TIDMTHRL
RNS Number : 0147X
Target Healthcare REIT Limited
25 April 2019
25 April 2019
Target Healthcare REIT Limited and its subsidiaries
("Target Healthcare" or "the Group")
Net Asset Value, update on corporate activity & dividend
declaration
Target Healthcare (LSE: THRL), the UK listed specialist investor
in purpose-built care homes, announces its unaudited quarterly Net
Asset Value (NAV) as at 31 March 2019, provides an update on its
corporate activity during the quarter, and declares its third
interim dividend.
Highlights
-- EPRA NAV per share of 107.3 pence (31 December 2018: 106.9
pence), resulting in a NAV total return for the quarter of
2.0%.
-- 0.5% increase in like-for-like value of the operational
portfolio; total portfolio value of GBP477.1 million, 61 assets
comprising a mix of operational homes and forward fund
developments.
-- Twelve rent reviews completed at an average uplift of 2.6%
per annum; contractual rent roll now stands at GBP29.7 million per
annum from 56 operational properties.
-- Two new homes opened for residents during the quarter,
located in Leicestershire and Oxfordshire, following practical
completion of development projects, delivering continued portfolio
diversification with the number of tenants increasing by 2 to
23.
-- On track to add a further three new tenants during 2019, and
GBP3.7 million of annual contractual rent, from the Group's five
forward funded pre-let developments plus a commitment to acquire a
further home upon completion.
-- GBP40 million of flexible debt secured through doubling the
size of the Group's revolving credit facility with HSBC, taking the
Group's total debt facilities available from its three lenders to
GBP170 million.
-- Third interim dividend declared for the year ending 30 June
2019 of 1.64475 pence per share, an increase of 2.0% on the 2018
quarterly dividends. On an annualised basis, this reflects a
payment of 6.579 pence per share and a dividend yield of 5.64%
based on the closing share price on 24 April 2019.
-- Post-quarter end acquisition of a care home in Formby, an
affluent area north of Liverpool, for GBP6.9 million, providing 40
bedrooms with full en suite wet-room facilities.
Kenneth MacKenzie, CEO of Target Fund Managers Limited,
commented:
"It has been another period of robust financial performance,
underpinned by both the valuation uplift of the operating portfolio
and the growth in contracted rent. It is particularly pleasing to
see our portfolio grow with the delivery of our forward funded
developments, providing purpose built accommodation for residents
whilst also helping us to deliver on our stated commitment to
diversify the portfolio by tenant, geography and end-user payment
profile.
"As the Formby acquisition demonstrates, we remain focused on
investing the remaining equity and debt capital we have available
in high quality investment opportunities that will further
diversify the portfolio whilst increasing earnings and improving
dividend cover. In addition, we continue to act as an engaged
landlord to our portfolio of homes to assist tenants and help
create further value for shareholders, as well as providing
fit-for-purpose real estate which continues to meet the needs of
residents and their care providers."
Net Asset Value
The Group's unaudited EPRA NAV per share as at 31 March 2019 was
107.3 pence. The total return for the quarter based on EPRA NAV was
2.0%.
A balance sheet summary and an analysis of the movement in the
EPRA NAV over the quarter is presented at the end of this
announcement in the Appendix.
Corporate Update
Portfolio performance
As at 31 March 2019 the Group's portfolio was valued at GBP477.1
million and comprised 61 assets, a combination of 56 operational
care homes and five pre-let sites being developed through forward
funding commitments with established development partners.
The portfolio value has increased by 2.8% over the quarter. Of
this, 2.3% is derived from further investment into developments,
with a positive like-for-like movement in the operational portfolio
value of 0.5% which reflects primarily the impact of the annual
inflation-linked rental reviews as well as a small amount of market
yield shift.
Portfolio contractual rent has increased by 6.0% over the
quarter, of which 5.5% is derived from the successful completion of
two development sites which are now operational homes, both leased
to operators who, whilst new tenants of the Group, have established
track records managing high quality homes. Where rent reviews were
completed during the quarter, the average increase was 2.6%,
resulting in a 0.5% like-for-like increase to the contractual rent
roll.
The portfolio's weighted average unexpired lease term remained
in line with previous periods at 28.85 years.
The portfolio had an EPRA topped-up net initial yield of 6.29%
based on an annualised contractual rent upon expiry of lease
incentives of GBP29.7 million. The EPRA net initial yield was 5.70%
based on passing rent of GBP26.9 million. A schedule showing the
respective NIY profiles from the unwind of portfolio assets in
rent-free periods is shown in the Appendix.
