Target Healthcare REIT raises dividend as full-year earnings grow

Target Healthcare REIT PLC on Tuesday boosted its dividend as the company hailed its best annual performance since its initial public offering in 2013.

The real estate investment trust focused on care homes said EPRA net tangible assets per share was 122.1 pence at its June 30 year-end, up 6.4% from 114.8p a year before. On an adjusted basis, EPRA NTA increased by 7.6% to 6.54 pence per share from 6.08p.

Revenue for the financial year that ended June 30 was £72.1 million, down slightly from £72.9 million the year prior.

Including £21.3 million gains on revaluation of investment properties and £9.2 million gains on investment properties, realised total income increased to £102.7 million from £85.2 million.

Pretax profit surged to £82.6 million from £60.8 million.

Target Healthcare REIT said a fully covered annual dividend of 6.032 pence per share was 2.5% higher than the prior year's 5.884p, and 108% covered by adjusted EPRA earnings. It set a FY27 annual dividend target of 6.212p per share, representing an increase of 3.0% on-year.

Chair Alison Fyfe said: "With a total accounting return of 12.0%, these results represent the group's best annual financial performance since its IPO in 2013. The inflation-linked rental uplifts embedded in the leases, combined with stable valuation yields over the year, drove a notable improvement in like-for-like capital value. Returns were further enhanced by the net impact of the group's investment activity during the year."

At the year-end, the firm's portfolio had a value of £924.1 million, including a like-for-like increase of 4.9%. Contractual rents slipped to £61.1 million per annum from £61.2 million a year ago, including a like-for-like increase of 3.7%, predominantly driven by rent reviews.

The firm said long-term demand from an ageing population is supporting both investor and operator activity in the sector.

"Whilst the investment market remains competitive, the care home market itself is structurally undersupplied," explained Chair Fyfe.

Shares in Target Healthcare REIT were up 2.3% at 115.40 pence each in London on Tuesday.

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