Target Healthcare, the UK listed specialist investor in modern, purpose-built care homes, has announced a 5.2% rise in portfolio value in the fourth quarter ended 30 June.
The gain in value comprised a 1.1% increase from further investment into the development portfolio, a 2.7% increase resulting from acquisitions, and 1.4% from a like-for-like uplift in the operational portfolio value.
The Group’s portfolio was valued at £684.8 million and comprised 77 properties, consisting of 73 operational care homes and four pre-let sites, which are being developed through capped forward funding commitments with established development partners, one of these developments reached completion in early July 2021.
Target Healthcare said occupancy levels had commenced their recovery from low points seen in the first quarter of 2021, posting encouraging growth of 5 percentage points in the quarter. The REIT also reported very low COVID-19 cases across its portfolio.
The group acquired a well-established luxury care home in Scotland as well as a pre-let development site subject to a forward funding agreement in Olney, Buckinghamshire with construction expected to complete in the first half of 2023. Target Healthcare also completed the delivery and lease commencement of a 68-bed care home in Rudheath, Cheshire to an existing tenant.
The REIT also completed the retenanting of a care home run by a provider that had fallen into financial distress. Terms have been agreed on the retenanting of the provider’s second home with Target commenting: “Current rent is being waived on this home whilst the re-tenanting progresses, with the existing tenant continuing to care for residents and facilitate an orderly handover.”
Kenneth MacKenzie, CEO of Target Fund Managers (pictured), commented: “We continue to grow the portfolio by adding high quality assets, including new developments, which we are confident will perform and contribute positively to stable returns over the long-term.
“We have several other deals progressing to completion which would see our remaining capital being put to work, as we play our part in the sector’s efforts to modernise its real estate.
“Investing only in high quality, purpose-built and future proof homes is fundamental to our mission to support the care sector whilst delivering attractive returns to shareholders.
“The valuation uplifts we have seen during the quarter demonstrate the quality of the portfolio we have been patiently building.
“Furthermore, the increase in occupancy we are seeing is encouraging and as anticipated based on feedback from our tenants in recent months.
“We have achieved a milestone in resolving key portfolio challenges in respect of two tenants, with one further re-tenanting transaction to conclude. We will closely monitor the other tenant’s continued improvements in trading, as we will for all tenants as we emerge from the pandemic, supporting them in our capacity as an engaged landlord.”