Debt facilities & swap arrangements
As at 31 March 2019, the Group's total borrowings were GBP84.0
million, giving a loan-to-value (LTV) of 13.2% using net debt
(total gross debt less cash, as a proportion of gross property
value). Gross LTV (total gross debt as a proportion of gross
property value) was 17.6%.
During the quarter, and as announced in the Half Year results,
the Group increased its revolving credit facility with HSBC to
GBP80 million from GBP40 million. Commercial terms including
pricing, covenants and security package are unchanged from the
existing facility.
Through its facilities with RBS, HSBC and FCB, the Group has
available fixed term debt of GBP70 million with an additional
GBP100 million of more flexible debt available from revolving
facilities. The Group has currently drawn GBP66 million of fixed
term debt on which the interest rate has been fixed through
interest rate swaps. GBP18 million has been drawn from the
revolving facilities on which the variable interest rate is linked
to 3-month LIBOR.
The Group's weighted average cost on its drawn debt, inclusive
of amortisation of arrangement costs, is 3.05% with a weighted
average term to expiry of 2.4 years. The Group is currently
assessing options available from lenders which would extend the
term of its facilities.
Investment and asset management activity in the quarter
The Group completed twelve rent reviews during the quarter
achieving an average uplift of 2.6% per annum.
Following detailed discussions between the parties, the Group
completed a re-tenanting exercise at its Alexandra Court home, with
the new tenant providing the Group with a longer lease as well as
the benefit of a parent company guarantee on its rental
obligations.
Construction was completed on development projects in
Leicestershire and Oxfordshire, providing 140 bedrooms with full en
suite wet-room facilities across two new homes, both of which have
now opened to residents. The five assets currently under
construction through pre-let forward funding agreements continue to
progress in line with the Group's expectations with two of these
expected to reach practical completion in the short term.
Post quarter-end, and as previously announced, the Group
completed the acquisition of a 40-bedroom property in Formby,
Merseyside for approximately GBP6.9 million, including transaction
costs. The home fully meets the Group's strict care home investment
criteria and is let on a 35-year lease with an RPI-linked cap and
collar to Athena Healthcare group, a proven operator and long
standing tenant of the Group.
Pipeline and Investment Market
As ever, the Group has a number of near-term opportunities
progressing through its diligence processes, which, if all these
potential acquisitions were to complete as anticipated, would fully
utilise the Group's available equity and debt capital during 2019's
summer months.
The Group's Investment Manager continues to use its specialist
knowledge and in-house research capabilities to identify and
acquire suitable assets in this competitive market place,
leveraging its strong reputation and relationships with vendors and
operators.
Dividends in the period
The Company paid its second interim dividend for the year to 30
June 2019, in respect of the period from 1 October 2018 to 31
December 2018, of 1.64475 pence per share on 22 February 2019 to
shareholders on the register on 8 February 2019.
The Company had 385,089,448 ordinary shares in issue at 31 March
2019 and has not issued or bought back any shares since that
date.
Announcement of third interim dividend
The Company today declares its third interim dividend payment
for the year ending 30 June 2019, in respect of the period from 1
January 2019 to 31 March 2019 of 1.64475 pence per share as
detailed in the schedule below:
Interim Property Income Distribution (PID) 1.64475 pence per share
Ex-Dividend Date: 2 May 2019
Record Date: 3 May 2019
Pay Date: 31 May 2019
All the dividend will be paid as a PID in respect of the
Company's tax-exempt property rental business. The dividend
reflects an annualised payment of 6.579 pence per share and a
dividend yield of 5.64% based on the 24 April 2019 closing share
price of 116.6 pence.
Shareholders entitled to elect to receive distributions without
deduction for withholding tax may complete the declaration form
which is available on request from the Company through the contact
details provided on its website, www.targethealthcarereit.co.uk, or
from the Company's registrar, Computershare Investor Services
(Jersey) Limited. Shareholders who qualify for gross payments are,
principally, UK resident companies, certain UK public bodies, UK
charities, UK pension schemes and the managers of ISAs, PEPs and
Child Trust Funds, in each case subject to certain conditions.
Individuals and non-UK residents do not qualify for gross payments
of distributions and should not complete the declaration form.
