The chair of Target Healthcare REIT says deals support the valuation of the company’s care home properties – even as listed real estate firms’ stock prices suffer.
Announcing the REIT’s results for the year to 30 June, chair Alison Fyfe noted that listed property companies continue to trade largely at a discount to EPRA net tangible assets. Target’s own NTA per share stands at 110.7p. That is up by almost 6% year-on-year but is a fifth down on a closing share price yesterday of 89.7p.
“The prevailing mismatch between market evidence of direct investment in our sector and stock market valuations has attracted comment,” Fyfe said. “Whilst we can’t answer for all property, we have clear evidence that transactions in prime care home real estate such as ours are supportive of our valuations.”
The REIT has completed £71m of disposals since late 2022, Fyfe said, all at or above book value. A disposal of four assets in June this year was at an implied net initial yield of 5.6%.
“Reliability of our valuations is further supported by their lack of volatility,” the chair added. “During the macro-driven sector-wide yield shift seen in late 2022 the initial reaction was an outward yield shift of 40-50 bps in our assets which then stabilised relatively quickly at only 30-40 bps as evidence from transactional activity and the strong underlying trading performance across our portfolio provided reliable data points for valuers. We have seen valuation growth for six consecutive quarters since.”
The company posted like-for-like valuation growth for the year of 3.7%.
Image: Target Healthcare’s Amwell Care Home in Melton Mowbray
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