Target Healthc. Regulatory News (THRL)

To: RNS Company Announcements

Date: 5 August 2015

Company: Target Healthcare REIT Limited

Subject: Net Asset Value

Net Asset Value

The Group announces that its unaudited EPRA NAV per share as at 30 June 2015 was 98.0 pence. The Group's care home assets held for the three month period increased in value by 1.7%. This valuation growth contributed towards a net increase of 1.7% in the EPRA NAV per share as at 30 June 2015 as analysed in the table below.

As at 30 June 2015 the Group owned twenty-eight care homes with a market value of £143.7 million. The valuation of the homes is based on the external valuation of the Company's property portfolio prepared by Colliers International.

The EPRA 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 September 2015 and the NAV per share as at 30 September 2015 will be announced in October 2015.

Analysis of movement in EPRA NAV

The following table provides an analysis of the movement in the unaudited EPRA NAV per share for the period from 31 March 2015 to 30 June 2015:

Highlights

- Dividends

The Company paid its third interim dividend for the year to 30 June 2015, in respect of the period from 1 January 2015 to 31 March 2015, of 1.53 pence per share on 29 May 2015. This reflects an annualised payment of 6.12 pence per share and a dividend yield of 5.6% based on a share price of 110.0 pence as at 4 August 2015.

- Portfolio

As at 30 June 2015 the Group owned twenty-eight care homes with a market value of £143.7 million. On a like-for-like basis the portfolio has increased in value by 1.7% reflecting an element of yield compression across individual assets as the underlying trading performance of the homes mature and uplifts from rent reviews on 7 properties. These rent reviews provided a 2% increase per property, and a like-for-like increase to portfolio passing rent of 0.6%.

As at 30 June 2015, the portfolio had an EPRA net initial yield of 7.1% (based on contractual net income) and an annualised rent roll of £11.0m with the weighted-average unexpired lease term of 29.5 years.

During June 2015 the Group exchanged contracts to acquire a purpose-built care home in Kingston-Upon-Hull for approximately £6.2 million including acquisition costs. The tenant is Arrow Healthcare Limited who will engage the services of specialist elderly care home operator, Healthcare Management Solutions, to operate the home under a management services agreement. The rent payable under the lease comprises a base rent subject to annual RPI-linked uplifts and incorporating a cap and collar, as well as a share in the profits of the care home. The income to the Group is forecast to represent a net initial yield in excess of 7%.

- Pipeline

The Group continues to be acquisitive, focusing on its strategy of acquiring high quality assets with favourable local dynamics and sustainable rental levels. Hence, in addition to the exchanged property in Kingston-Upon-Hull, the Group is currently actively evaluating a pipeline of near-term opportunities worth approximately £60 million, of which opportunities worth approximately £16 million have agreed heads of terms in place.

A placing programme, established through the Company's prospectus dated 5 September 2014, enables the Company to issue up to a further 52,923,403 new shares over the period to 4 September 2015 with such shares being issued at a premium to the prevailing NAV sufficient to cover the costs associated with the issue.

As such, through its Investment Manager and broker, the Company will continue to engage and consult with existing and prospective new shareholders in connection with achieving accretive and disciplined growth via the placing programme over the period to September 2015.

The Company currently has 142,298,226 ordinary shares in issue.

Kenneth MacKenzie, Managing Partner of Target Advisers LLP, commented on the Group's activity during the period:

'The portfolio continues to perform strongly with further capital growth and rental growth which is ahead of inflation. Across the sector there was some slowing in single asset deals coming to market around the time of the general election, and some of our deals in the pipeline have taken longer to progress to completion, but we are again seeing good opportunities to continue investing to meet our objectives.'

Enquiries:

Kenneth MacKenzie

Target Advisers

01786 406 581

Stifel Nicolaus Europe Limited

Mark Young, Roger Clarke, Neil Winward

020 7710 7600

Fiona Harris/Sam Emery

Quill PR

020 7466 5058 / 020 7466 5056