Target Healthcare REIT delivers 12.0% total accounting return as NTA rises 6.4%

Target Healthcare REIT plc (LON:THRL), the listed specialist investor in modern, purpose-built UK care homes, has announced its annual results for the year ended 30 June 2026.

Total accounting return of 12.0%; NTA growth of 6.4%; increase of 2.5% in fully covered dividend.

·      Total accounting return⁽¹⁾ of 12.0% (2025: 9.3%)

·      EPRA NTA per share increased 6.4% to 122.1 pence (2025: 114.8 pence)

·      Adjusted EPRA earnings per share increased by 7.6% to 6.54 pence per share (2025: 6.08 pence)

·      Fully covered annual dividend of 6.032 pence, an increase of 2.5% (2025: 5.884 pence) and 108% covered by adjusted EPRA earnings

·      FY27 annual dividend target of 6.212 pence per share, representing an increase of 3.0%

·      Low net loan-to-value (“LTV”) of 16.1% as at 30 June 2026 (2025: 21.8%)

Continued strong performance from sector-leading, fully-let real estate portfolio, with high rent cover, like-for-like rental growth of 3.7% and stable valuation yields.

·      Portfolio of 87 properties, comprising 86 modern operational care homes, all fully let to 31 tenants and one pre-let development site

·      Outperformed the MSCI UK Annual Healthcare Property Index, ranking in the top quartile for the year and maintaining its record of outperforming the Index in every year since IPO

·      Portfolio value of £924.1 million, including a like-for-like increase of 4.9% (2025: 2.6%)

·      Contractual rent of £61.1 million per annum (2025: £61.2 million), including a like-for-like increase of 3.7% (2025: 3.3%) predominantly driven by rent reviews

·      Strong underlying trading performance at mature homes delivering high rent cover of 1.9x (2025: 1.9x) and resident occupancy remaining stable at c.85%

·      One of the longest weighted average unexpired lease terms in the listed UK real estate sector of 26.0 years (2025: 25.9 years)

·      Rent collection of 99% for the year (2025: 97%), returning to 100% by the year end following the disposal of the asset where rent was not being paid in full. Rent arrears of £1.9 million were recovered following the re-tenanting of three homes, resulting in a non-recurring contribution of 0.18p to the Group’s adjusted EPRA EPS

·      Debt refinancing completed in the year resulting in £200 million of drawn debt at 30 June 2026 at an average cost, inclusive of the amortisation of loan arrangement costs, of 3.89% (2025: 3.84%) which is fully hedged against further interest rate increases until at least September 2030

·      Total debt facilities of £280 million with a weighted average term to maturity of 5.6 years (2025: 4.2 years), inclusive of a one-year extension to each of the Group’s bank facilities which was agreed post year end

·      Disposal of 11 care homes for £97 million, representing a premium of 11.0% to carrying value and an implied net initial yield of 5.5%. Proceeds substantially redeployed into four standing assets, a forward commitment and a forward fund, totalling £73 million at an accretive yield in excess of 6%

·      Strong pipeline of attractive, high-quality care home investment opportunities with an indicative blended net initial yield in excess of 6%

Responsible investment strategy focused on quality in a sector with supportive demographic tailwinds continues to improve the UK’s care home real estate with a future-proofed portfolio.

·      Long-term demand from ageing population supporting both investor and operator activity in the sector

·    Strong alignment of ESG principles, with continued social purpose and advocacy of minimum real estate standards across the sector, and portfolio improvements throughout the year

·    Modern, purpose-built care homes; full en suite wet-rooms account for 100% (2025: 100%) of the portfolio compared with c.36% for all UK care home stock

·    100% of the portfolio is A or B EPC rated (2025: 100%)

·    83% of the portfolio is purpose-built from 2010 onwards (2025: 84%)

·    Sector-leading average 49m² of space per resident (2025: 48m²)

⁽¹⁾ Based on EPRA NTA movement and dividends paid

Alison Fyfe, Chair of the Company, said:

“With a total accounting return of 12.0%, these results represent the Group’s best annual financial performance since its IPO in 2013. The inflation-linked rental uplifts embedded in the leases, combined with stable valuation yields over the year, drove a notable improvement in like-for-like capital value. Returns were further enhanced by the net impact of the Group’s investment activity during the year.

“Whilst the investment market remains competitive, the care home market itself is structurally undersupplied. Patient investing, particularly in competitive markets, remains key both in terms of delivering sustainable financial returns and in the construction of a balanced portfolio carefully weighted to those factors and characteristics that are expected to ensure that the properties remain attractive to investors, tenant operators and residents over the long-term.

“We remain confident in our growth aspirations and that the benefits of (i) the inherent value of our existing portfolio of high-quality, purpose-built assets; (ii) the structural support from annual inflation-linked rental growth; and (iii) the demographic tailwinds for the sector, will continue to deliver attractive returns and shareholder value.”