Target Healthcare REIT (ASX:THRL) reduces net loan-to-value ratio in June quarter as NAV rises

3 min read | August 08, 2024 06:18 AM AEST | By Team Kalkine

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Target Healthcare REIT (ASX:THRL) reduces net loan-to-value ratio in June quarter as NAV rises — Image source: Shutterstock

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Highlights

THRL’s current ratio of 1.02x and debt-equity ratio of 0.38x in 1HFY24 exceeded industry medians.

Revenue remained stable at GBP 34.05 million with a minimal change of 0.1%.

THRL will pay a quarterly dividend of 1.428 pence per share on 30 August 2024.

Target Healthcare REIT PLC (LSE:THRL) is a United Kingdom-based real estate investment trust. It has a market capitalization of GBP 515.96mn.

In the first half of FY24, THRL reported a current ratio of 1.02x and a debt-equity ratio of 0.38x, outperforming the industry medians of 0.72x and 0.67x, respectively. In this period, the company’s revenue remained relatively stable at GBP 34.05 million, reflecting a minimal change of just 0.1% compared to H1FY23. Market valuation of THRL’s portfolio increased by 4.9% to GBP 911.1 million. Target Healthcare REIT will distribute a quarterly interim dividend of 1.428 pence per share on 30 August 2024, with the ex-dividend date set for 29 August 2024.

Recent Business Update

For the quarter ended 30 June 2024, Target Healthcare REIT reported a 1.6% rise in EPRA Net Tangible Assets (NTA) per share, reaching 110.7 pence. This increase reflects a valuation boost from inflation-linked rent reviews and property disposals. While the portfolio’s total value decreased by 2.8% to £908.5 million, mainly due to disposals, there was a 0.8% increase in like-for-like valuations. The group achieved a 2.8% total return on NAV, reduced its net loan-to-value ratio to 22.5%, and maintained a strong rent collection rate of 99%.

Company outlook

Target Healthcare REIT’s £44.5 million asset disposal, achieved at a 5.64% net initial yield, highlights the demand and premium quality of its care home properties. Funds are being allocated to reduce expensive unhedged debt and finance development initiatives, aligning with the company’s strategy of investing in state-of-the-art, purpose-built care homes and improving shareholder returns despite sector challenges. In summary, THRL is progressing with its development plans, which include five new care homes and ongoing retrofits, while also promoting higher standards within the real estate sector.

Top 10 shareholders

The top 10 shareholders of THRL together hold approximately 39.56% of the total shares. BlackRock Financial Management, Inc. is the largest shareholder with around 9.98% of the shares, followed by Baillie Gifford & Co., which holds about 4.09%, as shown in the chart below.

Stock performance

The stock price of THRL has risen by approximately 1.37% over the past month but has fallen by around 0.89% over the last six months. It has a 52-week low of GBX 66.30 and a 52-week high of GBX 88.90, and is currently trading above the average of these 52-week high and low values.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 07 August 2024. The reference data in this article has been partly sourced from EODHD/Others.

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