Target Healthcare half-year profit jumps on disposal premiums

Target Healthcare REIT PLC on Wednesday reported a pretax profit spike in the first half of the year, as disposals yielded double-digit premiums.

The company’s revenue in the six months to December 31 was £36.9 million, up from £35.3 million on-year.

Pretax profit instead jumped 57% to £47.0 million from £30.0 million, boosted mainly by gains on revaluations and realisations of investment properties.

The London-based real estate investment trust focused on care homes also said total accounting return was 6.8% in the period, up from 4.5% a year prior, and the highest the company has recorded since its launch in 2013.

EPRA net tangible assets grew to 119.4 pence per share, up 4.0% from 114.8p six months prior and up 5.9% from 112.7p on-year.

Net asset value per share rose to 119.4p from 112.9p on-year.

Target Healthcare’s total portfolio value contracted by 3.8% to £894.6 million from £929.9 million six months prior, and fell 3.3% from £924.7 million on-year. However, it said its like-for-like portfolio valuation had increased by 3.1% since June, as it saw uplifts from inflation-linked rentals and gains on disposals.

The company sold ten properties at a weighted premium of almost 12% to the holding value at the end of June, and said it used £45 million of the £93.9 million in proceeds to buy three operational care homes in Scotland, with a forward commitment for a fourth.

The disposals also drove the contractual rent to £59.5 million, down 2.7% from £61.2 million six months prior.

Target Healthcare declared an interim dividend of 3.016p per share, up 2.5% from 2.942p on-year.

This follows a 2.5% quarterly dividend increase to 1.508p per share from 1.471p per share the previous year.

Chair Alison Fyfe said that, despite the potential impact of geopolitical events on inflation and interest rates, Target Healthcare is committed to its investment strategy.

‘The recent disposals, all at above book value, continue to demonstrate the attractiveness of both the group’s investment strategy and the resulting portfolio, whilst providing the group with capital for redeployment in order to further enhance and modernise the portfolio,’ the chair added.

Target Healthcare REIT share shares were up 4.1% to 106.40 pence each on Wednesday morning in London.

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