TIDMTHRL
RNS Number : 2294U
Target Healthcare REIT PLC
27 March 2023
27 March 2023
Target Healthcare REIT plc
HALF-YEAR RESULTS FOR THE SIX MONTHSED 31 DECEMBER 2022
Earnings growth and portfolio valuation supported by above
carrying value property disposal post period end; with a rebasing
of dividend to reflect the interest rate environment
Target Healthcare REIT plc (the "Company" or the "Group"), the
UK listed specialist investor in modern, purpose-built care homes,
is pleased to announce its results for the six months ended 31
December 2022.
Portfolio performance supported by inflation-linked rental
uplifts
-- Portfolio market value decreased by 4.8% to GBP867.7 million
(June 2022: GBP911.6 million), primarily driven by a like-for-like
portfolio valuation movement of -5.5% and net acquisitions of 0.7%.
The like-for-like valuation movement consists of a decrease of
7.3%, reflecting the outward shift in yields, offset by a 1.8%
increase from inflation-linked rental uplifts
-- Contractual rent increased by 2.9% to GBP57.1 million (June
2022: GBP55.5 million), including like--for-like rental growth of
1.8%
-- Diversified tenant base, with 33 tenants across 100
properties (June 2022: 34 tenants and 101 properties)
-- Underlying trading performance at the homes recovering
towards pre-pandemic levels. Most recent resident occupancy and
rent covers for the mature homes in the portfolio were 84% and 1.5
times, respectively
-- Post period end GBP22 million disposal of four assets for
above carrying value and June 2022 valuation, representing a full
exit from Northern Ireland
Sustainable returns generated through portfolio management and
inflation-linked characteristics of leases
-- EPRA NTA per share decreased by 8.3% to 103.0 pence (June 2022: 112.3 pence)
-- NAV total return(1) of -5.4% (2021: 3.4%)
-- Portfolio total return on standing assets of -2.2% (2021: 4.8%)
-- Rent collection of 96%
-- Full recovery of rent outstanding from one tenant, of which
GBP1.1 million had been provided for at 30 June 2022
-- 99% of leases benefit from upwards only inflation-linked rent reviews; 1% fixed uplifts
-- Weighted average unexpired lease term of 26.8 years (June 2022: 27.2 years)
-- Weighted average cost of drawn debt at 3.8% (June 2022:
3.3%), with average term to maturity of 6.7 years (June 2022: 6.9
years) and interest rate hedged on 96% of drawn debt until
expiry
-- Net LTV increased to 25.1% (June 2022: 22.0%)
Rebasing of target dividend to sustainable level reflecting
higher interest rate environment
-- Dividend per share in respect of the period maintained at 3.38 pence (2021: 3.38 pence)
-- Annual dividend target rebased to 5.60 pence per share,
commencing with the third interim dividend payable in May 2023,
providing a sustainable dividend level which will be fully covered
by earnings whilst allowing for annual growth. This represents a
reduction of 17%
-- Adjusted EPRA Earnings per share(2) of 3.01 pence (2021: 2.36 pence)
-- EPRA Earnings per share(2) of 3.89 pence (2021: 3.08 pence)
-- Adjusted EPRA Cost Ratio of 18.7% (2021: 27.7%); EPRA Cost Ratio of 15.7% (2021: 23.3%)
Responsible investment with a clear purpose to improve the UK's
care home real estate
-- Compelling long-term demand supply dynamics support both
investor and operator activity in the sector
-- Selective investment into new developments of new-build care
homes; one home (66 beds) opened in the period, three homes (203
beds) were being funded at period end and a further development
site (60 beds) was acquired post period end
-- Full en suite wet-rooms account for 97% of the portfolio,
compared to the UK national average of just 31%
-- Our homes provide generous space at an average of 47m(2) per resident
-- EPC ratings: 100% A-C ratings, with 93% A or B ratings and
currently compliant with the minimum energy efficiency standards
anticipated to apply from 2030
Unless otherwise stated in the above, references to 2021 mean
the comparative six month period to 31 December 2021 and references
to 2022 mean 30 June 2022, being the start of the period under
review.
(1) Based on EPRA NTA movement and dividends paid, see
alternative performance measures below.
(2) For the details of EPRA earnings and adjusted EPRA earnings
refer to note 6 to the Condensed Consolidated Financial
Statements.
Alison Fyfe, Chair of the Company, said:
" We remain committed to our primary investment objective,
producing long-term stable income and attractive total returns,
with positive social impact by investing in fit-for-purpose care
homes for older people in society. There is an increased national
focus on supporting people in the community rather than having them
experience unnecessary and potentially distressing hospital
admission and care homes play a crucial role in this.
"The recent increases in interest rates have impacted on
earnings but our tenants' underlying trading performance is
improving and maturing, with this property sector benefitting from
significant tailwinds of demographic change and needs-based demand
for care. With a rebased dividend to reflect the Group's current
recurring earnings, we believe the Group's modern portfolio is well
positioned to deliver sustainable long-term returns to shareholders
."
A live webcast presentation for analysts will be held at 9.00
a.m. BST this morning and can be accessed via the following
link:
https://stream.brrmedia.co.uk/broadcast/63fe469cd684866e54345175
LEI: 213800RXPY9WULUSBC04
Enquiries:
Kenneth MacKenzie; Gordon Bland
Target Fund Managers Limited
01786 845 912
Mark Young; Rajpal Padam
Stifel Nicolaus Europe Limited
020 7710 7600
Dido Laurimore; Richard Gotla, Talia Shirion
FTI Consulting
020 3727 1000
TargetHealthcare@fticonsulting.com
Important information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the UK version of the Market Abuse Regulations (EU) No. 596/2014,
which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended. Upon the publication of this
announcement via Regulatory Information Service, this inside
information is now considered to be in the public domain.
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 December 2022 comprised 100 assets
let to 33 tenants with a total value of GBP867.7 million.
The Group 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.
Chairman's Statement
Introduction & reflection
It is a great privilege for me to take over the role of Chair
for this remarkable company. I would like to start by thanking my
predecessor, Malcolm Naish, for his outstanding leadership and
dedication. His contribution has laid firm foundations for the
Company's growth and track record to date. I am committed to
building on this legacy so that we deliver further long-term
success.
Our investment strategy and business model has worked well,
producing a total return based on EPRA NTA of 91.2% since IPO. The
seven years to 2020 saw us patiently grow the portfolio, refine our
capital structure through adding long-term fixed rate debt, and
deliver earnings growth based on robust rental income.
Conditions then changed dramatically, with the COVID-19 pandemic
in March 2020 and its persistent effect on the care home sector.
This was exacerbated with the chain of headwinds that emerged from
early 2022: the Russian invasion of Ukraine; supply-side trouble
for energy and food, with its swift inflationary impact; and the
volatility experienced in the second half of 2022 with the decisive
end to the period of ultra-low interest rates. Through this, our
business model and the performance of the portfolio have been
resilient and we have grown large enough to become a constituent of
the FTSE 250 with a solid and secure capital structure.
However, the changes noted above and their impact on the real
estate investment market detailed below lead us to consider fine
tuning our business model to meet today's conditions which are very
different from those at our launch some 10 years ago:
-- Inflation appears to be more persistent than many forecasts,
and interest rates have reached 14-year highs, meaning our marginal
rate of financing currently exceeds the initial rental yields we
can obtain on new investments. This changes our view on what
earnings levels are achievable.
-- The net initial yields available on assets that meet our
strict investment criteria, to enable long term earnings, have
compressed significantly. The earlier assets in our portfolio,
acquired at net initial yields of 7.3%, if acquired new today would
be at c.5.5%. These valuation yields reflect the quality of our
prime real estate, its inflation-linked rental streams and strong
ESG credentials, all of which result in robust market demand for
these assets. Our investment strategy also has the significant
tailwinds of demographic change and needs-based demand for care,
resulting in a portfolio that is well-placed for the long-term.
-- Our portfolio was categorised as 71% mature when the COVID-19
pandemic emerged. The small 5% shortfall in rent collection since
then is primarily attributable to a combination of newly-opened
homes and a limited number of tenants who were also maturing as
businesses and who did not yet have sufficient reserves to absorb a
materially slower rate of occupancy growth - an inevitable
consequence of acquiring new real estate. We will continue to
invest in new-build care homes which support the sector's
modernisation and provide attractive long-term returns. Our mature
home proportion is currently 90%.
Following careful consideration of these matters, and of the
trends and outlook we note below, the Board believes the most
appropriate response is to rebase the target annual dividend level
to 5.60 pence per share to reflect the Group's current recurring
earnings, commencing with our third interim dividend payable in May
2023. The Board's priority is to offer an attractive dividend to
shareholders which (i) will be fully covered by earnings (ii)
allows annual growth and (iii) fully contributes to an attractive
level of total return.
