TIDMTHRL
RNS Number : 2162M
Target Healthcare REIT Limited
27 July 2017
27 July 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 30 June 2017 was 101.9 pence. The NAV total
return for the quarter was 1.9%.
Corporate Update
Portfolio
As at 30 June 2017 the Group owned forty-five care homes with a
market value of GBP282.0 million. The portfolio had an EPRA net
initial yield of 6.75% (based on contractual net income) and an
annualised rent roll of GBP20.3 million with a weighted average
unexpired lease term of 29.5 years. Portfolio passing rent has
increased by 2.8% during the quarter, 2.1% from additions and asset
management activity, plus 0.7% from rent reviews.
The portfolio value has increased 2.7% over the quarter, with
the like-for-like value up 0.6%. 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
As at 30 June 2017, the Group's total borrowings were GBP40.0
million, giving a loan-to-value ratio of 14.2% (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 currently has total agreed facilities of GBP50
million, consisting of a GBP30 million term loan and a GBP20
million revolving credit facility. The Group's interest rate swap
arrangements as at 30 June 2017 provided an all-in weighted average
interest cost on GBP30.0 million of debt of 2.36% for the period to
24 June 2019 and 2.25% thereafter until 1 September 2021. The
remaining debt is drawn from the revolving credit facility with
interest payable at a rate equal to three month LIBOR plus a
lending margin of 1.50 per cent. per annum.
The current debt arrangements allow the Group to flexibly manage
its capital structure with the Group currently benefitting from
GBP10 million of capital available to be drawn from the revolving
credit facility to fund the completion of acquisitions. 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 is currently at an advanced stage in
obtaining an additional debt facility from a new debt provider. The
facility is expected to be available, subject to the satisfactory
completion of legal diligence, to fund additional near-term
investment opportunities upon the existing facilities being fully
utilized.
Investment activity
In the three months to 30 June 2017, the Group's investment and
asset management activities have comprised:
-- The acquisition 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.
Subsequent to the quarter end:
-- The acquisition of an 88 bed home in Melton Mowbray,
Leicestershire for GBP8.4 million, including acquisition costs. The
home opened its doors to residents in March 2017 and boasts very
large lounges and well laid out gardens providing good outdoor
space for residents and visitors. The home was leased back to
Melton Care Limited and is subject to a 35 year lease with
RPI-linked uplifts with a cap and collar. Melton Care is a joint
venture between Magnum Care, a Leicestershire-based operator, and
the principals behind Care Concern, the national operator with whom
the Group have worked in a number of homes.
-- The acquisition of a development site, with planning
permission, in Birkdale, Merseyside, and entry into a capped
development contract to develop a home with 55 large bedrooms and
good public space in an impressive building on this corner
location. The development will be carried out by Athena Healthcare,
who have also contracted to pre-let the property on completion at
an agreed rental level. The lease will again be for 35 years with
RPI uplifts subject to cap and collar. The home will target the
premium residential market, and once completed will become the
third home in the Group's portfolio with Athena, a growing operator
with three operational homes and several further in development.
The home is expected to complete by March 2019, with a total
development price of around GBP8.2 million including costs.
Pipeline and Investment Market
Since the Company's GBP84 million equity issuance in May 2016,
the Group has committed investments with an aggregate value of
around GBP105 million.
The Group continues to be acquisitive, and continues, through
its Investment Manager, to see attractive assets meeting its strict
investment criteria. Diligence is being performed on a number of
near-term investment opportunities which will utilize current
available debt capital, and that expected to be available shortly
from a new facility. A wider pipeline of assets is being assessed
where the timetable for potential completion remains subject to
additional due diligence and vendor negotiations. The Group will
continue to consider its ongoing capital requirements with respect
to these opportunities as and when they progress.
Dividends in the period
The Company paid its third interim dividend for the year to 30
June 2017, in respect of the period from 1 January 2017 to 31 March
2017, of 1.570 pence per share on 26 May 2017. This reflects an
annualised payment of 6.28 pence per share and a dividend yield of
5.3% based on the 26 July 2017 closing share price of 118.0
pence.
The Group's unaudited EPRA Earnings per share for the quarter
were 1.46 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 30 June
2017 and has not issued or bought back any shares since that
date.
Announcement of Fourth Interim Dividend for the year ending 30
June 2017
The Company has today declared its fourth interim dividend
payment for the year ending 30 June 2017, in respect of the period
from 1 April 2017 to 30 June 2017 of 1.570 pence per share as
detailed in the schedule below:
Interim Property Income Distribution (PID) 0.707 pence per share
Interim Ordinary Dividend 0.863 pence per share
Ex-Dividend Date: 3 August 2017
Record Date: 4 August 2017
Pay Date: 25 August 2017
Quarterly investor report
The Group's quarterly investor report for June 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:
"This has been another strong quarter for Target Healthcare
REIT. Our portfolio of modern, purpose-built homes continues to
perform well and as an engaged landlord we have been encouraged by
the feedback from many of our recent home visits. In addition, we
have progressed several attractive investment opportunities, some
of these arising from recommendations from existing tenants who
value our care home expertise and corporate ethos. In the short
term the team are also focused on securing new debt facilities
which will allow us to meet our long term leverage targets and
provide operational flexibility to progress these investment
opportunities in an efficient timeframe."
Enquiries:
Kenneth MacKenzie
Target Advisers
01786 845 912
Mark Young, Neil Winward, Tom Yeadon
Stifel Nicolaus Europe Limited
020 7710 7600
Martin Cassels
Maitland Administration Services (Scotland) 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 April 2017 to 30
June 2017:
Pence per share
------------------------------------------------------------------ -----------------------
EPRA NAV per share as at 31 March 2017 101.5
Property revaluation 0.5
Property acquisition costs & other capital items 0.0
Movement in revenue reserve (excluding performance fee accruals) 1.5
Movement in performance fee accruals* (0.0)
Third interim dividend payment for the year to 30 June 2017 (1.6)
------------------------------------------------------------------ -----------------------
EPRA NAV per share as at 30 June 2017 101.9
------------------------------------------------------------------ -----------------------
Percentage change in the 3 month period 0.4%
------------------------------------------------------------------ -----------------------
*To recognise: (1) a quarterly accrual of GBP198,000 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, and; (2) an amendment of
GBP140,000 in relation to the performance fee paid to the
Investment Manager in April 2017 in respect of the calendar year to
31 December 2016 which has been refunded to the Company following a
minor adjustment to the applicable portfolio valuation.
The EPRA NAV provides a measure of the fair value of a company
on a long-term basis. As at 30 June 2017 the EPRA NAV stated above
was materially equal to that calculated under International
Financial Reporting Standards of 101.9 pence per share. The
difference, of less than 0.1 pence per share, 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.
SUMMARY BALANCE SHEET (Unaudited)
Jun-17 Mar-17 Dec-16 Sept-16
GBPm GBPm GBPm GBPm
Investment properties 282.0 274.6 253.1 232.3
Cash 10.4 11.6 26.7 42.6
Net current assets
/ (liabilities) 4.5 (0.1) (1.9) (1.6)
Bank loan (40.0) (30.0) (21.0) (21.0)
Net assets 256.9 256.1 256.9 252.3
----------- ------- ------- --------
EPRA NAV per share
(pence) 101.9 101.5 101.8 100.0
Ignores the re-allocation of fixed/guaranteed
rent reviews
The next quarterly valuation of the property portfolio will be
conducted by Colliers International Healthcare LLP during September
2017 and the unaudited EPRA NAV per share as at 30 September 2017
will be announced in October 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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