Care home specialist Target Healthcare has announced a 5% dip in the quarterly valuation of its portfolio, reflecting the outward yield movement seen across the property sector following recent interest rate rises.
The fall compares with a 0.1% increase in the previous quarter. Target Healthcare’s portfolio of 100 assets let to 33 tenants is now valued at £867.7m (30 September 2022: £913.7m).
In its update today, the UK listed REIT, which invests in modern, purpose-built care homes, announced a -6.6% net asset value total return for the quarter to 31 December, down from 1.3% for the three months to 30 September.
However, occupancy has improved through recent quarters and operational improvements delivered 1.1% like-for-like rental growth in the latest quarter.
Target Fund Managers chief executive Kenneth MacKenzie said: “Following the interest rate rises witnessed in late 2022, real estate values across almost all sectors have been falling. While the group has not been completely immune to this trend, our portfolio has demonstrated its resilience versus the CBRE UK monthly index (all property) capital decline of 14.6% for the same quarter.”
Target says it is not “aggressively pursuing an acquisitions strategy at present” but remains alert to opportunities presented as a result of changing market conditions. Its borrowings stand at £240m, representing a net LTV of 25.1% (30 September 2022: £22.3m). Some 96% of this is fully hedged to further increases in interest rates.
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