This is a strong and resilient business with a clear purpose and
a business model which has delivered for shareholders and which
will continue to do so. We note the following trends seen over the
last 10 years which are very much aligned to our investment
strategy:
-- Private wet-room provision now accounts for 31% of total care
home places in the UK, up from 14% in 2014. This trend is
supportive of long-term resident demand for places in our homes and
our view of what should be considered the minimum acceptable
standard and the clear direction of travel. Our portfolio benefits
from 97% en suite wet-room provision.
-- The demographic tailwinds continue, with further significant
growth in the proportion of older people predicted.
-- ESG - we have always prioritised social impact, and our real
estate's environmental credentials are compelling with 93% of the
portfolio having been rated EPC B or above(1) , supporting the
longevity of our real estate and minimising the need for costly and
disruptive building alterations to be compliant with upcoming
legislative changes.
-- Our portfolio's occupancy levels and trading performance are
continuing their improvement following the persistent impact of
COVID-19, including through this past winter.
2. Performance & balance sheet
Underlying profits, measured by adjusted EPRA earnings, have
increased by 37% to GBP18.7 million (31 December 2021: GBP13.7
million), being 3.01 pence per share (31 December 2021: 2.36
pence). The accounting total return for the period was -5.4% (31
December 2021: 3.4%).(2)
This increase in earnings has improved dividend cover to 89%
based on adjusted EPRA earnings (31 December 2021: 65%) and is
reflected in an improved EPRA cost ratio of 15.7% (31 December
2021: 23.3%).(3)
As with other commercial real estate classes, property
valuations have declined, driven by the outward shift in yields
applied by valuers in response to the higher interest rate
environment. Our like-for-like portfolio valuation decrease in the
period of 5.5% demonstrates the stable and resilient nature of our
assets in contrast to the 19% capital decline in the CBRE UK
monthly index (all property) over the same period. The fall in
property values contributes to an IFRS loss of GBP34.2 million (31
December 2021: profit GBP18.7 million). The portfolio's EPRA
topped-up net initial yield is 6.22% (30 June 2022: 5.82%).
Net LTV increased to 25.1% (30 June 2022: 22.0%) with the
Group's debt arrangements providing a weighted average term to
maturity of 6.7 years at a weighted interest rate on drawn debt,
inclusive of amortisation of loan arrangement costs, of 3.79%. 96%
of the GBP240 million of drawn debt is fully hedged against further
increases in interest rates.
The Group has GBP62 million of capital available, net of its
development commitments, which provides flexibility with regard to
capital allocation for activities such as making strategically
important new investments, portfolio improvements or other asset
management initiatives.
3. Portfolio
The Group's portfolio of 100 properties is valued at GBP867.7
million with 33 tenants. The portfolio's rental growth on a
like-for-like basis was 1.8% driven by annual rental uplifts.
The underlying trading performance at the homes has been
recovering towards pre-pandemic levels. Most recent occupancy and
rent covers for the mature homes in the portfolio were 84% and 1.5
times, respectively.
4. Board
We have completed our board succession programme, in line with
the expectations set out in the previous Annual Report. As Malcolm
Naish stepped down as Chair, Gordon Coull also retired from his
role as Senior Independent Director, having previously chaired the
Audit Committee. Our sincere thanks to them both for their
commitment and dedication.
Following the appointment of Richard Cotton as Senior
Independent Director in November 2022, the new Board reached its
full complement with the appointment of Michael Brodtman in January
2023. I am enjoying working with my fellow Directors and the range
of skills and experience identified during the recruitment
processes is evident from the many valuable contributions made
early in our collective tenure.
5. Outlook
As we look ahead to the next 10 years, I am optimistic about the
outlook for our company. We remain committed to our primary
investment objective, producing long-term stable income and
attractive total returns with positive social impact by investing
in fit-for-purpose care homes for older people in society. There is
an increased national focus on supporting people in the community
rather than having them experience unnecessary and potentially
distressing hospital admission and care homes play a crucial role
in this.
Our portfolio trading is improving and maturing, which we
believe will deliver sustainable long-term returns to shareholders,
whom we thank for their long-term and stable presence on our
register.
Alison Fyfe
Chair
24 March 2023
(1) EPC ratings are, where required, converted to their
English-equivalent.
(2) Based on EPRA NTA movement and dividends paid, see
alternative performance measures below.
(3) See alternative performance measures below.
Investment Manager's Report
Overview
The Group's portfolio of 100 assets, comprising 97 operational
homes and three pre-let development sites, was valued at GBP867.7
million at 31 December 2022. The operational homes were let to 33
tenants, providing 6,701 beds for residents, and generating a
contractual rent of GBP57.1 million per annum.
The portfolio value decreased by 4.8% overall, and 5.5% on a
like-for-like basis in the period. The contractual rent roll has
increased by 2.9%, 1.8% like-for-like. The WAULT has shortened
slightly to 26.8 years while the EPRA topped-up net initial yield
has moved out to 6.22% and the EPRA net initial yield was
6.06%.
Portfolio
The focus of trading performance shifted in the period, from a
welcome easing of the persistent impacts of the pandemic to the
influence of high inflation on the costs of delivering care.
Pleasingly, and consistent with the structural drivers of
demographics and demand for places in quality real estate, we have
seen tenants' profitability metrics improve: operators have been
able to articulate the inflationary cost pressures to residents and
their families and receive commensurate fee increases; occupancy is
steadily improving, with the usual seasonal variations having
negligible impact this winter; and, crucially, rent covers are
responding, with the December 2022 portfolio rent cover at 1.5
times (30 June 2022: 1.3 times). Portfolio occupancy is at 84% at
the time of writing.(1)
Our portfolio has a bias towards the private fee payer - there
is long-term evidence that this group is accepting of higher fees,
particularly for quality real estate and care services. For those
receiving local authority funding, whilst increases have come
through in recent years, these are inevitably under pressure. An
element of council tax rises in England announced in February 2023
appear to be "allocated" towards social care. Staffing costs are
increasing with inflation, which is expected and encouraged, and
operators are reporting easing in staff availability challenges.
Visa programmes have helped, and many of our tenants have used
these to sponsor overseas staff to fill a number of vacancies.
All-in, we see underlying tenant profitability improving across our
portfolio even while occupancy continues its recovery to
pre-COVID-19 levels of c.90%.
Asset management initiatives
As at 24 March 2023, the Group had collected 96% of the rent
that was due and payable in respect of the six months under review.
Since the outbreak of the pandemic in March 2020, 95% of portfolio
rent has been collected. To manage the portfolio's sustainable
long-term returns, and improve shorter-term rent collection
prospects, we have completed the following notable portfolio
initiatives:
Subsequent to the period-end:
-- The disposal of four homes for sales proceeds of GBP22
million to a care home operator. This pricing was ahead of both
carrying value from June 2022, prior to the general decline in
property valuations seen through the second half of 2022, and that
of December 2022.
-- The completion of the final stage of a re-tenanting programme
to leave a tenant with three homes whose trading performance covers
current rent in full. Existing lease terms, including rent levels,
have been maintained with the incoming tenant being granted a
short-term rent-free period to manage the rebuild in occupancy.
-- Rent collection has increased from the tenant which has
historically been responsible for a significant proportion of the
Group's rent arrears, with rent having been received in full from
this tenant during the first two months of 2023.
During the period:
-- Practical completion of the Group's development site in
Weymouth, Dorset was reached in November 2022, contributing 66 new
beds to the portfolio. A new tenant to the Group has entered into a
35-year lease which incorporates green provisions and annual rent
reviews (subject to caps and collars).
-- Completion of retrofit programmes on 47 rooms to bring two of
the Group's small number of homes without full en suite wet-room
provision to acceptable modern standards.
-- The disposal of a non-core asset. This care home was part of
the 18-home portfolio acquired in December 2021, with real estate
standards below the average of that portfolio. It has been sold to
the operator for proceeds consistent with carrying value. The home
represented 0.5% of the portfolio by value.
Ten years in, having supported the creation of 15 brand new
homes providing more than 1,000 fit-for-purpose beds to the sector,
and following delay from the major global pandemic, our portfolio
has now reached a more optimal level of operational maturity. We
assess acquisition opportunities on the assumption that a premium
home targeting private fee-paying residents will typically take
three years to fill and reach trading maturity. Currently 90% of
our portfolio is mature, with the immature proportion progressing
well, inclusive of the initiatives noted above. Our mission will
invariably still have us supporting new homes/tenants, whilst using
experience gained to ensure rental income is appropriately
protected through the fill-up period.
Investment market
The investment market has shown some signs of recovery since the
start of 2023 following a pause in the second half of 2022 due to
uncertainty regarding valuation levels across the real estate
sector. Deals are now being completed at pricing levels that
reflect discounts that are consistent with the move in the
valuation of the Group's portfolio. We would anticipate competitive
bidding processes and pricing for prime real estate with strong ESG
credentials, whilst expecting pricing to decline further for
sub-prime assets.
