TIDMTHRL
RNS Number : 3256D
Target Healthcare REIT Limited
26 April 2017
26 April 2017
Corporate Update, Net Asset Value & Dividend
announcement
Net Asset Value
Target Healthcare REIT Limited (the "Company" and together with
its subsidiaries, the "Group") announces that its unaudited EPRA
NAV per share as at 31 March 2017 was 101.5 pence. The NAV total
return for the quarter was 1.3%.
Corporate Update
Portfolio
As at 31 March 2017 the Group owned forty-four care homes with a
market value of GBP274.6 million. The portfolio had an EPRA net
initial yield of 6.75% (based on contractual net income) and an
annualised rent roll of GBP19.8 million with a weighted average
unexpired lease term of 29.6 years. Portfolio passing rent has
increased by 8.7% during the quarter, 8.2% from additions and asset
management activity, plus 0.5% from rent reviews.
The portfolio value has increased 8.5% over the quarter, with
the like-for-like value up 0.5%. The increase reflects our
acquisitions in the period, value generated from our ongoing
embedded rental uplifts, and also an element of yield compression
across individual assets.
A balance sheet summary and an analysis of the movement in EPRA
NAV over the quarter is presented in the Appendix.
Debt facility & swap arrangements
The Group's total borrowings were GBP30.0 million as at 31 March
2017, giving a loan-to-value ratio of 10.9% (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
new care homes, cash has been excluded from the calculation.
The Group's interest rate swap arrangements provide an all-in
weighted average interest cost on the GBP30.0 million of currently
drawn debt of 2.36% for the period to 24 June 2019 and 2.25%
thereafter until 1 September 2021.
The Group has total agreed facilities of GBP50 million,
consisting of a GBP30 million term loan and a GBP20 million
revolving credit facility. The current debt availability allows the
Group to flexibly manage its capital structure as it provides GBP20
million in short-term available capital to fund the completion of
transactions. Over the medium term the Group is committed to
maintaining a loan-to-value ratio of approximately 20%, as
described in its Investment Policy. To that end, the Group will
look to increase its current debt levels and is currently in
discussions with a new debt provider. Commercial terms have been
agreed and documentation and diligence is currently being performed
by the Group with its legal advisors. The facility is expected to
be available to fund near-term investment opportunities upon the
existing facilities being fully utilized.
Investment activity
In the three months to 31 March 2017, the Group's investment and
asset management activities have comprised:
-- The acquisition of two purpose built care homes near
Wimborne, Dorset for an undisclosed price. The two homes are
adjacent to each other and comprise a total of 70 bedrooms. On
acquisition the combined homes were let to Dorset Healthcare
Limited, which is part of the Care Concern Group, an existing
tenant of the Group. The lease is for 35 years with RPI-linked
increases subject to a cap and collar. The Group and Care Concern
intend to undertake renovation works to the combined homes, with a
view to enlarging some bedrooms, providing additional lounge space
and generally bringing the properties into line with others in the
Group's portfolio. This will be carried out over a period of time
to minimise disruption to the residents of the home.
-- In line with previous announcements in 2016 when contracts
were exchanged, the Group confirms that it has now completed the
acquisitions of two purpose-built care homes located in Kirby Cross
near Frinton-on-Sea, Essex and Sutton-in-Ashfield, Nottinghamshire
for a total consideration of approximately GBP14.8 million
including acquisition costs. Care Concern leased Beaumont Manor
near Frinton-on-Sea and Oakdale Care Group is the tenant at
Kingfisher Court in Sutton-in-Ashfield, becoming the Group's 16(th)
tenant.
Subsequent to 31 March 2017, the Group has acquired of a care
home in Dover, Kent for a total consideration of GBP6.1 million
including costs. The home has 79 large bedrooms over four floors
and benefits from large lounges as well as a hairdressing salon and
dedicated cinema room. Upon acquisition, the home was leased back
to Athena Healthcare who developed the property, and is subject to
a 35-year lease with RPI-linked uplifts with a cap and collar.
Pipeline and Investment Market
Since the Company's GBP84 million capital raise in May 2016, the
Group has completed investments with an aggregate value of around
GBP90 million.
The Investment Manager is analysing and performing diligence on
a number of near-term investment opportunities and there continues
to be a pipeline of assets where the timetable for potential
completion remains subject to additional due diligence and vendor
negotiations. Capital to fund the near-term investment
opportunities will be provided by the revolving credit facility of
the Group's debt facility as well as the new additional debt
facility under consideration in order to ensure that the Company
meets its medium term gearing targets.
