Net Asset Value(s)

RNS Number : 2981E

Target Healthcare REIT Limited

03 November 2015

To: RNS Company Announcements

Date: 3 November 2015

Company: Target Healthcare REIT Limited

Subject: Net Asset Value

Net Asset Value and Portfolio Update

Target Healthcare REIT Limited (the "Company" and together with its subsidiaries, the "Group") announces that its unaudited EPRA NAV per share as at 30 September 2015 was 99.2 pence. The Group's care home assets held for the three month period increased in value by 1.4%. This valuation growth contributed towards a net increase of 1.3% in the EPRA NAV per share as at 30 September 2015 as analysed in the table below. The NAV total return for the quarter was 2.9%.

As at 30 September 2015 the Group owned twenty-eight care homes with a market value of £145.8 million. The valuation of the homes is based on the independent 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.

The next quarterly valuation of the property portfolio will be conducted by Colliers International during December 2015 and the unaudited NAV per share as at 31 December 2015 will be announced in January 2016.

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 30 June 2015 to 30 September 2015:

	Pence per share
EPRA NAV per share as at 30 June 2015	97.9

Property revaluation	1.5
Property acquisition & treasury share issue costs	(0.1)
Movement in revenue reserve	1.4
Fourth interim dividend payment for the period to 30 June 2015	(1.5)
EPRA NAV per share as at 30 September 2015	99.2
Percentage change in the 3 month period	1.3%

The EPRA NAV provides a measure of the fair value of a company on a long-term basis. As at 30 September 2015 there were no differences between the EPRA NAV stated above and that calculated under International Financial Reporting Standards.

Highlights

- Dividends

The Company paid its fourth interim dividend for the year to 30 June 2015, in respect of the period from 1 April 2015 to 30 June 2015, of 1.53 pence per share on 28 August 2015. This reflects an annualised payment of 6.12 pence per share and a dividend yield of 5.51% based on the 2 November 2015 closing share price of 111.0 pence.

- Gearing

The Group's borrowings remained unchanged at £31.5 million at 30 September 2015, giving a loan-to-value ratio of 21.6 per cent (excluding the effect of cash held).

- Portfolio

As at 30 September 2015 the Group owned twenty-eight care homes with a market value of £145.8 million. On a like-for-like basis the portfolio has increased in value by 1.4% over the quarter reflecting an element of yield compression across individual assets as the underlying trading performance of the homes mature and uplifts from rent reviews on 9 properties. These rent reviews provided an average increase per property of 2.4%, and a like-for-like increase to portfolio passing rent of 0.7%.

As at 30 September 2015, the portfolio had an EPRA net initial yield of 7.2% (based on contractual net income) and an annualised rent roll of £11.1 million with a weighted average unexpired lease term of 29.2 years.

Subsequent to the period end, in October 2015 the Group completed the acquisition of a purpose-built care home in Kingston-Upon-Hull for approximately £6.2 million including acquisition costs. Contracts had been exchanged for this transaction during June 2015 and completion had been dependent on the incoming tenant obtaining registered status with the Care Quality Commission.

- Share issuance

On 27 August 2015, the Company issued 14,229,822 ordinary shares, under the placing programme described in the Company's prospectus dated 5 September 2014, as supplemented on 7 January 2015 and 24 February 2015, at a price of 99.5 pence per share. Following admission on 2 September 2015, the Company immediately repurchased these same shares, at the same price, to be held in treasury. The net cash position of the Company following this transaction was unchanged.

The shares held in treasury will be available to be sold, at a price above the amount paid of 99.5 pence per share, to meet ongoing market demand. The net proceeds of any subsequent sales of shares out of treasury will provide the Group with additional capital to enable it to take advantage of investment opportunities in the market and make further investments in accordance with its investment policy and within its appraisal criteria.

- Pipeline

The Group continues to be acquisitive, focusing on its strategy of acquiring high quality assets with favourable local dynamics and sustainable rental levels. In addition to the recently completed £6.2 million acquisition noted above, the Group expects by the end of 2015 to complete on £19 million of care home assets where terms have already been agreed. In addition the Group has identified and agreed terms on a further £14 million of assets and it hopes to finish its due diligence and complete on the majority of these assets in early 2016. A further pipeline in excess of £40 million of opportunities has been identified and is being actively evaluated although currently no terms have been agreed on these assets.

The Group has a clear view on its investment pipeline and although there is no certainty that it will be able to complete on all the investment opportunities mentioned, it also continues to see a large number of other attractive opportunities in the market. The Group has cash reserves available for investment of approximately £19 million and with near term investment opportunities and commitments totalling £46 million, the Group remains cognisant of the need to ensure it has the operational flexibility to complete on its attractive investment opportunities, whilst also minimising the impact of cash drag on its returns. As such it will continue to engage and consult with existing and prospective shareholders in connection with achieving accretive and disciplined growth.

The Company currently has 156,528,048 ordinary shares in issue, of which 14,229,822 ordinary shares are held in treasury. The total number of voting rights of the Company is 142,298,226.

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

'Portfolio performance continues to be pleasing, with strong growth in NAV driven by a strengthening investment market and rental uplifts ahead of inflation. The Group is well-placed to continue to successfully manage its portfolio whilst also adding further attractive assets as some of our long standing deals near completion.'

Enquiries:

Kenneth MacKenzie

Target Advisers

01786 845 912

Stifel Nicolaus Europe Limited

Mark Young, Roger Clarke, Neil Winward

020 7710 7600

Martin Cassels

R&H Fund Services Limited

0131 524 6140

Fiona Harris/Sam Emery

Quill PR