Sectoral
Reform of the social care sector was again moved down the
priority list as the Government's Manifesto pledge to 'fix' social
care was pushed back by two years in late 2022. Care providers
understand the public's desire for a 'cap' on care costs but a
discarding of the less prominent national assessment of a 'fair
cost of care' was seen as a negative for many, who believe it will
produce compelling evidence of the unreasonably low fees many Local
Authorities are paying. The need for cross-subsidisation of these
residents by privately funded residents has been a long standing
and contentious issue. In part, the Government has tried to address
this issue by allowing Local Authorities to again raise council tax
beyond the normal threshold, with the proceeds ring-fenced for
social care, but commentators argue the proceeds to be inadequate
and risk a 'postcode lottery' based on the demographics and
affluence of Local Authority areas.
The Government has also recently announced funding to clear
discharge backlogs in hospitals. Care providers are willing to
help, not least to support the beleaguered patients trapped in
hospital.
Commercial decision-making within homes is responding. We
believe we see a new trend emerging from the pandemic, with
operators no longer rushing to simply fill beds, but to fill them
at reasonable fees, even if that means occupancy trails behind the
pre-pandemic norm. It is likely this trend also partly explains the
gradual progression of occupancy recovery, despite strong demand
and enquiries. However, staff recruitment and retention has played
its part, having become the main frustration within the sector in
the past year. On recruitment, many tenants within our portfolio
have lately made use of the Government Immigration Licence scheme,
which, when implemented quickly, has proven to be valuable. We note
that many homes are recently reporting a more settled workforce,
which helps from a cost perspective (lower agency) and the quality
of care.
Inflationary pressures, particularly around energy have of
course also been a concern in the sector, but as (originally) a
fairly small part of the budget these have been of lesser concern
than staffing. We also note that many established operators have
traditionally used brokers and had locked in reasonable rates. The
sector is also lobbying the Government to remain on 'special
status' after the proposed lifting of the energy cap in the summer,
albeit recent drops in pricing may negate the importance of such an
intervention.
The pandemic highlighted the benefits of modern, purpose-built
care homes, where residents had the dignity and privacy provided by
their en suite wet-room, and the infection control advantage which
that brought. But memories are short, and the public are generally
unaware of the vagaries in quality of UK care homes (where
approximately 70% do not provide private wet-rooms and which we
consider are no longer fit for purpose), until they have to find
accommodation for a loved one in a hurry. We believe many families
and commissioners of care are becoming more discerning. Ironically
it may be ESG which drives quicker change, with modern homes simply
more aligned to best ESG principles .
Target Fund Managers Limited
Investment Manager
24 March 2023
(1) All occupancy and rent cover figures quoted relate to mature
homes within the portfolio.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 31 December 2022
Six months ended Six months ended
31 December 2022 31 December 2021
(unaudited) (unaudited)
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Revenue
Rental income 28,058 5,897 33,955 21,929 4,515 26,444
Other income 81 - 81 66 - 66
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Total revenue 28,139 5,897 34,036 21,995 4,515 26,510
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
(Losses)/gains on
investment properties 8 - (58,058) (58,058) - 871 871
Gains on sale of
investment properties 8 - 55 55 - - -
Total income 28,139 (52,106) (23,967) 21,995 5,386 27,381
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Expenditure
Investment management
fee 2 (3,799) - (3,799) (3,553) - (3,553)
Credit loss allowance
and bad debts 3 8 - 8 (1,073) - (1,073)
Other expenses 3 (1,564) - (1,564) (1,558) - (1,558)
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Total expenditure (5,355) - (5,355) (6,184) - (6,184)
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Profit/(loss) before
finance costs and
taxation 22,784 (52,106) (29,322) 15,811 5,386 21,197
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Net finance costs
Interest receivable 84 - 84 36 - 36
Interest payable
and similar charges 4 (4,636) (302) (4,938) (2,519) - (2,519)
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Profit/(loss) before
taxation 18,232 (52,408) (34,176) 13,328 5,386 18,714
Taxation 5 - - - (6) - (6)
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Profit/(loss) for
the period 18,232 (52,408) (34,176) 13,322 5,386 18,708
Other comprehensive
income:
Items that are or
may be reclassified
subsequently to profit
or loss
Movement in fair
value of interest
rate derivatives
designated as cash
flow hedges - 879 879 - 678 678
Total comprehensive
income for the period 18,232 (51,529) (33,297) 13,322 6,064 19,386
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
Earnings/(loss)
per share (pence) 6 2.94 (8.45) (5.51) 2.31 0.93 3.24
------------------------- ------ --------- ----------- ----------- --------- -------- ---------
The total column of this statement represents the Group's
Condensed Consolidated Statement of Comprehensive Income, prepared
in accordance with UK adopted IAS 34 'Interim Financial Reporting'.
The supplementary revenue return and capital return columns are
both prepared under guidance published by the Association of
Investment Companies.
All revenue and capital items in the above statement are derived
from continuing operations.
No operations were discontinued in the period.
Condensed Consolidated Statement of Financial Position
As at 31 December 2022
As at As at
31 December 30 June
2022 2022
(unaudited) (audited)
Notes GBP'000 GBP'000
Non-current assets
Investment properties 8 803,831 857,691
Trade and other receivables 9 70,814 63,651
Interest rate derivatives 11 5,438 2,284
------------------------------------ ------ -------------- -----------
880,083 923,626
------------------------------------ ------ -------------- -----------
Current assets
Trade and other receivables 9 4,921 5,549
Cash and cash equivalents 21,801 34,483
------------------------------------ ------ -------------- -----------
26,722 40,032
------------------------------------ ------ -------------- -----------
Total assets 906,805 963,658
------------------------------------ ------ -------------- -----------
Non-current liabilities
Loans 11 (236,744) (231,383)
Trade and other payables 12 (7,255) (7,145)
------------------------------------ ------ -------------- -----------
(243,999) (238,528)
------------------------------------ ------ -------------- -----------
Current liabilities
Trade and other payables 12 (18,300) (26,363)
------------------------------------ ------ -------------- -----------
Total liabilities (262,299) (264,891)
------------------------------------ ------ -------------- -----------
Net assets 644,506 698,767
------------------------------------ ------ -------------- -----------
Share capital and reserves
Share capital 13 6,202 6,202
Share premium 256,633 256,633
Merger reserve 47,751 47,751
Distributable reserve 205,497 226,461
Hedging reserve 3,163 2,284
Capital reserve 31,342 83,750
Revenue reserve 93,918 75,686
------------------------------------ ------ -------------- -----------
Equity shareholders' funds 644,506 698,767
------------------------------------ ------ -------------- -----------
Net asset value per ordinary share
(pence) 6 103.9 112.7
------------------------------------ ------ -------------- -----------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 December 2022 (unaudited)
Distrib-utable
Share Share Merger reserve Hedging Capital Revenue
Notes capital premium reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 30 June
2022 6,202 256,633 47,751 226,461 2,284 83,750 75,686 698,767
Total
comprehensive
income for
the period - - - - 879 (52,408) 18,232 (33,297)
Transactions
with owners
recognised
in equity:
Dividends paid 7 - - - (20,964) - - - (20,964)
As at 31
December
2022 6,202 256,633 47,751 205,497 3,163 31,342 93,918 644,506
---------------- ------- --------- ---------- --------- --------------- --------- ----------- --------- -----------
For the six months ended 31 December 2021 (unaudited)
Distrib-utable
Share Share Merger reserve Hedging Capital Revenue
Notes capital premium reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 30 June
2021 5,115 135,228 47,751 265,164 251 64,112 47,564 565,185
Total
comprehensive
income for
the period - - - - 678 5,386 13,322 19,386
Transactions
with owners
recognised
in equity:
Dividends paid 7 - - - (19,076) - - - (19,076)
Issue of
ordinary
shares 13 1,087 123,913 - - - - - 125,000
Expenses of
issue - (2,505) - - - - - (2,505)
As at 31
December
2021 6,202 256,636 47,751 246,088 929 69,498 60,886 687,990
---------------- ------- --------- ---------- --------- --------------- --------- --------- --------- ----------
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 December 2022
Six months Six months
ended ended
31 December 31 December
2022 2021
(unaudited) (unaudited)
Notes GBP'000 GBP'000
---------------------- -------------------------- -------------- -------------
Cash flows from operating activities
(Loss)/profit before tax (34,176) 18,714
Adjustments for:
Interest receivable (84) (36)
Interest payable 4,938 2,519
Revaluation losses/(gains) on investment
properties and movements in lease
incentives, net of acquisition costs
written off 52,106 (5,386)
Increase in trade and other receivables (512) (14,331)
(Decrease)/increase in trade and
other payables (358) 1,216
--------------------------------------------- --- -------------- -------------
21,914 2,696
--------------------------------------------- --- -------------- -------------
Interest paid (4,101) (2,201)
Premium paid on interest rate cap 11 (2,577) -
Interest received 84 36
Tax paid - (6)
--------------------------------------------- --- -------------- -------------
(6,594) (2,171)
--------------------------------------------- --- -------------- -------------
Net cash inflow from operating
activities 15,320 525
--------------------------------------------- --- -------------- -------------
Cash flows from investing activities
Disposal of investment properties, 4,280 -
net of lease incentives
Purchase of investment properties,
including acquisition costs (16,457) (181,873)
Net cash outflow from investing
activities (12,177) (181,873)
--------------------------------------------- --- -------------- -------------
Cash flows from financing activities
Issue of ordinary share capital 13 - 125,000
Expenses of issue of ordinary share
capital 13 - (2,505)
Drawdown of bank loan facilities 11 42,000 210,000
Expenses of arrangement of bank
loan facilities 11 (205) (1,519)
Repayment of bank loan facilities 11 (36,750) (117,250)
Dividends paid (20,870) (18,837)
--------------------------------------------- --- -------------- -------------
Net cash (outflow)/inflow from
financing activities (15,825) 194,889
--------------------------------------------- --- -------------- -------------
Net (decrease)/increase in cash
and cash equivalents (12,682) 13,541
Opening cash and cash equivalents 34,483 21,106
--------------------------------------------- --- -------------- -------------
Closing cash and cash equivalents 21,801 34,647
--------------------------------------------- --- -------------- -------------
Transactions which do not require the
use of cash
Fixed or guaranteed rent reviews derecognised (50) -
on disposal
Movement in fixed or guaranteed rent
reviews and lease incentives 7,349 4,938
----------------------------------------------- ------ ------
Notes to the Condensed Consolidated Financial Statements
1. Basis of Preparation
The condensed consolidated financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting'
and the accounting policies set out in the statutory financial
statements of the Group for the year ended 30 June 2022.
