Interim Management Statement

RNS Number : 1804G

Target Healthcare REIT Limited

04 June 2013

 



To:                         RNS

From:                    Target Healthcare REIT Limited

Date:                     4 June 2013

Interim Management Statement

Introduction

Following its listing on 7 March 2013, Target Healthcare REIT Limited ("Target Healthcare" or "the Company"), a specialist investor in UK care homes, is today pleased to issue its Interim Management Statement for the period to 31 March 2013.

Investment objective

The Company's investment objective is 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 freehold and long leasehold care homes, that are let to care home operators, and other healthcare assets in the UK.

Highlights

·     Upon listing the Company raised gross proceeds of £45.6m from institutional investors, wealth managers and private investors.

·     Unaudited Net Asset Value ("NAV") per share as at 31 March 2013 of 94.7 pence.

·     Two portfolio acquisitions comprising a total of seven modern purpose-built care homes in March 2013 for an aggregate consideration (including acquisition costs) of £33.6m.

·     Good pipeline of acquisition opportunities.

·     The Company has submitted its application to HMRC to enter the REIT regime with effect from 1 June 2013.

Performance summary

Capital Values	As at 31 March 2013
Net asset value per share *	94.7
Ordinary share price	103.7
Premium to net asset value	9.5%

* Calculated under International Financial Reporting Standards.

(Sources: R&H Fund Services Limited and Bloomberg)

First period commentary

The Company's NAV at the 31 March 2013 was 94.7 pence per share and the share price was 103.7p. The NAV reflects the write-off of transaction expenses associated with the establishment of the Company and the underlying care home acquisitions. The Company expects the NAV to increase as the properties mature.

The Company has a strong level of liquidity with a positive cash balance at 31 March 2013 of £12.3m.

Property acquisitions

As previously announced to shareholders, the Company has acquired two portfolios of seven modern purpose-built care homes for an aggregate consideration (including acquisition costs) of £33.6m.

The care homes are leased to two operators: the three Scottish properties to Balhousie Care Group; and the remaining portfolio to Ideal Carehomes Group. Both operators conform to the Company's investment approach of supporting established, high quality operators who demonstrate a strong focus on resident care. 

The Company is pleased to report that the aggregate net initial rental yield on acquisition across the portfolio is ahead of the 7% blended initial yield modelled pre-launch. The rents payable are subject to annual uplifts in line with the retail prices index subject to a cap and collar.

Geographical analysis

Location	% of Portfolio As at 31 March 2013
Scotland	44%
East Midlands	42%
Yorkshire & Humberside	14%

REIT status

The Company is pleased to report that it has submitted its application to enter the REIT regime with effect from 1 June 2013.  

Dividends

There have been no distributions to shareholders to date.

Whilst not forming part of its investment policy, the Company will target the payment of an initial dividend of approximately 8p per share in respect of its first financial period to 30 June 2014.  It is expected that the first interim dividend will be paid in August 2013.

Outlook

During the period to the end of March 2013, the healthcare property sector has continued to attract further investment and some overseas funds have been investing in the debt of "opco / propco" structures.

The supply of quality stock being openly marketed across the sector remains limited; however, the Company's demonstrable success in securing off-market transactions ensures it is well-placed to continue to add high quality assets to the portfolio.

The Company's delegated investment manager maintains a pipeline of additional acquisition opportunities and, as previously announced to shareholders, expects to have invested the remainder of the available funds by October 2013.

The Company is currently engaged in discussions with a number of UK financial institutions with regards to the raising of a modest level of debt funding.

Subsequent events

The Board is not aware of any significant events or transactions which have occurred since 31 March 2013 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Enquiries

Kenneth MacKenzie	Target Advisers LLP	01786 406 581
Martin Cassels	R&H Fund Services Limited	0131 524 6140
Graeme Caton	Winterflood Securities	020 3100 0268

 

END

 

 

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