In This Article:
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Net Rental Income: Increased by 4% for the six months ended December 2024.
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Effort Cost Ratio: Stable at 16%.
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Adjusted EPRA EPS: Increased by just under 3%.
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Dividends Per Share: Grew by 3% compared to the previous period.
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Total Accounting Return: 4.5% for the six months, translating to approximately 9% annually.
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Contracted Rent Growth: Increased by 3% during the period.
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Net Asset Value (NAV) Per Share: Grew by 1.8% over the period.
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Resident Occupancy: Recovered to almost 86% by the end of December 2024.
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Rent Cover: Improved to 1.9 times over the last five years.
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Private Pay Proportion: Increased from 66% to 78% over five years.
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Staff Costs as Percentage of Total Fees: Decreased from 57% to 54%.
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Debt Cost: Phoenix debt at 3.2% cash cost annually, with overall group cost expected to rise to 4.4% after refinancing.
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Portfolio Valuation: GBP925 million at the end of 2024.
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Number of Care Homes: 94 care homes with just under 6,500 beds.
Release Date: March 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Target Healthcare REIT PLC (LSE:THRL) reported a 4% increase in net rental income for the six-month period, despite a disposals program.
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The portfolio boasts a 99% inflation-linked rental income, providing stability and predictability in revenue.
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The company has achieved a 76% outperformance over the last 10 years against the MSCI UK annual Healthcare Property index.
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The portfolio is modern and ESG compliant, with 100% EPC ratings and 99% of properties featuring en suite wet rooms.
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The company has a low loan-to-value (LTV) ratio and significant headroom for future investments, with over GBP70 million available.
Negative Points
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Resident occupancy experienced a seasonal drop to 86%, which is consistent with the sector but still a point of concern.
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Construction costs have grown significantly, impacting the development of new build homes.
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The refinancing of RBS and HSBC debt is pending, with potential increases in the overall group's weighted average cost of debt.
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The share price is not at the desired level, indicating potential market concerns or undervaluation.
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There are macroeconomic challenges, including government austerity and public pay market pressures, which could impact future growth.
Q & A Highlights
Q: What factors contributed to the slight decline in resident occupancy at Target Healthcare's homes? A: Gordon Bland, Chief Financial Officer, explained that the 1% decline in occupancy is a seasonal effect typical for this time of year. The decline is consistent with trends across the wider sector, and occupancy is expected to recover in the spring.