Dividends in the period
The Company paid its second interim dividend for the year to 30
June 2017, in respect of the period from 1 October 2016 to 31
December 2016, of 1.570 pence per share on 24 February 2017. This
reflects an annualised payment of 6.28 pence per share and a
dividend yield of 5.5% based on the 25 April 2017 closing share
price of 113.88 pence.
The Group's unaudited EPRA Earnings per share for the quarter
were 1.31 pence, excluding the effects of the performance fee
accruals as noted in the Appendix.
The Company had 252,180,851 ordinary shares in issue at 31 March
2017 and has not issued or bought back any shares since that
date.
Announcement of Third Interim Dividend for the year ending 30
June 2017
The Company has today declared its third interim dividend
payment for the year ending 30 June 2017, in respect of the period
from 1 January 2017 to 31 March 2017 of 1.570 pence per share as
detailed in the schedule below:
Interim Property Income Distribution (PID) 1.099 pence per share
Interim Ordinary Dividend 0.471 pence per share
Ex-Dividend Date: 4 May 2017
Record Date: 5 May 2017
Pay Date: 26 May 2017
Quarterly investor report
The Group's quarterly investor report for March 2017 will
shortly be available on its website at:
http://www.targethealthcarereit.co.uk/Financial%20reporting.aspx
Kenneth MacKenzie, Managing Partner of Target Advisers LLP,
commented on the Group's activity during the period:
"We have had a good start to 2017 with positive momentum across
a number of fronts. The portfolio continues to perform well. We
have a diverse tenant base with long duration, upward only leases,
which continue to contribute to portfolio passing rent increases
alongside our acquisition activity. Over the quarter we invested
the remaining proceeds of last year's equity raise and continue to
see a number of new opportunities in the market. If these progress
through our extensive due diligence procedures, they will in the
short-term be funded via additional gearing in order to ensure the
Group is fully invested with borrowings in-line with our stated
target. The team is focused on delivering on our promises to
shareholders and, as our portfolio matures following recent
acquisitions, we are encouraged by the Group's prospects."
Enquiries:
Kenneth MacKenzie
Target Advisers
01786 845 912
Stifel Nicolaus Europe Limited
Mark Young, Neil Winward, Tom Yeadon
020 7710 7600
Martin Cassels
R&H Fund Services Limited
0131 550 3760
Fiona Harris/Sam Emery
Quill PR
020 7466 5058 / 020 7466 5056
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 2017 to
31 March 2017:
Pence per share
------------------------------------------------------------------ -----------------------
EPRA NAV per share as at 31 December 2016 101.8
Property revaluation 0.5
Property acquisition costs & other capital items (0.3)
Movement in revenue reserve (excluding performance fee accruals) 1.3
Movement in performance fee accruals* (0.2)
Second interim dividend payment for the year to 30 June 2017 (1.6)
------------------------------------------------------------------ -----------------------
EPRA NAV per share as at 31 March 2017 101.5
------------------------------------------------------------------ -----------------------
Percentage change in the 3 month period (0.3%)
------------------------------------------------------------------ -----------------------
*To recognise: (1) an under-accrual of the performance fee
payable to the investment manager for the year to 31 December 2016,
and; (2) an accrual for a performance fee, if due, for the year
from 1 January 2017 to 31 December 2017. The accrued amount is
estimated based on historic portfolio performance relative to the
MSCI UK Annual Healthcare Property Index. The final performance fee
for the year to 31 December 2017 will be calculated once the Index
figures for the year to 31 December 2017 are available.
The EPRA NAV provides a measure of the fair value of a company
on a long-term basis. As at 31 March 2017 the EPRA NAV stated above
differed from that calculated under International Financial
Reporting Standards of 101.4 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.
The Group has settled its claim, disclosed in its interim report
and financial statements to 31 December 2016, with its previous tax
adviser. The financial impact has been recognised within the EPRA
NAV as at 31 March 2017.
SUMMARY BALANCE SHEET (Unaudited)
Mar-17 Dec-16 Sept-16 Jun-16
GBPm GBPm GBPm GBPm
Investment properties 274.6 253.1 232.3 210.7
Cash 11.6 26.7 42.6 65.1
Net current assets
/ (liabilities) (0.1) (1.9) (1.6) (1.2)
Bank loan (30.0) (21.0) (21.0) (21.0)
Net assets 256.1 256.9 252.3 253.6
--------- ------- -------- -------
EPRA NAV per share
(pence) 101.5 101.8 100.0 100.6
Ignores the effect of fixed/guaranteed
rent reviews
The next quarterly valuation of the property portfolio will be
conducted by Colliers International Healthcare LLP during June 2017
and the unaudited EPRA NAV per share as at 30 June 2017 will be
announced in July 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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