Net Asset Value and Dividend Announcement

RNS Number : 4119M

Target Healthcare REIT Limited

07 May 2015

 



To:                   RNS Company Announcements

Date:                7 May 2015

Company:        Target Healthcare REIT Limited

Subject:           Net Asset Value & Dividend Announcement

Net Asset Value

The Group announces that its unaudited EPRA NAV per share as at 31 March 2015 was 96.4 pence. The Group's care home assets held for the three month period increased in value by 0.6%. This valuation growth contributed towards a net increase of 0.9% in the ERPA NAV per share as at 31 December 2014 as analysed in the table below.

As at 31 March 2015 the Group owned twenty-eight care homes with a market value of £141.3 million. The valuation of the homes is based on the external valuation of the Group's property portfolio prepared by Colliers International.

The EPRA NAV includes income and no provision for an accrued dividend has been made.

For the first time the Group is reporting an EPRA net asset value ('EPRA NAV') per share which is arrived at by adjusting the calculated net asset value ('NAV') calculated under International Financial Reporting Standards ('IFRS'). The EPRA NAV represents the fair value of an entity's equity on a long-term basis. There were no adjustments required and the NAV is consistent with the EPRA NAV.  EPRA is an industry body which issues best practice reporting guidelines and the Group will report an EPRA NAV on an ongoing basis.

The next quarterly valuation of the property portfolio will be conducted by Colliers International during June 2015 and the EPRA NAV per share as at 30 June 2015 will be announced in July 2015.

Analysis of movement in EPRA NAV

The following table provides an analysis of the movement in the unaudited EPRA NAV per share for the period from 31 December 2014 to 31 March 2015:

	Pence per share
EPRA NAV per share as at 31 December 2014	95.5
Transaction costs relating to asset acquisitions during period Property revaluation Net impact of share issue	(0.2) 1.0 0.7
Movement in revenue reserve*	0.7
Movement due to second interim dividend payment to 31 December 2014	(1.3)
EPRA NAV per share as at 31 March 2015	96.4
Percentage change in the 3 month period	0.9%

*Includes a movement of (0.3) pence per share in current period relating to an under accrual of performance fee amount for the period from launch to 31 December 2014, payable to the Investment Manager.

Highlights

-       Dividends

The Company paid its second interim dividend for the year to 30 June 2015, in respect of the period from 1 October 2014 to 31 December 2014, of 1.53 pence per share on 27 February 2015. This reflects an annualised payment of 6.12 pence per share and a dividend yield of 5.8% based on a share price of 106.0 pence as at 5 May 2015.

-       Portfolio

As at 31 March 2015 the Group owned twenty-eight care homes with a market value of £141.3 million. On a like-for-like basis the portfolio has increased in value by 0.6%, reflecting an element of yield compression across individual assets as the underlying trading performance of the homes mature together with uplifts from rent reviews on 8 properties. These rent reviews provided a 2% increase per property, and a like-for-like increase to portfolio passing rent of 0.6%.

As at 31 March 2015, the portfolio had a net initial yield of 7.1% (based on contractual net income) and an annualised rent roll of £10.5m with the weighted average unexpired lease term of 29.7 years.

In January 2015, the Group acquired a purpose-built care home in Swaffham, Norfolk, for approximately £4.5 million including acquisition costs. The care home is let to Norfolk Care Homes Limited on a full repairing and insuring lease with annual RPI uplifts and a term expiring in 2038. The acquisition is consistent with the Group's strategy of acquiring high quality assets with favourable local dynamics and sustainable rental levels.

-       Pipeline

The regional mid-market remains subdued relative to the activity of 2014. Notwithstanding this, the Group has identified a number of attractive investment opportunities and expects to utilise the proceeds of the recent share issue over the coming months.

-       Share issuance

On 5 September 2014 Target Healthcare REIT Limited published a prospectus in connection with an initial placing and offer and 12 month placing programme of ordinary shares (the "Issue"). Placings of shares under this program occurred in September and November 2014, raising gross proceeds of £22.3 million

A further 25,000,000 Ordinary Shares were admitted to trading on the London Stock Exchange on 6 March 201, being the third allotment under the Issue. The issue price was 102.0 pence per share reflecting a premium of 6.4% to the 31 December NAV of 95.5 pence per share. The issue's gross proceeds of approximately £25.5 million will be used to fund the purchase of further care home assets.

The Company currently has 142,298,226 ordinary shares in issue.

-       Tenant concentration

For the current financial year to 30 June 2015, it is expected that income from properties operated by Ideal Care Homes group companies ("Ideal") will amount to 33.2% of the Group's total rental income and 32.4% by market value of gross property assets.

The Group, whilst having been fully invested at times, currently has funds awaiting investment from the share issuance described above. It is intended that investment of these funds will reduce the Group's exposure to this single tenant grouping to less than 30% of total rental income.

Announcement of Third Interim Dividend for the year ending 30 June 2015

Target Healthcare REIT Limited (the "Company' or the 'Group') has today declared its third interim dividend payment in respect of the period from 1 January 2015 to 31 March 2015 of 1.53 pence per share as detailed in the schedule below:

Interim ordinary dividend                                   0.92 pence per share

Interim Property Income Distribution (PID)    0.61 pence per share

Ex-Dividend Date:                14 May 2015

Record Date:                        15 May 2015

Pay Date:                               29 May 2015

Kenneth MacKenzie, Managing Partner of Target Advisers LLP, commented on the Company's activity during the period:

"We are pleased with the Group's performance during the quarter. The existing portfolio has delivered strong rental returns allied with further capital growth as the portfolio matures and upwards-only rental reviews are reflected in valuations."

Enquiries:

Kenneth MacKenzie

Target Advisers

01786 406 581

Stifel Nicolaus Europe Limited

Mark Young, Roger Clarke, Neil Winward

020 7710 7600

Fiona Harris/Sam Emery

Quill PR

020 7466 5058 / 020 7466 5056

 

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