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 2025.
Total accounting return of 9.3%; NTA growth of 3.7%; increase of 3% in fully covered dividend.
· Total accounting return(1) of 9.3% (2024: 11.8%)
· Outperformed the MSCI UK Annual Healthcare Property Index, ranking in the top quartile for the year and maintaining record of outperforming the Index in every year since IPO
· EPRA NTA per share increased 3.7% to 114.8 pence (2024: 110.7 pence)
· Adjusted EPRA earnings per share of 6.08 pence per share (2024: 6.13 pence)
· Fully covered annual dividend of 5.884 pence, an increase of 3.0% (2024: 5.712 pence) and 103% covered by adjusted EPRA earnings
· FY26 annual dividend target of 6.032 pence per share, representing an increase of 2.5%
· Net loan-to-value (“LTV”) of 21.8% as at 30 June 2025 (2024: 22.5%)
Continued strong performance from sector-leading real estate portfolio underpinned by supportive demographic tailwinds, with record rent covers and like-for-like rental growth of 3.3%.
· Portfolio of 93 properties, consisting of 92 modern operational care homes and one pre-let site, let to 34 tenants
· Portfolio value increased by £21.4 million, or 2.4%, to £929.9 million, including a like-for-like increase of 2.6% (2024: increase of 3.7%).
· Contractual rent increased by 4.0% to £61.2 million per annum (2024: £58.8 million), including a like-for-like increase of 3.3% (2024: 3.8%) predominantly driven by rent reviews
· Strong underlying trading performance at the homes with mature homes rent cover of 1.9x (2024: 1.9x) and mature homes spot occupancy remaining steady at c.86%
· One of the longest weighted average unexpired lease terms in the listed UK real estate sector of 25.9 years (2024: 26.4 years)
· Rent collection of 97% for the year (2024: 99%). Successful resolution subsequent to the year end of two tenant matters which had resulted in the reduction of rent collection and the increase in costs in the year
Post-year end landmark disposal at a premium of 11.6% and attractive debt refinancing.
· As previously announced, £85.9 million disposal of nine care homes, representing a premium of 11.6% to carrying value at 30 June 2025 and an implied net initial yield of 5.2%
· £130 million debt refinance resulting in an average cost of drawn debt, inclusive of the amortisation of loan arrangement costs, of 4.3% as at September 2025 (30 June 2025: 3.8%) and weighted average term to maturity of 5.9 years (30 June 2025: 4.2 years). 81% of the drawn debt is fully hedged against further interest rate increases until at least September 2030
· Strong pipeline of attractive, high-quality care home investment opportunities with a blended net initial yield of c.6%
Responsible investment strategy focused on quality 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
o Modern, purpose-built care homes; full en suite wet-rooms now account for 100% (2024: 99%) of the portfolio compared to just 34% for all UK care homes
o 100% of the portfolio is A or B EPC rated (2024: 99%)
o 84% of the portfolio is purpose-built from 2010 onwards (2024: 84%)
o Sector-leading average 48m2 of space per resident (2024: 48m2)
(1) Based on EPRA NTA movement and dividends paid
Alison Fyfe, Chair of Target Healthcare REIT, said:
“The Group has delivered solid portfolio and financial performance against what has remained a challenging backdrop. This shows the resilience of our business model.
“The Group has recently disposed of nine care homes, representing an opportunity to crystallise an attractive return for shareholders, evidence the realisable value of a representative cross-section of the portfolio and reduce the Group’s exposure to its largest tenant. The intention is to re-invest the proceeds from the disposal into earnings-enhancing acquisitions to further improve the quality of our portfolio and maintain its best-in-class credentials.
“We remain confident in the Group’s investment strategy; investing in high-quality care home assets with sustainable rental streams. Our portfolio continues to consist of future-proofed, best-in-class real estate in a defensive asset class supported by compelling long-term demographic tailwinds. This leaves the portfolio well-positioned, with the Group ready to act nimbly to take advantage of any opportunities that the uncertain market conditions may present.”