Investor relations
Shareholders will find the latest Group information at its
website: https://www.targethealthcarereit.co.uk/
LEI: 2138008VQQ5Y9QXMX749
ENDS
Enquiries:
Kenneth MacKenzie; Gordon Bland
Target Fund Managers Limited
01786 845 912
Mark Young; Neil Winward; Tom Yeadon
Stifel Nicolaus Europe Limited
020 7710 7600
Stifeltargethealthcare@stifel.com
Martin Cassels; Donald Cameron
Maitland Administration Services (Scotland) Limited
0131 550 3760
Dido Laurimore; Claire Turvey; Richard Gotla
FTI Consulting
020 3727 1000
TargetHealthcare@fticonsulting.com
Notes to editors:
UK listed Target Healthcare REIT Limited (THRL) is an externally
managed Real Estate Investment Trust which provides shareholders
with an attractive level of income, together with the potential for
capital and income growth, from investing in a diversified
portfolio of modern, purpose-built care homes.
The Group's current portfolio comprises 61 assets with a total
value of GBP477.1 million (31 March 2019), which are let to 23
tenants.
The Group only invests in modern, purpose-built homes that are
let to high quality tenants who demonstrate strong operational
capabilities and a strong care ethos. The Group builds
collaborative, supportive relationships with each of its tenants as
it believes working in this way helps raise standards of care and
helps its tenants build sustainable businesses. In turn, that helps
the Group deliver stable returns to its investors.
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.
APPENDIX
1. 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 2019 to
31 March 2019:
Pence per share
----------------
EPRA NAV per share as at 31 December 2018 106.9
Revaluation gains / (losses) on investment properties 0.1
Net effect of acquisition costs and assets under construction^ 0.8
Movement in revenue reserve 1.1
Second interim dividend payment for the year to 30 June 2019 (1.6)
---------------------------------------------------------------- ----------------
EPRA NAV per share as at 31 March 2019 107.3
---------------------------------------------------------------- ----------------
Percentage change in the 3-month period 0.4%
---------------------------------------------------------------- ----------------
The EPRA NAV provides a measure of the fair value of a company
on a long-term basis. As at 31 March 2019 the EPRA NAV stated above
differed from that calculated under International Financial
Reporting Standards of 107.2 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.
^Consistent with standard valuation practice for assets under
construction, the carrying value of these assets is calculated by
the valuer through the application of a discount to accumulated
costs to date. This discount varies depending on factors such as
the remaining development time. As the asset progresses towards
completion the discount that has been applied is unwound. During
the quarter, two assets have reached practical completion which has
contributed to a positive contribution to EPRA NAV from unwinding
of the discount in these cases.
2. Summary balance sheet (unaudited)
Mar-19 Dec-18 Sep-18 Jun-18
GBPm GBPm GBPm GBPm
Investment properties* 477.1 463.9 403.7 385.5
Cash 21.1 28.8 24.0 41.4
Net current assets
/ (liabilities)* (1.0) (10.2) (1.9) (2.4)
Bank loans (84.0) (71.0) (66.0) (66.0)
----------- ------- ------- -------
Net assets 413.2 411.5 359.8 358.5
----------- ------- ------- -------
EPRA NAV per share
(pence) 107.3 106.9 106.1 105.7
*Investment properties are stated at market value and the IFRS
effects of fixed/guaranteed minimum rent reviews are not
reflected.
The next quarterly valuation of the property portfolio will be
conducted by Colliers International Healthcare Property Consultants
Limited during June 2019 and the unaudited EPRA NAV per share as at
30 June 2019 will be announced in July 2019.
3. EPRA NIY profiles and unwind of rent-free periods
The Group has four assets currently with rent-free periods. As
these unwind, assuming no other changes including inter alia the
portfolio valuation or rental profile, the EPRA yield profiles for
the portfolio will be as follows:
31 March 2019 30 June 2019 30 September 31 December
2019 2019
EPRA topped-up
NIY 6.29% 6.29% 6.29% 6.29%
-------------- ------------- ------------- ------------
EPRA NIY 5.70% 5.95% 6.19% 6.29%
-------------- ------------- ------------- ------------
Contractual
rent (GBPm) 29.7 29.7 29.7 29.7
-------------- ------------- ------------- ------------
Passing rent
(GBPm) 26.9 28.1 29.3 29.7
-------------- ------------- ------------- ------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUSAWRKKASUAR
(END) Dow Jones Newswires
April 25, 2019 02:00 ET (06:00 GMT)
Target Healthcare Reit (LSE:THRL)
Historical Stock Chart
From Apr 2024 to May 2024
Target Healthcare Reit (LSE:THRL)
Historical Stock Chart
From May 2023 to May 2024