Care home investor Target Healthcare REIT has seen cases of coronavirus increase in its properties and has postponed acquisitions as the pandemic continues.
In a stock exchange update, the firm said the number of confirmed or suspected cases of Covid-19 in its care homes were rising “as anticipated” but represented residents in less than 5% of its beds. It said its board had taken the “prudent” step of postponing deals that had been set to complete towards the end of March “as the severity of the Covid-19 pandemic emerged” and it remained in discussions with the sellers.
The company said: “As a result of the Covid-19 pandemic, transaction volumes have reduced and the government-imposed lockdown has virtually put a halt to those transactions that were at an earlier stage. Having said that, we are aware of a small number of transactions having progressed to completion at pricing levels agreed prior to 23 March.”
Kenneth MacKenzie, chief executive of Target Fund Managers, the REIT’s investment manager, said: “Given the fast-moving nature of the Covid-19 pandemic, it is impossible to predict with any certainty what sort of impact we may see across our portfolio. While we expect to see a small number of care homes disproportionately affected, our investment strategy has always focused on the quality and design facilities of the properties, underpinned by a forensic approach to understanding local market dynamics.
“Nothing has changed our conviction that this approach, coupled with the underlying demographic trends supporting strong demand for care home beds, will underpin the delivery of reliable and sustainable income over the long term.”
EPRA net asset value per share stood at 108p at the end of March, nudging down from 108.1p at the end of 2019, which the company said was due to one-off costs of debt refinancing. NAV total return for the first quarter was 1.5%.
Target’s rent roll is now £38.9m, rising by more than £1m during the quarter. During the three months the company bought two care homes in Yorkshire. The value of its portfolio now stands at £613.4, up from £589.9m at the end of 2019, including a material uncertainty clause.
The company has £29m in cash and £38m of undrawn debt. It has signed a 12-year loan for £50m with ReAssure, alongside its existing credit line with RBS and HSBC.
Target will pay an interim dividend of 1.67p.
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