26 October 2018
Target Healthcare REIT Limited and its subsidiaries
("Target Healthcare" or "the Group")
EPRA Best Practice Recommendations
Following recent discussions with investors, the Board of Directors has reviewed the disclosure of EPRA performance measures and, in-line with best practice guidance, the Group will in its future reporting provide both an EPRA "Topped-up" Net Initial Yield and an EPRA Net Initial Yield. The inclusion of both performance measures, and the difference between them in regards to rent free periods, helps investors to compare like-with-like EPRA Net Initial Yields irrespective of the temporary effect of any lease incentives.
The Group on occasion and as is commonplace in the market, provides rent free periods on commercial terms to support newly-opened care homes. Following its review of its EPRA performance measures, the Group has become aware of some temporary inconsistencies in its disclosure of past EPRA Net Initial Yields in regards to these rent free periods and hence provides a full break down of the respective numbers below since it started reporting EPRA measures:
|
EPRA topped-up NIY |
EPRA NIY |
30 June 2015 |
7.25% |
7.25% |
30 September 2015 |
7.21% |
7.21% |
31 December 2015 |
7.08% |
7.08% |
31 March 2016 |
6.98% |
6.98% |
30 June 2016 |
6.96% |
6.70% |
30 September 2016 |
6.92% |
6.69% |
31 December 2016 |
6.74% |
6.63% |
31 March 2017 |
6.75% |
6.29% |
30 June 2017 |
6.75% |
6.41% |
30 September 2017 |
6.69% |
6.49% |
31 December 2017 |
6.58% |
6.40% |
31 March 2018 |
6.58% |
6.58% |
30 June 2018 |
6.44% |
5.90% |
30 September 2018 |
6.41% |
5.88% |
The Group's two assets at Cirencester and Camberley, which were acquired on 29 June 2018, are the only assets in the portfolio 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 December 2018 |
31 March 2019 |
30 June 2019 |
30 September 2019 |
EPRA topped-up NIY |
6.41% |
6.41% |
6.41% |
6.41% |
EPRA NIY |
5.88% |
6.12% |
6.12% |
6.41% |
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
Martin Cassels
Maitland Administration Services (Scotland) Limited
0131 550 3760
Dido Laurimore; Claire Turvey; Richard Gotla
FTI Consulting
020 3727 1000
[email protected]
Glossary of Terms
EPRA Net Initial Yield - annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value of the property, increased with (estimated) purchasers' costs. EPRA's purpose is to provide a comparable measure around Europe for portfolio valuations.
EPRA Topped-up Net Initial Yield - Incorporates an adjustment to the EPRA Net Initial Yield in respect of the expiration of rent-free periods (or other unexpired lease incentives).
* In line with stated methodology, the calculation of the EPRA Yields excludes assets where construction is in progress and hence the measures above do not include the value of or interest income associated with the Group's assets which are currently being forward funded.
Notes to editors:
UK listed Target Healthcare REIT Limited (THRL) is an externally managed Real Estate Investment Trust which aims to provide 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 58 assets with a total value of circa £403.7 million (30 September 2018), which are let to 21 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 aims to build 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.
