0.07 pence per share) for
a performance fee, if payable, for the year from 1 January 2018 to
31 December 2018. This accrual is estimated using historic returns
information of the portfolio and the IPD UK Annual Healthcare
Property Index. Any fee will be calculated and payable once the
Index figures for the year to 31 December 2018 are available, and
may differ from the amount accrued up to that date.
The EPRA NAV provides a measure of the fair value of a company
on a long-term basis. As at 31 March 2018 the EPRA NAV stated above
differed from that calculated under International Financial
Reporting Standards of 105.1 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)
Mar-18 Dec-17 Sept-17 Jun-17
GBPm GBPm GBPm GBPm
Investment properties* 341.4 334.9 296.6 282.0
Cash 85.3 14.9 16.8 10.4
Net current assets
/ (liabilities)* (4.7) (5.5) (3.8) 4.5
Bank loan (66.0) (81.0) (49.0) (30.0)
------- ------- -------- -------
Net assets 356.0 263.3 260.6 256.9
------- ------- -------- -------
EPRA NAV per share
(pence) 105.0 104.4 103.3 101.9
*Investment properties stated at market value and ignore the
IFRS effects of fixed/guaranteed minimum rent reviews.
The next quarterly valuation of the property portfolio will be
conducted by Colliers International Healthcare Property Consultants
Limited during June 2018 and the unaudited EPRA NAV per share as at
30 June 2018 will be announced in July 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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