Investing in care. Delivering returns.
Target Healthcare REIT plc Annual Report and Financial Statements 2023
About Us
Responsible investment with a clear purpose - delivering returns and improving UK care home real estate.
Key financial metrics for the year to, or as at, 30 June 2023
EPRA NTA per share (pence)
104.5-6.9%
2023104.5
2022 | 112.3 | |
2021 | 110.4 | |
IFRS profit (£ million)
-£6.6m
-6.6 | 2023 | ||
2022 | 49.1 | ||
2021 | 43.9 | ||
Accounting total return (per cent)1
-1.2%
-1.2 | 2023 | ||
2022 | 8.1 | ||
2021 | 8.8 | ||
Dividend cover (per cent)2
97%
2023 | 97 |
202272
202180
Dividend per share (pence)
6.18-8.6%
20236.18
2022 | 6.76 |
2021 | 6.72 |
Portfolio value (£ million)
868.7-4.7%
2023868.7
2022 | 911.6 | |
2021 | 684.8 | |
- Based on EPRA NTA movement and dividends paid, see alternative performance measures on page 97.
- Based on adjusted EPRA earnings, see note 8 of the consolidated financial statements and alternative performance measures on page 97.
Strategic Report | Corporate Governance | Financial Statements | Additional Information |
Strategic Report | IFC-27 |
About Us | IFC |
Chair's Statement | 4 |
Business Model | 6 |
At a Glance | 8 |
Environmental, Social and Governance Charter | 10 |
Investment Manager's Report | 14 |
Our Strategy | 16 |
Principal and Emerging Risks and Risk Management | 24 |
Section 172 Statement | 26 |
Corporate Governance | 28-59 |
Board of Directors | 28 |
Investment Manager | 30 |
Directors' Report | 32 |
Statement of Directors' Responsibilities | 39 |
Corporate Governance Statement | 40 |
Report of the Audit Committee | 45 |
Directors' Remuneration Report | 51 |
Independent Auditor's Report | 54 |
Financial Statements | 60-90 |
Consolidated Statement of Comprehensive Income | 60 |
Consolidated Statement of Financial Position | 61 |
Consolidated Statement of Changes in Equity | 62 |
Consolidated Statement of Cash Flows | 63 |
Notes to the Consolidated Financial Statements | 64 |
Company Statement of Financial Position | 81 |
Company Statement of Changes in Equity | 82 |
Notes to the Company Financial Statements | 83 |
Additional Information | 91-104 |
Notice of Annual General Meeting | 91 |
Shareholder Information | 94 |
Alternative Performance Measures | 97 |
EPRA Performance Measures | 98 |
Data Centre | 100 |
Glossary of Terms and Definitions | 101 |
Corporate Information | 104 |
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 2023 | 1 |
About Us continued
Committed long-terminvestment.
Our purpose is to accelerate the improvement in the physical standards of UK care homes through long term, responsible investment in modern real estate that delivers our return objectives to shareholders.
We are advocates of the benefits that intelligently designed, purpose-built care homes can bring and we want more residents, care professionals and local communities to benefit from their positive social impact.
Modern real estate.
Demographic tailwinds.
Sustainable rents with inflation-linked growth.
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
98%wet-rooms
94%A or B EPC ratings
100%C or better
- Long leases at sustainable rents.
- Lowly geared balance sheet with long duration fixed-rate debt.
- Growing demand for care home places:
- Number of people aged over 85 forecast to almost double from 1.7m to 3.3m by 2046.
- 1 in 7 people aged over 85 will require residential care.
Near-future trends
Clear movement to these standards reflecting resident demand and expectations.
% UK care home market with wet-rooms
2023 | 31 |
201414
31
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, although recent Government announcements suggest this may be voluntary.
Many commercial real estate owners with older/ converted properties face a significant burden to meet the forthcoming changes.
Ageing population underpins demand
(m) | 24 | 2046 | ||||||||||||||||||||
people | 20 | c.2x over 85s | ||||||||||||||||||||
16 | Today | |||||||||||||||||||||
12 | ||||||||||||||||||||||
of | ||||||||||||||||||||||
Number | 8 | |||||||||||||||||||||
4 | ||||||||||||||||||||||
0 | 2111 | |||||||||||||||||||||
1901 | 1911 | 1921 | 1631 | 1941 | 1951 | 1961 | 1971 | 1981 | 1991 | 2001 | 2011 | 2021 | 2031 | 2041 | 2051 | 2061 | 2071 | 2081 | 2091 | 2101 | ||
65-74 | 75-84 | 85+ |
Source: LaingBuisson December 2022
2 | Target Healthcare REIT plc |
Strategic Report | Corporate Governance | Financial Statements | Additional Information |
Social impact: Why purpose-built matters
It's crucial. A building designed and then built with its end-users in mind will be a more dignified, agreeable and functional environment, particularly in a care home which has multiple user groups: Residents, their families and friends; their direct care-providers; and other essential
care home staff.
It's simple. Consider a typical home, or a vital medical facility like a hospital. These aren't converted from another use. More often than not it would limit suitability, usefulness and ambience. The correct environment can have a positive impact on the emotional wellbeing of the resident, particularly those with dementia.
The descriptors 'purpose-built' and 'modern' are often used broadly with the bulk of homes described in this fashion being very different from those of the standard we invest in.
Below are some additional characteristics of our real estate which may be assumed as pre-requisites for care homes but are absent in the majority of homes across the UK:
Wide corridors
Allows free and easy movement around the building for:
- Residents whilst socialising.
- Infirm or low-confidence residents to be accompanied.
- Residents requiring wheelchair use.
- Staff to move other equipment and residents' belongings such as laundry, and to distribute meals.
Assists the resident in being social and active, and boosts a home's efficiency and ambience.
Wide corridors are not present in many older, converted, care homes which often have narrow corridors with variations in levels, requiring steps.
Convenient outdoor access
Instinct and science both suggest convenient outdoor access to be beneficial for users, though it is often overlooked, particularly for residents not on ground level. We have long advocated for balconies and unrestricted access to outdoor space for all residents, whilst prioritising health and safety considerations.
Building services appropriately located
Thoughtful location of core building services provides a practical and efficient layout for care providers to manage the main "non-care" aspects of their service, such as:
- Kitchen
- Laundry
- Lifts
- Staff rest and administrative areas
This creates a more efficient home with happier staff providing better care and service to residents.
Sta | ||||
Laundry | ||||
Lift | ||||
Dining | ||||
Activity | Bedrooms | Bedrooms | ||
Room | Lift | |||
Sta | ||||
Sun Lounge
Room
Sta
Bedrooms
Bedrooms
Lounge
Annual Report and Financial Statements 2023 | 3 |
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Target Healthcare REIT plc published this content on 11 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 October 2023 08:36:21 UTC.