Target Healthcare REIT


£442.1m market cap

114.8p last close

Target Healthcare REIT invests in modern, purpose-built residential care homes in the UK let on long leases to high quality care providers. It selects assets according to local demographics and intends to pay increasing dividends underpinned by structural growth in demand for care.

Investment summary

Target’s portfolio continued to perform well during the three months ended 31 March (Q319), with RPI-driven rental growth, increased property valuations and progress with the forward-funded development of pre-let, high-quality, purpose-built homes. EPRA NAV per share increased 0.4% to 107.3p and including dividends paid the EPRA NAV total return was 2.0%, taking the cumulative return in the first nine months of FY19 to 6.1%. Target has proposed a new corporate structure that would domicile the group in the UK, better aligning it with the UK tax regime, UK local authorities and health services, and reducing regulatory complexity. There will be no change in strategy or how the company is run. Details will be set out in a prospectus, including proposals for flexible share issuance over the next 12 months. Although there were no acquisitions completed in Q319, £6.9m has since been deployed and the pipeline remains strong. We continue to forecast a fully covered dividend in FY20.

Y/E Jun
Revenue (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 23.6 N/A 12.2 5.23 22.0 65.9
2018A 28.4 N/A 14.8 5.54 20.7 13.7
2019E 34.4 N/A 18.8 5.68 20.2 21913.5
2020E 43.1 N/A 25.7 6.71 17.1 15379.9
Industry outlook

The UK population over the age of 85 is expected to increase by 140% from 2014 to 2039 which, combined with a current shortage of high-quality care homes, suggests a strong investment demand in years to come.

Last updated on 25/07/2019
Share price graph
Balance sheet
Forecast net debt (£m) 130.8
Forecast gearing ratio (%) 36
Price performance
Actual (0.5) (1.5) 4.8
Relative* (1.6) (2.0) 7.7
52-week high/low 118.2p/106.0p
*% relative to local index
Key management
Kenneth MacKenzie CEO
Gordon Bland FD

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