Target Healthcare REIT saw its like-for-like portfolio valuation increase by 1.4% for the six months to the end of 2023, driven by inflation-linked rental uplifts and the end of rent-free periods on some if its care home assets.
This growth actually reached 2%, but was offset by 0.6% as a result of outward yield movement.
The market valuation for the company’s portfolio of 98 modern, purpose-built care homes increased by 4.9% to £911.1m, owing to a further 3.5% boost from acquisitions and capital expenditure.
Rent across the portfolio increased by 2.4% to £57.9m, including like‑for-like rental growth of 1.9%.
Target Healthcare saw improvement across all key metrics of underlying trading performance at the homes with rent collection increasing to 99%, resident occupancy for mature homes of 87% (June 2023: 85%) and rent cover of 1.9 times (June 2023: 1.75 times). It has 32 tenants across 98 properties, up from 32 tenants across 97 properties last June, with a weighted average unexpired lease term of 26 (June 2023: 26.5 years).
At year end, it had a further five homes (329 beds) under development, with two of these now complete. It has a net loan to value of 25.8%, up only slightly from June (24.7%).
Against a challenging backdrop, the company delivered an accounting total return of +4.9% and earnings growth of 1.3%.
Chair Alison Fyfe said the performance was strong when benchmarked against the wider real estate sector.
“Our portfolio is fully let, provides inflation-linked annual rental growth supported by tenants with robust underlying trading, and has historically demonstrated a low volatility in asset valuations,” she said.
“Commercial real estate is experiencing many headwinds right now, though we note a clear bifurcation in sentiment towards high-quality assets with a solid long-term future in their current or near-current state, and those that cannot be described in that way. Investors increasingly value energy efficiency, social impact and positive experience for users and we remain deeply proud to be running a portfolio and strategy with real impact and longevity.”
Image: Target’s Amwell Care Home in Melton Mowbray
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