The condensed consolidated financial statements do not include
all of the information required for a complete set of IFRS
financial statements and should be read in conjunction with the
consolidated financial statements of the Group for the year ended
30 June 2022, which were prepared under full UK Adopted IFRS
requirements.
Going concern
The condensed consolidated financial statements have been
prepared on the going concern basis. In assessing the going concern
basis of accounting the Directors have had regard to the guidance
issued by the Financial Reporting Council. Given the potentially
significant continuing impact of COVID-19 on the economic
conditions in which the Group is operating, the Directors have
continued to place a particular focus on the appropriateness of
adopting the going concern basis in preparing the financial
statements for the period ended 31 December 2022.
The Group's going concern assessment particularly considered
that:
-- The value of the Group's portfolio of assets significantly
exceeds the value of its liabilities;
-- The Group is contractually entitled to receive rental income
which significantly exceeds its forecast expenses and loan
interest; and
-- The Group remains within its loan covenants, with its finance
facilities having been extended during the period, resulting in a
weighted average term to maturity of 6.7 years at 31 December 2022
and an earliest repayment date of November 2025.
The Group has a significant balance of cash and undrawn debt
available and the Group's current policy is to prudently retain a
proportion of this to ensure it can continue to pay the Group's
expenses and loan interest in the unlikely scenario that the level
of rental income received deteriorates significantly. The
proportion retained will be kept under review dependent on
portfolio performance and market conditions.
Based on these considerations, the Directors consider that the
Group has adequate resources to continue in operational existence
for the foreseeable future and at least the next twelve months from
the date of issuance of this report. For this reason, they continue
to adopt the going concern basis in preparing the financial
statements.
2. Investment Management Fee
For the six month For the six month
period ended period ended
31 December 2022 31 December 2021
GBP'000 GBP'000
----------------------- ------------------ ------------------
Investment management
fee 3,799 3,553
----------------------- ------------------ ------------------
The Group's Investment Manager and Alternative Investment Fund
Manager ('AIFM') is Target Fund Managers Limited. The Investment
Manager is entitled to an annual management fee on a tiered basis
based on the net assets of the Group as set out below. Where
applicable, VAT is payable in addition.
Net assets of the Group Management fee percentage
Up to and including GBP500 million 1.05
Above GBP500 million and up to and including
GBP750 million 0.95
Above GBP750 million and up to and including
GBP1 billion 0.85
Above GBP1 billion and up to and including
GBP1.5 billion 0.75
Above GBP1.5 billion 0.65
----------------------------------------------- --------------------------
2. Investment Management Fee (continued)
The Investment Management Agreement can be terminated by either
party on 24 months' written notice. Should the Company terminate
the Investment Management Agreement earlier then compensation in
lieu of notice will be payable to the Investment Manager. The
Investment Management Agreement may be terminated immediately
without compensation if: the Investment Manager is in material
breach of the agreement; guilty of negligence, wilful default or
fraud; is the subject of insolvency proceedings; or there occurs a
change of Key Managers to which the Board has not given its prior
consent.
3. Other expenses
For the six For the six
month period month period
ended ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------- -------------- --------------
Credit loss allowance (323) 936
Bad debts written off 315 137
------------------------------------- -------------- --------------
Total credit loss allowance and
bad debts (8) 1,073
------------------------------------- -------------- --------------
Valuation and other professional
fees 922 932
Secretarial and administration fees 106 90
Directors' fees 110 114
Other 426 422
------------------------------------- -------------- --------------
Total other expenses 1,564 1,558
------------------------------------- -------------- --------------
The movement in the credit loss allowance during the period
ended 31 December 2022 includes the full recovery of GBP1,144,000
of rent outstanding from one tenant of seven homes, against which a
credit loss allowance of GBP1,138,000 had been recognised at 30
June 2022.
4. Interest payable and similar charges
For the six For the six
month period month period
ended ended
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------------------------- -------------- --------------
Interest paid on loans 4,320 2,264
Amortisation of loan costs 316 255
Finance and transaction costs relating
to the interest rate cap 302 -
Total 4,938 2,519
---------------------------------------- -------------- --------------
5. Taxation
The Directors intend to conduct the Group's affairs such that
management and control is exercised in the United Kingdom and so
that the Group carries on any trade in the United Kingdom.
The Group has entered the REIT regime for the purposes of UK
taxation. Subject to continuing relevant UK-REIT criteria being
met, the profits from the Group's property rental business, arising
from both income and capital gains, are exempt from corporation
tax.
6. Earnings per share and Net Asset Value per share
Earnings per share
For the six month For the six month
period ended period ended
31 December 2022 31 December 2021
Pence Pence per
GBP'000 per share GBP'000 share
-------------------------- ---------- ------------ ---------- ------------
Revenue earnings 18,232 2.94 13,322 2.31
Capital earnings (52,408) (8.45) 5,386 0.93
Total earnings (34,176) (5.51) 18,708 3.24
-------------------------- ---------- ------------ ---------- ------------
Average number of shares
in issue 620,237,346 578,295,002
-------------------------- ---------- ------------ ---------- ------------
The European Public Real Estate Association ('EPRA') is an
industry body which issues best practice reporting guidelines for
property companies and the Group reports an EPRA NAV quarterly.
EPRA has issued best practice recommendations for the calculation
of certain figures which are included below.
The EPRA earnings are arrived at by adjusting for the
revaluation movements on investment properties and other items of a
capital nature and represents the revenue earned by the Group.
The Group's specific adjusted EPRA earnings adjusts the EPRA
earnings for rental income arising from recognising guaranteed
rental review uplifts and for development interest received from
developers in relation to monies advanced under forward fund
agreements which, in the Group's IFRS financial statements, is
required to be offset against the book cost of the property under
development. The Board believes that that Group's specific adjusted
EPRA earnings represents the underlying performance measure
appropriate for the Group's business model as it illustrates the
underlying revenue stream and costs generated by the Group's
property portfolio. The reconciliations are provided in the table
below:
For the six For the six
month period month period
ended ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------- -------------- --------------
Earnings per IFRS Consolidated
Statement of Comprehensive Income (34,176) 18,708
Adjusted for (losses)/gains on investment
properties 58,058 (871)
Adjusted for gains on investment (55) -
properties realised
Adjusted for finance and transaction
costs on the interest rate cap and 302 -
other capital items
EPRA earnings 24,129 17,837
Adjusted for rental income arising
from recognising guaranteed rent
review uplifts (5,897) (4,515)
Adjusted for development interest
under forward fund agreements 460 335
Group specific adjusted EPRA earnings 18,692 13,657
Earnings per share ('EPS') (pence
per share)
EPS per IFRS Consolidated Statement
of Comprehensive Income (5.51) 3.24
EPRA EPS 3.89 3.08
Group specific adjusted EPRA EPS 3.01 2.36
------------------------------------------- -------------- --------------
Earnings for the period ended 31 December 2022 should not be
taken as a guide to the results for the year to 30 June 2023.
