Investing in care. Delivering returns.
Target Healthcare REIT plc
Annual Report and Financial Statements 2022
About Us
Responsible investment with a clear purpose - improving the UK's care home real estate
Long-term sustainable value
- Compelling investment rationale, strongly supported by real estate trends and demographic change.
- Long leases with inflation-linked rental growth; strong balance sheet with substantially fixed-rate, long duration debt.
Key financial metrics for the year to, or as at, 30 June 2022
EPRA NTA per share (pence) | Accounting total return (per cent)1 | Dividend per share (pence) | ||||||||||||||||
112.3+1.7% | 8.1 | 6.76+0.6% | ||||||||||||||||
2022 | 112.3 | 2022 | 8.1 | 2022 | 6.76 | |||||||||||||
2021 | 110.4 | 2021 | 8.8 | 2021 | 6.72 | |||||||||||||
2020 | 108.1 | 2020 | 7.0 | 2020 | 6.68 | |||||||||||||
IFRS profit (£ million) | Dividend cover (per cent)2 | Portfolio value (£ million) | ||||||||||||||||
49.1+11.8% | 72 | 911.6+33.1% | ||||||||||||||||
2022 | 49.1 | 2022 | 72 | 2022 | 911.6 | |||||||||||||
2021 | 43.9 | 2021 | 80 | 2021 | 684.8 | |||||||||||||
2020 | 31.6 | 2020 | 76 | 2020 | 617.6 | |||||||||||||
- Based on EPRA NTA movement and dividends paid, see the alternative performance measures on page 95.
- Based on adjusted EPRA earnings, see note 8 to the consolidated financial statements and the alternative performance measures on page 95.
Strategic Report | Corporate Governance | Financial Statements | Additional Information |
Strategic Report | IFC-27 | |
About Us | IFC | |
Chairman's Statement | 4 | |
Business Model | 6 | |
At a Glance | 8 | |
Environmental, Social and Governance | 10 | |
Investment Manager's Report | 14 | |
Our Strategy | 16 | |
Principal and Emerging Risks and Risk Management | 24 | |
Section 172 Statement | 26 | |
Corporate Governance | 28-57 | |
Board of Directors | 28 | |
Investment Manager | 30 | |
Directors' Report | 32 | |
Statement of Directors' Responsibilities | 39 | |
Corporate Governance Statement | 40 | |
Report of the Audit Committee | 44 | |
Directors' Remuneration Report | 49 | |
Independent Auditor's Report | 52 | |
Financial Statements | 58-88 | |
Consolidated Statement of Comprehensive Income | 58 | |
Consolidated Statement of Financial Position | 59 | |
Consolidated Statement of Changes in Equity | 60 | |
Consolidated Statement of Cash Flows | 61 | |
Notes to the Consolidated Financial Statements | 62 | |
Company Statement of Financial Position | 79 | |
Company Statement of Changes in Equity | 80 | |
Notes to the Company Financial Statements | 81 | |
Additional Information | 89-IBC | |
Notice of Annual General Meeting | 89 | |
Shareholder Information | 92 | |
Alternative Performance Measures | 95 | |
EPRA Performance Measures | 96 | |
Data Centre | 98 | |
Glossary of Terms and Definitions | 99 | |
Corporate Information | IBC |
This document is important and requires your immediate attention.
If you are in any doubt about the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have sold or otherwise transferred all your ordinary shares in Target Healthcare REIT plc, please forward this document, together with the accompanying documents immediately to the purchaser or transferee, or to the stockbroker bank or agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
Annual Report and Financial Statements 2022 | 1 |
About Us
Social impact driven strategy, with a future-proofedbusiness model
Portfolio protected from the sector's modernisation challenge
Care home sector- leading environmental credentials
Long-term outlook and commitment, aligned with care sector needs and supported by demographic trends
Now
Standard-setting care home real estate.
100%
purpose-built
96%
wet-rooms
92%
A or B EPC ratings
100%
C or better
- Strong investment demand
- Long leases with annual growth
- Lowly geared balance sheet with substantially fixed-rate debt
- Track record of stable NAV returns
Near-future trends
Clear movement to these standards from the many older, converted properties.
% UK care home market with wet-rooms
29% | |
14% | |
2014 | 2022 |
Minimum Energy Efficiency Standards (MEES) legislation has applied to commercial rented buildings since 2018. COP 26 commitments made by the UK Government anticipates the current "E" rating requirement will be raised to "B" for 2030.
Many commercial real estate owners with older/converted properties face a significant burden to meet the forthcoming changes.
- Sector occupancy recovering post COVID-19 pandemic
- Long-termstructural support for care home places from demographic change:
- Number of over 85s forecast to almost double from 1.7m to 3.3m by 2046
- 1 in 7 people over 85 will require residential care
2 | Target Healthcare REIT plc |
Strategic Report | Corporate Governance | Financial Statements | Additional Information |
Why wet-rooms matter
1. Wet-rooms represent socially acceptable standards
It is estimated that 50% of care home residents experience incontinence. We believe all residents should have en suite wet-rooms to allow personal hygiene to be practised with dignity and in privacy.
We use the provision of wet-rooms as a proxy for the overall standard of care home real estate. The majority of care home places in the UK (71%) do not offer this, instead "en suites" are generally WC and wash hand basin and therefore require residents to use shared washing facilities, while many do not offer private hygiene facilities at all.
18%-28%
higher resident fees in care homes built since 20161
2. Wet-rooms support sustainable occupancy levels
The sector is recognising the need to modernise its real estate, with wet-room provision now at 29% having progressed from
14% only eight years ago. There is a clear commercial benefit with respect to demand for care places:
- The current generation requiring care are more used to showering than previous generations;
- En suite showers in hotels and other modern buildings have become commonplace and substandard facilities won't be accepted;
- Modern buildings command a fee premium: homes built since 2016 command 18%-28% higher fees than those from older properties; and
- Provision future-proofs against potential legislative change to mandate private washing facilities (retrofitting is costly and will not always be possible).
Of course, it's not just wet-rooms. Our portfolio of modern homes also offer:
- More space per resident, both private and social;
- More useable outdoor space (balconies and gardens);
- Better accessibility via wider corridors and more lifts;
- Visitor space (e.g. dining rooms to host visitors / local community);
- Cinemas, exercise space, activities rooms; and
- Better facilities for staff.
1 Carterwood Research - 2022.
Annual Report and Financial Statements 2022 | 3 |
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Target Healthcare REIT plc published this content on 12 October 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 October 2022 16:01:05 UTC.