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15 Jan 2015 07:00
To: RNS Company Announcements
Date: 15 January 2015
Company: Target Healthcare REIT Limited
Subject: Net Asset Value
Net Asset Value
Target Healthcare REIT Limited (the "Company') announces that its unaudited net asset value ('NAV') per share as at 31 December 2014 was 95.5 pence. The Company's care home assets held for the three month period increased in value by 1.5%. This valuation growth contributed to a net increase of 0.6% in the NAV per share as at 30 September 2014 as analysed in the table below. As at 31 December 2014 the Company owned twenty-seven care homes with a market value of £135.6 million.
The NAV has been calculated under International Financial Reporting Standards ('IFRS'). It is based on the external valuation of the Company's property portfolio prepared by Colliers International.
The NAV includes income and no provision for an accrued dividend has been made.
The next quarterly valuation of the property portfolio will be conducted by Colliers International during March 2015 and the NAV per share as at 31 March 2015 will be announced in April 2015.
Analysis of movement in NAV
The following table provides an analysis of the movement in the unaudited NAV per share for the period from 30 September 2014 to 31 December 2014:
Pence per share | % of opening NAV | |
NAV per share as at 30 September 2014 | 94.9 | 100.0 |
Transaction costs relating to asset acquisitions during period Property revaluation Net impact of share issue |
(0.9) 1.1 0.2 |
(0.9) 1.1 0.2 |
Movement in revenue reserve | 1.6 | 1.7 |
Movement due to first interim dividend payment to 30 September 2014 | (1.4) | (1.5) |
NAV per share as at 31 December 2014 | 95.5 | 100.6 |
Highlights
- Dividends
The Company paid its first interim dividend for the year to 30 June 2015, in respect of the period from 1 July 2014 to 30 September 2014, of 1.53 pence per share on 28 November 2014. This represented an increase of 2% on quarterly dividend rates from the previous period, reflecting an annualised payment of 6.12 pence per share and a dividend yield of 6.2% based on a share price of 99.5 pence as at 14 January 2014.
The Company expects to announce its second interim dividend for the year to 30 June 2015, in respect of the period from 1 October to 31 December 2014, during February 2015.
- Portfolio
As at 31 December 2014 the Company owned twenty-seven care homes with a market value of £135.6 million. On a like-for-like basis the portfolio has increased in value by 1.5% reflecting an element of yield compression across individual assets as the underlying trading performance of the homes mature. There were no rental uplifts during the quarter.
As at 31 December, the Portfolio had a net initial yield of 7.1% (based on contractual net income) and an annualised rent roll of £10.2m with the average unexpired lease term of 30.2 years.
During the period the Company has acquired the following:
· In November, three purpose-built care homes in Yorkshire and Lancashire, for a total consideration of £13.3 million including acquisition costs. The care homes are let to Orchard Care Homes on full repairing and insuring leases with annual RPI uplifts and a term expiring in 2042.
· In December, a new, purpose-built care home in Hastings, East Sussex for a total consideration of approximately £8.0 million including acquisition costs. The care home is let to Hastings Court Limited on a full repairing and insuring lease with annual RPI uplifts and a term expiring in 2049.
Both acquisitions were consistent with the Company's strategy of acquiring high quality assets with favourable local dynamics and sustainable rental levels.
- Share issuance
On 5 September 2014 Target Healthcare REIT Limited published a prospectus in connection with an initial placing and offer and 12 month placing programme of ordinary shares (the "Issue"). The first placing of shares under this program occurred in September 2014, raising gross proceeds of £17.4 million
A further 4,832,000 Ordinary Shares were admitted to trading on the London Stock Exchange on 26 November, being the second allotment under the Issue. The issue price was 101.1 pence per share reflecting a premium of 6.5% to the 30 September NAV of 94.9 pence per share. The issue's gross proceeds of approximately £4.8 million will be used to fund the purchase of identified care home assets.
The Company currently has 117,298,226 ordinary shares in issue.
- Increase to debt facility
On 23 December 2014 THR Number One PLC, a wholly owned subsidiary of the Company, agreed to increase its five year £30 million committed term loan and revolving credit facility with The Royal Bank of Scotland plc to £35 million.
The Company has currently drawn £27.0 million and further drawdowns will be made against the facility to coincide with completion of transactions currently in non-binding advanced legal negotiations. Interest is payable under the facility at a rate equal to 3 month LIBOR plus a margin of 2.0% per annum and as at 31 December 2014 the loan-to-value ratio of the Company was 19%.
In the event that the full amount is drawn down under the debt facility the Group's gearing would be expected to be approximately 24% of the Group's gross assets. Although this is within the Group's stated maximum gearing limit of 35% of gross assets, it remains the Board's intention that the long term average loan-to-value ratio will be approximately 20%.
- Forward commitment to acquire a care home asset in South-East England
In December 2014 the Company entered into a forward commitment agreement to acquire a purpose-built care home in Tonbridge, Kent, for a consideration of £12.5m including acquisition costs. The property is yet to be built, with the development expected to be completed in summer 2016. The 101-bed care home is pre-let to The Abbeyfield Kent Society, a charitable organisation which provides care and housing to over 500 people at 14 locations across Kent.
- Pipeline
Consistent with our aim to develop a well-balanced portfolio in terms of geographic diversification, we continue to see a strong pipeline of suitable investment opportunities. We are currently actively reviewing a number of pipeline assets.
Kenneth MacKenzie, Managing Partner of Target Advisers LLP, commented on the Company's activity during the period:
"We are once again pleased with the performance of the Company's portfolio during the quarter which has delivered strong rental returns and further capital growth of 1.5%.
We have now successfully deployed the proceeds arising from our capital raises to date and with attractive deal flow being shown to us regularly we expect to further utilise our placing programme to take advantage of these earnings accretive opportunities"
Enquiries:
Kenneth MacKenzie
Target Advisers
01786 406 581
Oriel Securities
Mark Young, Roger Clarke, Neil Winward
020 7710 7600
Fiona Harris/Sam Emery
Quill PR
020 7466 5058 / 020 7466 5056
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