6. Earnings per share and Net Asset Value per share (continued)
Net Asset Value per share
The Group's net asset value per ordinary share of 103.9 pence
(30 June 2022: 112.7 pence) is based on equity shareholders' funds
of GBP644,506,000 (30 June 2022: GBP698,767,000) and on 620,237,346
(30 June 2022: 620,237,346) ordinary shares, being the number of
shares in issue at the period end.
The three EPRA NAV metrics are shown below. Further details are
included in the glossary.
31 December 2022 30 June 2022
------------------------------- -------------------------------
EPRA EPRA EPRA EPRA EPRA EPRA
NRV NTA NDV NRV NTA NDV
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- --------- --------- --------- ---------
IFRS NAV per financial
statements 644,506 644,506 644,506 698,767 698,767 698,767
Fair value of interest
rate derivatives (5,438) (5,438) - (2,284) (2,284) -
Fair value of loans - - 35,306 - - 22,257
Estimated purchasers'
costs 57,980 - - 60,225 - -
------------------------ --------- --------- --------- --------- --------- ---------
EPRA net assets 697,048 639,068 679,812 756,708 696,483 721,024
------------------------ --------- --------- --------- --------- --------- ---------
EPRA net assets (pence
per share) 112.4 103.0 109.6 122.0 112.3 116.2
------------------------ --------- --------- --------- --------- --------- ---------
7. Dividends
Dividends paid as distributions to equity shareholders during
the period.
For the six For the six
month period month period
ended ended
31 December 31 December
2022 2021
Pence GBP'000 Pence GBP'000
----------------------------------- ------ -------- ------ --------
Fourth interim dividend for prior
year 1.69 10,482 1.68 8,594
First interim dividend 1.69 10,482 1.69 10,482
Total 3.38 20,964 3.37 19,076
----------------------------------- ------ -------- ------ --------
A second interim dividend for the year to 30 June 2023, of 1.69
pence per share, was paid on 24 February 2023 to shareholders on
the register on 10 February 2023.
8. Investment properties
As at
31 December
2022
Freehold and Leasehold Properties GBP'000
---------------------------------------------- -------------
Opening market value 911,596
Opening fixed or guaranteed rent reviews
and lease incentives (56,705)
Performance payments 2,800
----------------------------------------------- -------------
Opening carrying value 857,691
----------------------------------------------- -------------
Disposals - proceeds (4,455)
- loss on sale (559)
Purchases and performance payments 11,057
Acquisition costs capitalised 116
Acquisition costs written off (116)
Unrealised loss realised during the year 614
Revaluation movement - gains 1,425
Revaluation movement - losses (52,018)
----------------------------------------------- -------------
Movement in market value (43,936)
Fixed or guaranteed rent reviews and lease
incentives derecognised on disposal 225
Movement in fixed or guaranteed rent reviews
and lease incentives (7,349)
Movement in performance payments (2,800)
----------------------------------------------- -------------
Movement in carrying value (53,860)
Closing market value 867,660
Closing fixed or guaranteed rent reviews
and lease incentives (63,829)
----------------------------------------------- -------------
Closing carrying value 803,831
The investment properties can be analysed as follows:
As at As at
31 December 30 June
2022 2022
GBP'000 GBP'000
-------------------------------------------- ------------- ---------
Standing assets 859,060 892,336
Developments under forward fund agreements 8,600 19,260
-------------------------------------------- ------------- ---------
Closing market value 867,660 911,596
-------------------------------------------- ------------- ---------
Changes in the valuation of investment For the For the six
properties six month month period
period ended ended
31 December 31 December
2022 2021
GBP'000 GBP'000
---------------------------------------------- -------------- --------------
Loss on sale of investment properties (559) -
Unrealised loss realised during the year 614 -
---------------------------------------------- -------------- --------------
Gains on sale of investment properties 55 -
realised
Revaluation movement (50,593) 14,409
Acquisition costs written off (116) (8,600)
Movement in lease incentives (1,452) (423)
Movement in fixed or guaranteed rent reviews (5,897) (4,515)
---------------------------------------------- -------------- --------------
(Losses)/gains on revaluation of investment
properties (58,003) 871
---------------------------------------------- -------------- --------------
8. Investment properties (continued)
The investment properties were valued at GBP867,660,000 (30 June
2022: GBP911,596,000) by Colliers International Healthcare Property
Consultants Limited ('Colliers'), in their capacity as external
valuers. The valuation was undertaken in accordance with the RICS
Valuation - Professional Standards, incorporating the International
Valuation Standards, ('the Red Book Global', 31 January 2022)
issued by the Royal Institution of Chartered Surveyors ('RICS') on
the basis of Market Value, supported by reference to market
evidence of transaction prices for similar properties. Market Value
represents the estimated amount for which a property should
exchange on the date of valuation between a willing buyer and a
willing seller in an arm's length transaction after proper
marketing wherein the parties had each acted knowledgeably,
prudently and without compulsion.
The fair value of the properties after adjusting for the
movement in the fixed or guaranteed rent reviews and lease
incentives was GBP803,831,000 (30 June 2022: GBP857,691,000). The
adjustment consisted of GBP54,649,000 (30 June 2022: GBP48,802,000)
relating to fixed or guaranteed rent reviews and GBP9,180,000 (30
June 2022: GBP7,903,000) of accrued income relating to the
recognition of rental income over rent free periods subsequently
amortised over the life of the lease, which are both separately
recorded in the financial statements as non-current and current
assets within 'trade and other receivables' (see note 9).
The Group is required to classify fair value measurements of its
investment properties using a fair value hierarchy, in accordance
with IFRS 13 'Fair Value Measurement'. This hierarchy reflects the
subjectivity of the inputs used, and has the following levels:
-- Level 1: unadjusted quoted prices in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
-- Level 2: observable inputs other than quoted prices included
within level 1;
-- Level 3: use of inputs that are not based on observable
market data.
The Group's investment properties are valued by Colliers on a
quarterly basis. The valuation methodology used is the yield model,
which is a consistent basis for the valuation of investment
properties within the healthcare industry. This model has regard to
the current investment market and evidence of investor interest in
properties with income streams secured on healthcare businesses. On
an asset-specific basis, the valuer makes an assessment of: the
quality of the asset; recent and current performance of the asset;
and the financial position and performance of the tenant operator.
This asset specific information is used alongside a review of
comparable transactions in the market and an investment yield is
applied to the asset which, along with the contracted rental level,
is used to derive a market value.
In determining what level of the fair value hierarchy to
classify the Group's investments within, the Directors have
considered the content and conclusion of the position paper on IFRS
13 prepared by the European Public Real Estate Association
('EPRA'), the representative body of the publicly listed real
estate industry in Europe. This paper concludes that, even in the
most transparent and liquid markets, it is likely that valuers of
investment property will use one or more significant unobservable
inputs or make at least one significant adjustment to an observable
input, resulting in the vast majority of investment properties
being classified as level 3.
Observable market data is considered to be that which is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market. In arriving at
the valuation Colliers make adjustments to observable data of
similar properties and transactions to determine the fair value of
a property and this involves the use of considerable judgement.
Considering the Group's specific valuation process, industry
guidance, and the level of judgement required in the valuation
process, the Directors believe it appropriate to classify the
Group's investment properties within level 3 of the fair value
hierarchy.
8. Investment properties (continued)
The Group's investment properties, which are all care homes, are
considered to be a single class of assets. The weighted average net
initial yield ('NIY') on these assets, as measured by the EPRA
topped-up net initial yield, is 6.2%. The yield on the majority of
the individual assets ranges from 5.6 per cent to 8.7 per cent.
There have been no changes to the valuation technique used through
the period, nor have there been any transfers between levels.
The key unobservable inputs made in determining the fair values
are:
-- Contracted rental level: The rent payable under the lease
agreement at the date of valuation or, where applicable, on expiry
of the rent free period; and
-- Yield: The yield is defined as the initial net income from a
property at the date of valuation, expressed as a percentage of the
gross purchase price including the costs of purchase.
The contracted rental level and yield are not directly
correlated although they may be influenced by similar factors. Rent
is set at a long-term, supportable level and is likely to be
influenced by property-specific matters. The yield also reflects
market sentiment and the strength of the covenant provided by the
tenant, with a stronger covenant attracting a lower yield.
The lease agreements on the properties held within the Group's
property portfolio generally allow for annual increases in the
contracted rental level in line with inflation, within a cap and a
collar. An increase of 1.0 per cent in the contracted rental level
will increase the fair value of the portfolio, and consequently the
Group's reported income from unrealised gains on investments, by
GBP8,677,000 (30 June 2022: GBP9,116,000); an equal and opposite
movement would have decreased net assets and decreased the Group's
income by the same amount.
A decrease of 0.25 per cent in the net initial yield applied to
the property portfolio will increase the fair value of the
portfolio by GBP37,905,000 (30 June 2022: GBP40,729,000), and
consequently increase the Group's reported income from unrealised
gains on investments. An increase of 0.25 per cent in the net
initial yield will decrease the fair value of the portfolio by
GBP34,994,000 (30 June 2022: GBP37,388,000) and reduce the Group's
income.
