TIDMTHRL
RNS Number : 8049J
Target Healthcare REIT PLC
16 April 2020
16 April 2020
Target Healthcare REIT plc and its subsidiaries
("Target Healthcare" or "the Group")
Business and Portfolio Update
Target Healthcare (LSE: THRL), the UK listed specialist investor
in modern, purpose-built care homes, provides an update on its
business and portfolio in the light of the evolving COVID-19
pandemic. During this difficult time, the safety and wellbeing of
the residents in our care homes and the professionals who provide
their care is of paramount importance to us. This update also
reiterates the robust financial position of the Group and actions
being taken in order to mitigate against short-term disruption.
The Group will continue to closely monitor the effect of the
COVID-19 pandemic at an asset level and on the broader economy, and
anticipates providing a full corporate update, NAV and dividend
declaration on 21 April 2020 in line with its usual reporting
schedule.
In the meantime, the Group notes the recent commentary on the
care home sector and increasing reference to the magnificent work
of all social care staff in these trying times. The sector plays a
crucial role in supporting the NHS ordinarily, and is assisting the
NHS's efforts to increase critical care capacity by making much of
its own limited headroom available to those who can be moved from
hospitals. Care home operators are clearly therefore faced with the
difficult balance of exercising this civic duty whilst caring
effectively for existing residents during the challenging
conditions the pandemic brings. We are encouraged to see the
sector's importance recognised with pledges for testing for
residents and staff where required, which is especially long
overdue for the latter group who are taking personal risk to care
for residents, and for provision of personal protective equipment
("PPE").
Longer-term, the fundamental demand drivers for elderly care
have not changed, nor have the advantages of the Group's ethos and
strategy of owning modern, purpose-built care homes which by design
segregate residents into groups, promote enhanced infection
control, and allow effective isolation, as needed, of residents in
their own rooms through the provision of private en suite
wet-rooms.
Portfolio
The Group acts as landlord to 27 care home operators through its
portfolio of 73 modern, purpose-built homes. From our ongoing
dialogue and reporting channels with our tenants, we understand
that:
- All their staff members are currently working with expertise,
compassion and diligence with many individuals making personal
sacrifices to care for residents;
- Avoidance of infection has always been a primary concern, and
therefore protocols for infection control within care homes were
implemented by our tenants well ahead of the COVID-19 guidelines
for the general population, using existing PPE stocks;
- Maintenance of staffing levels by our tenants is at the
forefront of their management teams' minds as staff members who
show signs of infection are required to stay at home and
self-isolate for up to two weeks. Although this increases staff
absences, these rates are currently manageable;
- Confirmed or suspected cases of COVID-19 are currently
affecting residents occupying less than 5% of the portfolio's beds.
Whilst this number is likely to rise as the pandemic progresses, we
trust that the prevention measures in place will help to minimise
the impact on residents; and
- Management teams across our portfolio are having to carefully
consider their duty to effectively care for existing residents,
their efforts to assist the NHS in accepting new residents, and the
cost impact of additional staffing levels to (a) cover absence and
(b) increase staffing for new residents who need to be isolated for
a given period on entering a care home.
Our expectation is that demand for beds provided by our tenants
across our portfolio will remain strong, therefore supporting
cashflows, while we anticipate short-term increases in their labour
and consumables costs. The portfolio's aggregate rent cover on
mature homes was 1.6x as at 31 December 2019.
Financial Update
The Group received its March quarter rental payments in line
with its typical collection pattern, although recognising the
uncertainties currently being faced it has agreed for a limited
number of tenants to stage payments in advance through the upcoming
quarter. The Group continues to benefit from its highly diversified
portfolio by tenant, geography and end-user payment profile, with
rents set at sustainable levels.
As at the current date the Group has a strong balance sheet with
a net loan-to-value of 18.3%, GBP30 million of cash reserves and
GBP38 million of undrawn revolving credit facilities. Portfolio
capex commitments, which are principally in relation to the
development of two new care homes, construction of which has so far
continued during the quarter but for which completion may
ultimately be delayed by the current pandemic, total GBP12
million.
Valuation
At 31 March 2020 the portfolio was valued at GBP613.4 million,
reflecting a like-for-like increase of 0.6% over the quarter, of
course being subject to a market standard material uncertainty
clause. This, along with any other relevant changes over the
period, will be reflected in the net asset value of the Group to be
published in due course as described above.
LEI: 213800RXPY9WULUSBC04
ENDS
Enquiries:
Kenneth MacKenzie; Gordon Bland
Target Fund Managers Limited
01786 845 912
Mark Young; Mark Bloomfield
Stifel Nicolaus Europe Limited
020 7710 7600
Dido Laurimore; Claire Turvey; Richard Gotla
FTI Consulting
020 3727 1000
TargetHealthcare@fticonsulting.com
Notes to editors:
UK listed Target Healthcare REIT plc (THRL) is an externally
managed Real Estate Investment Trust which provides shareholders
with an attractive level of income, together with the potential for
capital and income growth, from investing in a diversified
portfolio of modern, purpose-built care homes.
The Group's portfolio at 31 March 2020 comprised 73 assets let
to 27 tenants with a total value of GBP613.4 million.
The Group only invests in modern, purpose-built care homes that
are let to high quality tenants who demonstrate strong operational
capabilities and a strong care ethos. The Group builds
collaborative, supportive relationships with each of its tenants as
it believes working in this way helps raise standards of care and
helps its tenants build sustainable businesses. In turn, that helps
the Group deliver stable returns to its investors.
Important information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information Service
this inside information is now considered to be in the public
domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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