23 September 2019
TARGET HEALTHCARE REIT PLC
("Target" or the "Company", together with its subsidiaries, the "Group")
Tenant Update
The Company announces that it has received notice from one of its tenants, Orchard Care Homes ("Orchard"), which operates six homes in the Target portfolio, of its intention to exit these six leasehold homes as part of a wider business restructuring. The Company is continually preparing for such contingencies and is in active discussions with alternative care home operators to ensure an orderly handover of operations with minimal disruption to the residents. The Company expects to continue to receive rental income from the six assets up until the end of the year and has a further four months of rental deposits held in reserve.
The Company has a diversified portfolio and currently benefits from 26 different tenants across its 63 homes. The Company also has a successful track record of replacing operators with no disruption to the residents and a minimal value impact. Whilst the homes operated by Orchard have recently had on average poorer rent covers, the level of earnings before interest, tax, depreciation, amortisation and management charges over the last year has still exceeded the equivalent rental obligation.
Following the re-tenanting, the Company expects to see management and rent covers improve at these assets. The six assets were already conservatively valued at an average net initial yield of 7.15 per cent., as at 30 June 2019, reflecting a significant discount to the portfolio average net initial yield of 6.26 per cent. Having spoken to its independent valuer, the Company does not believe this event will have a material impact on the value of the homes.
The Company's legal entity identifier: 213800RXPY9WULUSBC04
All enquiries:
Target Fund Managers Limited (Investment Manager to the Company)
Notes to Editors
UK listed Target Healthcare REIT plc (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, through the assembly and management of a portfolio of modern, purpose-built care homes.
The Group's portfolio at 30 June 2019 comprised 63 assets, including three under development, with a total portfolio value of £500.9 million. In Q3 2019 the Group has completed the disposal of two properties and separately the acquisition of two properties. On completion of the developments the Group will have 26 different tenants.
The Group only invests in modern, purpose-built homes that provide the best environments for residents and their care providers and ensure they are let at a sustainable rent. 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.