9. Trade and other receivables
As at As at
31 December 30 June
2022 2022
Non-current trade and other receivables GBP'000 GBP'000
-------------------------------------------- ------------- ---------
Fixed rent reviews 54,649 48,802
Rental deposits held in escrow for tenants 7,255 7,145
Lease incentives 8,910 7,704
-------------------------------------------- ------------- ---------
Total 70,814 63,651
-------------------------------------------- ------------- ---------
As at As at
31 December 30 June
2022 2022
Current trade and other receivables GBP'000 GBP'000
-------------------------------------------- ------------- ---------
Lease incentives 270 199
VAT recoverable 1,317 1,387
Accrued income - rent receivable 2,115 906
Accrued development interest under forward
fund agreements 518 452
Other debtors and prepayments 701 2,605
-------------------------------------------- ------------- ---------
Total 4,921 5,549
-------------------------------------------- ------------- ---------
10. Investment in subsidiary undertakings
The Group included 49 subsidiary companies as at 31 December
2022. All subsidiary companies were wholly owned, either directly
or indirectly, by the Company and, from the date of acquisition
onwards, the principal activity of each company within the Group
was to act as an investment and property company. Other than one
subsidiary incorporated in Jersey, two subsidiaries which are
incorporated in Gibraltar and two subsidiaries which are
incorporated in Luxembourg, all subsidiaries are incorporated
within the United Kingdom.
11. Loans
As at As at
31 December 30 June
2022 2022
GBP'000 GBP'000
------------------------------- ------------- ---------
Principal amounts outstanding 240,000 234,750
Set-up costs (4,520) (4,315)
Amortisation of set-up costs 1,264 948
------------------------------- ------------- ---------
Total 236,744 231,383
------------------------------- ------------- ---------
In November 2020, the Group entered into a GBP70,000,000
committed term loan and revolving credit facility with the Royal
Bank of Scotland plc ('RBS') which is repayable in November 2025.
Interest accrues on the bank loan at a variable rate, based on
SONIA plus margin and mandatory lending costs, and is payable
quarterly. The margin is 2.18 per cent per annum on GBP50,000,000
of the facility and 2.33 per cent per annum on the remaining
GBP20,000,000 revolving credit facility, both for the duration of
the loan. A non-utilisation fee of 1.13 per cent per annum is
payable on the first GBP20,000,000 of any undrawn element of the
facility, reducing to 1.05 per cent per annum thereafter. As at 31
December 2022, the Group had drawn GBP40,000,000 under this
facility (30 June 2022: GBP50,000,000).
In November 2020, the Group entered into a GBP100,000,000
revolving credit facility with HSBC Bank plc ('HSBC') which is
repayable in November 2025. Interest accrues on the bank loan at a
variable rate, based on SONIA plus margin and mandatory lending
costs, and is payable quarterly. The margin is 2.17 per cent per
annum for the duration of the loan and a non-utilisation fee of
0.92 per cent per annum is payable on any undrawn element of the
facility. As at 31 December 2022, the Group had drawn GBP50,000,000
under this facility (30 June 2022: GBP34,750,000).
In January 2020 and November 2021, the Group entered into
committed term loan facilities with Phoenix Group of GBP50,000,000
and GBP37,250,000, respectively. Both these facilities are
repayable on 12 January 2032. The Group has a further committed
term loan facility with Phoenix Group of GBP62,750,000 which is
repayable on 12 January 2037. Interest accrues on these three loans
at aggregate annual fixed rates of interest of 3.28 per cent, 3.13
per cent and 3.14 per cent, respectively and is payable quarterly.
As at 31 December 2022, the Group had drawn GBP150,000,000 under
these facilities (30 June 2022: GBP150,000,000).
The following interest rate derivatives were in place during the
period ended 31 December 2022:
Notional Starting Ending Interest Interest received Counterparty
Value Date Date paid
Daily compounded
5 November 5 November SONIA (floor at
30,000,000 2020 2025 0.30% -0.08%) RBS
----------- ----------- --------- ------------------ -------------
50,000,000 1 November 5 November nil Daily compounded HSBC
2022 2025 SONIA above 3.0%
cap
----------- ----------- --------- ------------------ -------------
The Group paid a premium of GBP2,577,000, inclusive of
transaction costs of GBP169,000, on entry into the GBP50,000,000
interest rate cap.
11. Loans (continued)
At 31 December 2022, inclusive of the interest rate derivatives,
the interest rate on GBP230,000,000 of the Group's borrowings had
been capped, including the amortisation of loan arrangement costs,
at an all-in rate of 3.70 per cent per annum until at least
November 2025. The remaining GBP90,000,000 of debt, of which
GBP10,000,000 was drawn at 31 December 2022, would, if fully drawn,
carry interest at a variable rate equal to daily compounded SONIA
plus a weighted average lending margin, inclusive of the
amortisation of arrangement costs, of 2.46 per cent per annum.
The aggregate fair value of the interest rate derivatives at 31
December 2022 was an asset of GBP5,438,000 (30 June 2022: asset of
GBP2,284,000). The Group categorises all interest rate derivatives
as level 2 in the fair value hierarchy (see note 8).
At 31 December 2022, the nominal value of the Group's loans
equated to GBP240,000,000 (30 June 2022: GBP234,750,000). Excluding
the interest rate derivatives referred to above, the fair value of
these loans, based on a discounted cashflow using the market rate
on the relevant treasuries plus an estimated margin based on market
conditions at 31 December 2022, totalled, in aggregate,
GBP204,694,000 (30 June 2022: GBP212,493,000). The payment required
to redeem the loans in full, incorporating the terms of the Spens
clause in relation to the Phoenix Group facilities, would have been
GBP226,173,000 (30 June 2022: GBP239,728,000). The loans are
categorised as level 3 in the fair value hierarchy.
The RBS loan is secured by way of a fixed and floating charge
over the majority of the assets of the THR Number One plc Group
('THR1 Group') which consists of THR1 and its five subsidiaries.
The Phoenix Group loans of GBP50,000,000 and GBP37,250,000 are
secured by way of a fixed and floating charge over the majority of
the assets of the THR Number 12 plc Group ('THR12 Group') which
consists of THR12 and its eight subsidiaries. The Phoenix Group
loan of GBP62,750,000 is secured by way of a fixed and floating
charge over the majority of the assets of THR Number 43 plc
('THR43'). The HSBC loan is secured by way of a fixed and floating
charge over the majority of the assets of the THR Number 15 plc
Group ('THR15 Group') which consists of THR15 and its 18
subsidiaries. In aggregate, the Group has granted a fixed charge
over properties with a market value of GBP758,770,000 as at 31
December 2022 (30 June 2022: GBP795,949,000).
Under the financial covenants related to the loans, as at 31
December 2022, the Group is to ensure that:
- the loan to value percentage for THR1 Group and THR15 Group
does not exceed 50 per cent;
- the loan to value percentage for THR12 Group and THR43 does
not exceed 60 per cent;
- the interest cover for THR1 Group is greater than 225 per cent
(30 June 2022: 300 per cent) on any calculation date;
- the interest cover for THR15 Group is greater than 200 per
cent (30 June 2022: 300 per cent) on any calculation date; and
- the debt yield for each of THR12 Group and THR43 is greater
than 10 per cent on any calculation date.
During the period ended 31 December 2022, the Group entered into
agreements with HSBC and RBS to relax the interest cover covenants
on the relevant loans with effect from 1 January 2023. All other
significant terms of the facilities remained unchanged. All loan
covenants have been complied with during the period.
12. Trade and other payables
As at As at
31 December 30 June
2022 2022
Non-current trade and other payables GBP'000 GBP'000
-------------------------------------- ------------- ---------
Rental deposits 7,255 7,145
Total 7,255 7,145
-------------------------------------- ------------- ---------
12. Trade and other payables (continued)
As at As at
31 December 30 June
2022 2022
Current trade and other payables GBP'000 GBP'000
-------------------------------------------- ------------- ---------
Rental income received in advance 8,435 8,390
Property acquisition and development costs
accrued 3,674 8,892
Interest payable 1,981 1,762
Investment Manager's fees payable 1,816 1,895
Performance payments - 2,800
Other payables 2,394 2,624
-------------------------------------------- ------------- ---------
Total 18,300 26,363
-------------------------------------------- ------------- ---------
The Group's payment policy is to ensure settlement of supplier
invoices in accordance with stated terms.
13. Share capital
Allotted, called-up and fully paid ordinary Number of GBP'000
shares of GBP0.01 each shares
--------------------------------------------- ------------ --------
Balance as at 30 June 2022 and 31 December
2022 620,237,346 6,202
--------------------------------------------- ------------ --------
During the period to 31 December 2022, the Company did not issue
any ordinary shares of GBP0.01 each (period to 31 December 2021:
108,695,652 ordinary shares) raising gross proceeds of GBPnil
(period to 31 December 2021: GBP125,000,000). The Company did not
buyback or resell any ordinary shares (period to 31 December 2021:
nil).
