Target Healthcare REIT (THRL) H1 2025 earnings summary

Executive summary

• Portfolio comprises 94 modern, ESG-compliant care homes valued at £925 million, with nearly 6,400–6,500 beds, generating £61 million in contracted rent and 99% inflation-linked leases; 34 tenants and a 6.2% EPRA topped-up net initial yield.

• 100% of bedrooms are en suite, 100% EPC A or B ratings, and 84% of buildings constructed since 2010.

• Portfolio is highly diversified, with a long weighted average lease term of 26 years and robust rent collection (98%).

• Outperformed the MSCI UK Healthcare Property Index, ranking second over 10 years and achieving a 10.8% total return in 2024.

• Benefited from sector tailwinds such as demographic growth and a shift to higher quality care home real estate.

Financial highlights

• Net rental income increased by 4% year-over-year to £29.8m, with adjusted EPRA earnings up 3% to £19.4m and adjusted EPRA EPS at 3.13p.

• Dividend per share rose 3% to 2.94p, with dividend cover at 107% and total accounting return at 4.5%.

• EPRA NTA per share increased by 1.8% to 112.7p, marking the 8th consecutive quarter of NTA growth.

• EPRA cost ratio remained stable at 16–16.1%, and portfolio market value increased 2% to £924.7m.

• IFRS profit for the period was £30.0m, down 2.6% year-over-year.

Outlook and guidance

• Sector supported by strong demographic trends, with the over-85 population expected to double in 25 years, driving demand for care homes.

• Continued focus on recycling capital, enhancing shareholder returns, and maintaining a high private pay proportion (78%).

• Confident in ability to refinance expiring loans, with indicative terms suggesting a weighted average cost on drawn debt of ~4.4%.

• Expectation of further occupancy growth, stable or improving rent cover (currently at 1.9x), and well-covered dividends.