At 31 December 2022, the Company did not hold any shares in
treasury (30 June 2022: nil).
14. Commitments
The Group had capital commitments as follows:
As at As at
31 December 30 June
2022 2022
GBP'000 GBP'000
--------------------------------------------------- ------------- ---------
Amounts due to complete forward fund developments 31,853 34,458
Other capital expenditure commitments 2,763 3,594
--------------------------------------------------- ------------- ---------
Total 34,616 38,052
--------------------------------------------------- ------------- ---------
15. Contingent assets and liabilities
As at 31 December 2022, seven (30 June 2022: fourteen)
properties within the Group's investment property portfolio
contained performance payment clauses meaning that, subject to
contracted performance conditions being met, further capital
payments totalling GBP8,220,000 (30 June 2022: GBP13,320,000) may
be payable by the Group to the vendors/tenants of these properties.
The potential timings of these payments are also conditional on the
date(s) at which the contracted performance conditions are met and
are therefore uncertain.
It is highlighted that any performance payments subsequently
paid will result in an increase in the rental income due from the
tenant of the relevant property. As the net initial yield used to
calculate the additional rental which would be payable is not
significantly different from the investment yield used to arrive at
the valuation of the properties, any performance payments paid
would be expected to result in a commensurate increase in the value
of the Group's investment property portfolio.
15. Contingent assets and liabilities (continued)
Having assessed each clause on an individual basis, the Group
has determined that the contracted performance conditions were not
highly likely to be met in relation to any of these properties and
therefore an amount of GBPnil has been recognised as a liability at
31 December 2022 (30 June 2022: two properties resulting in the
recognition of a liability of GBP2,800,000). Where relevant, an
equal but opposite amount would have been recognised as an asset in
'investment properties' in note 8 to reflect the increase in the
investment property value that would be expected to arise were the
performance payments to be paid and the contracted rental income
increased accordingly.
16. Related party transactions
The Directors are considered to be related parties to the
Company. No Director has an interest in any transactions which are,
or were, unusual in their nature or significant to the nature of
the Company.
The Directors of the Company received fees for their services.
Total fees for the period were GBP110,000 (period ended 31 December
2021: GBP114,000) of which GBP56,000 (31 December 2021: GBP18,000)
remained payable at the period end.
The Investment Manager received GBP3,799,000 (inclusive of
estimated irrecoverable VAT) in management fees in relation to the
period ended 31 December 2022 (period ended 31 December 2021:
GBP3,553,000). Of this amount GBP1,816,000 remained payable at the
period end (31 December 2021: GBP1,889,000). The Investment Manager
received a further GBP85,000 (inclusive of irrecoverable VAT)
during the period ended 31 December 2022 (period ended 31 December
2021: GBP75,000) in relation to its appointment as Company
Secretary and Administrator, of which GBP42,000 (31 December 2021:
GBP38,000) remained payable at the period end. Certain employees of
the Investment Manager are directors of some of the Group's
subsidiaries. Neither they nor the Investment Manager receive any
additional remuneration in relation to fulfilling this role.
17. Operating segments
The Board has considered the requirements of IFRS 8 'Operating
Segments'. The Board is of the view that the Group is engaged in a
single segment of business, being property investment, and in one
geographical area, the United Kingdom, and that therefore the Group
has only a single operating segment. The Board of Directors, as a
whole, has been identified as constituting the chief operating
decision maker of the Group. The key measure of performance used by
the Board is the EPRA NTA. The reconciliation between the NAV, as
calculated under IFRS, and the EPRA NTA is detailed in note 6.
The view that the Group is engaged in a single segment of
business is based on the following considerations:
-- One of the key financial indicators received and reviewed by
the Board is the total return from the property portfolio taken as
a whole;
-- There is no active allocation of resources to particular
types or groups of properties in order to try to match the asset
allocation of the benchmark; and
-- The management of the portfolio is ultimately delegated to a
single property manager, Target.
18. Post balance sheet event
In the summer of 2022, the Group had exchanged contracts in
relation to the acquisition of a development site near Malvern,
Worcestershire on a subject-to-planning basis. This acquisition
completed on 27 January 2023 following the receipt of the required
planning consent for the construction of a 60-bed care home. The
home is pre-let to an existing tenant of the Group and has in place
a capped development agreement which is itself underpinned by a
fixed price construction contract.
In March 2023, the Group sold four homes for proceeds of GBP22
million to a care home operator. The sale value was ahead of the
carrying value of these properties at both 30 June 2022 and 31
December 2022.
Interim Report Statement
These are not full statutory accounts in terms of Section 434 of
the Companies Act 2006 and are unaudited. Statutory accounts for
the Company for the year ended 30 June 2022, which received an
unqualified audit report and which did not contain a statement
under Section 498 of the Companies Act 2006, have been lodged with
the Registrar of Companies. No full statutory accounts, for either
the Company or Group, in respect of any period after 30 June 2022
have been reported on by the Company's auditor or delivered to the
Registrar of Companies.
The Interim Report and Condensed Consolidated Financial
Statements for the six months ended 31 December 2022 will be posted
to shareholders and made available on the website:
www.targethealthcarereit.co.uk . Copies may also be obtained from
the Company Secretary, Target Fund Managers Limited, 1st Floor,
Glendevon House, Castle Business Park, Stirling FK9 4TZ.
D irectors' Statement of Principal Risks and Uncertainties
The risks, and the way in which they are managed, are described
in more detail in the Strategic Report within the Annual Report and
Financial Statements for the year to 30 June 2022. Other than as
disclosed in the Chairman's Statement and Investment Manager's
Report, the Group's principal risks and uncertainties have not
changed materially since the date of the report and are not
expected to change materially for the remainder of the Group's
financial year.
Statement of Directors' Responsibilities in Respect of the
Interim Report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' and gives a
true and fair view of the assets, liabilities, financial position
and profit of the Group;
-- the Chairman's Statement and Investment Manager's Report
(together constituting the Interim Management Report) include a
fair review of the information required by the Disclosure Guidance
and Transparency Rules ('DTR') 4.2.7R, being an indication of
important events that have occurred during the period and their
impact on the financial statements;
-- the Statement of Principal Risks and Uncertainties referred
to above is a fair review of the information required by DTR
4.2.7R; and
-- the condensed set of financial statements includes a fair
review of the information required by DTR 4.2.8R, being related
party transactions that have taken place in the period and that
have materially affected the financial position or performance of
the Group during the period.
On behalf of the Board
Alison Fyfe
Chair
24 March 2023
Independent Review Report to Target Healthcare REIT plc
Introduction
We have been engaged by Target Healthcare REIT plc ("the
Company") to review the condensed consolidated set of financial
statements in the Interim Report and Financial Statements for the
six months ended 31 December 2022 which comprises the Condensed
Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed
Consolidated Statement of Changes in Equity, Condensed Consolidated
Statement of Cash Flows and the related notes 1 to 19 to the
Condensed Consolidated Financial Statements. We have read the other
information contained in the Interim Report and Financial
Statements and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated set of
financial statements in the Interim Report and Financial Statements
for the six months ended 31 December 2022 is not prepared, in all
material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group will be prepared in accordance with UK adopted international
accounting standards. The condensed set of consolidated financial
statements included in this Interim Report and Financial Statements
has been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting'.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the Interim Report
and Financial Statements in accordance with the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the Interim Report and Financial Statements, the
Directors are responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the Review of the Financial
Information
In reviewing the Interim Report and Financial Statements, we are
responsible for expressing to the Company a conclusion on the
condensed consolidated set of financial statements in the Interim
Report and Financial Statements. Our conclusion is based on
procedures that are less extensive than audit procedures, as
described in the Basis for Conclusion paragraph of this report.
Use of our Report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
24 March 2023
Glossary of Terms and Definitions
Building Research BREEAM is the world's leading science-based suite
Establishment of validation and certification systems for sustainable
Environmental built environment. The BREEAM in-use standards
Assessment provide a framework to enable property investors,
Method ('BREEAM') owners, managers and occupiers to determine and
drive sustainable improvements in the operational
performance of their assets, leading to benchmarking,
assurance and validation of operational asset data.
Contractual The annual rental income receivable on a property
Rent as at the balance sheet date, adjusted for the
inclusion of rent currently subject to a rent free
period.
Discount/ The amount by which the market price per share
Premium* of a Closed-end Investment Company is lower or
higher than the net asset value per share. The
discount or premium is expressed as a percentage
of the net asset value per share.
Dividend Cover* The absolute value of Group specific adjusted EPRA
Earnings divided by the absolute value of dividends
relating to the period of calculation.
Dividend Yield* The annual Dividend expressed as a percentage of
the share price at the date of calculation.
Energy Performance An Energy Performance Certificate (EPC) rates how
Certificate energy efficient a building is using grades from
('EPC') A to G (with 'A' the most efficient grade). All
commercial properties leased to a tenant must have
an EPC. All EPCs are valid for 10 years.
EPRA Cost Ratio* Reflects the relevant overhead and operating costs
of the business. It is calculated by expressing
the sum of property expenses (net of service charge
recoveries and third-party asset management fees)
and administration expenses (excluding exceptional
items) as a percentage of gross rental income.
EPRA Group The EPRA Cost Ratio adjusted for items thought
specific adjusted appropriate for the Group's specific business model.
Cost Ratio* The adjustments made are consistent with those
made to the Group specific adjusted EPRA earnings
as detailed in note 6.
EPRA Earnings Recurring earnings from core operational activities.
per Share* A key measure of a company's underlying operating
results from its property rental business and an
indication of the extent to which current dividend
payments are supported by earnings. A reconciliation
of the earnings per IFRS and the EPRA earnings,
including any items specific to the Group, is contained
in note 6.
EPRA Net Disposal A measure of Net Asset Value which represents the
Value ('NDV')* shareholders' value under a disposal scenario,
where deferred tax, financial instruments and certain
other adjustments are calculated to the full extent
of their liability, net of any resulting tax.
EPRA Net Reinstatement A measure of Net Asset Value which assumes that
Value ('NRV')* entities never sell assets and aims to represent
the value required to rebuild the entity. The objective
is to highlight the value of net assets on a long-term
basis. Assets and liabilities that are not expected
to crystallise in normal circumstances, such as
the fair value movements on financial derivatives,
are excluded and the costs of recreating the Group
through investment markets, such as property acquisition
costs and taxes, are included.
EPRA Net Tangible A measure of Net Asset Value which assumes that
Assets ('NTA')* entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax.
EPRA Net Initial Annualised rental income based on the cash rents
Yield* passing at the balance sheet date, less non-recoverable
property operating expenses, divided by the market
value of the property, increased with (estimated)
purchasers' costs. EPRA's purpose is to provide
a comparable measure around Europe for portfolio
valuations.
EPRA Topped-up Incorporates an adjustment to the EPRA Net Initial
Net Initial Yield in respect of the expiration of rent-free
Yield* periods (or other unexpired lease incentives).
Loan-to-Value A measure of the Group's Gearing level. Gross LTV
('LTV')* is calculated as total gross debt as a proportion
of gross property value. Net LTV is calculated as
total gross debt less cash (including any cash held
as security in relation to the debt facilities)
as a proportion of gross property value.
Mature Homes Care homes which have been in operation for more
than three years. Homes which do not meet this definition
are referred to as 'immature'.
Portfolio The annual rental income currently receivable on
or Passing a property as at the balance sheet date, excluding
Rent* rental income where a rent free period is in operation.
The gross rent payable by a tenant at a point in
time.
Rent Cover* A measure of a tenant's ability to meet its rental
liability from the profit generated by their underlying
operations. Generally calculated as the tenant's
EBITDARM (earnings before interest, taxes, depreciation,
amortisation, rent and management fees) divided
by the contracted rent.
Total Return* The return to shareholders calculated on a per share
basis by adding dividends paid in the period to
the increase or decrease in the Share Price or NAV.
The dividends are assumed to have been reinvested
in the form of Ordinary Shares or Net Assets.
WAULT* Weighted average unexpired lease term. The average
lease term remaining to expiry across the portfolio
weighted by contracted rental income.
* Alternative Performance Measure
Alternative Performance Measures
The Company uses Alternative Performance Measures ('APMs'). APMs
do not have a standard meaning prescribed by GAAP and therefore may
not be comparable to similar measures presented by other entities.
The definitions of all APMs used by the Company are highlighted in
the glossary above, with detailed calculations, including
reconciliation to the IFRS figures where appropriate, being set out
below.
Discount or Premium - the share price of an Investment Company
is derived from buyers and sellers trading their shares on the
stock market. This price is not identical to the NAV. If the share
price is lower than the NAV per share, the shares are trading at a
discount and, if the share price is higher than the NAV per share,
are said to be at a premium. The figure is calculated at a point in
time and, unless stated otherwise, the Company measures its
discount or premium relative to the EPRA NTA per share.
31 December 30 June
2022 2022
pence pence
------------------------------------ ----------- ------------ --------
EPRA Net Tangible Assets per share
(see note 6) (a) 103.0 112.3
Share price (b) 80.2 108.4
------------------------------------ ----------- ------------ --------
Discount = (b-a)/a (22.1)% (3.5)%
------------------------------------ ----------- ------------ --------
Dividend Cover - the percentage by which Group specific adjusted
EPRA earnings for the period cover the dividend paid.
Period ended Period ended
31 December 31 December
2022 2021
GBP'000 GBP'000
-------------------------------------- --------- ------------- -------------
Group-specific EPRA earnings for the
period (see note 6) (a) 18,692 13,657
First interim dividend 10,482 10,482
Second interim dividend 10,482 10,482
Dividends paid in relation to the
period (b) 20,964 20,964
Dividend cover = (a/b) 89% 65%
-------------------------------------- --------- ------------- -------------
EPRA Cost Ratio - the EPRA cost ratios are produced using EPRA
methodology, which aims to provide a consistent base-line from
which companies can provide additional information, and include all
property expenses and management fees. The Group did not have any
vacant properties during the periods and therefore separate
measures excluding direct vacancy costs are not presented.
Consistent with the Group specific adjusted EPRA earnings detailed
in note 6 to the Condensed Consolidated Financial Statements,
similar adjustments have been made to also present the adjusted
Cost Ratio which is thought more appropriate for the Group's
business model.
Period Period ended
ended 31 December
31 December 2021
2022 GBP'000
GBP'000
------------------------------------------ ----------- ------------- -------------
Investment management fee 3,799 3,553
Credit loss allowance and bad debts
written off (8) 1,073
Other expenses 1,564 1,558
------------------------------------------------------- ------------- -------------
EPRA costs (a) 5,355 6,184
Specific cost adjustments, if applicable - -
------------------------------------------ ----------- ------------- -------------
Group specific adjusted EPRA costs (b) 5,355 6,184
------------------------------------------ ----------- ------------- -------------
Gross rental income per IFRS (c) 34,036 26,510
Adjusted for rental income arising
from recognising guaranteed rent review
uplifts (5,897) (4,515)
Adjusted for development interest
under forward fund arrangements 460 335
Group specific adjusted gross rental
income (d) 28,599 22,330
EPRA Cost Ratio (including direct
vacancy costs) = (a/c) 15.7% 23.3%
EPRA Group specific adjusted Cost
Ratio (including direct vacancy costs) = (b/d) 18.7% 27.7%
------------------------------------------ ----------- ------------- -------------
EPRA Loan-to-Value ('LTV') - A shareholder-gearing measure to
determine the percentage of debt comparing to the appraised value
of the properties. EPRA LTV is calculated as total gross debt
(adding net trade payables and less cash) as a proportion of gross
property value.
31 December 30 June
2022 2022
GBP'000 GBP'000
--------------------------------------- --------- ------------ ---------
Borrowings 240,000 234,750
Net payables 13,649 18,213
Cash and cash equivalent (21,801) (34,483)
-------------------------------------------------- ------------ ---------
Net debt (a) 231,848 218,480
--------------------------------------- --------- ------------ ---------
Investment properties at market value 867,660 911,596
Total property value (b) 867,660 911,596
--------------------------------------- --------- ------------ ---------
EPRA Loan-to-Value = (a/b) 26.7% 24.0%
--------------------------------------- --------- ------------ ---------
EPRA Net Initial Yield and EPRA Topped-up Net Initial Yield -
EPRA Net Initial Yield is calculated as annualised rental income
based on the cash rents passing at the balance sheet date, less
non-recoverable property operating expenses, divided by the market
value of the property, increased with (estimated) purchasers'
costs. The EPRA Topped-up Net Initial Yield incorporates an
adjustment in respect of the expiration of rent-free periods (or
other unexpired lease incentives).
31 December 30 June
2022 2022
GBP'000 GBP'000
----------------------------------------- --------- ------------ ---------
Annualised passing rental income based
on cash rents (a) 55,547 51,217
Notional rent expiration of rent-free
periods or other lease incentives 1,529 4,259
---------------------------------------------------- ------------ ---------
Topped-up net annualised rent (b) 57,076 55,476
----------------------------------------- --------- ------------ ---------
Standing assets (see note 8) 859,060 892,336
Allowance for estimated purchasers'
costs 57,980 60,225
---------------------------------------------------- ------------ ---------
Grossed-up completed property portfolio
valuation (c) 917,040 952,561
----------------------------------------- --------- ------------ ---------
EPRA Net Initial Yield = (a/c) 6.06% 5.38%
EPRA Topped-up Net Initial Yield = (b/c) 6.22% 5.82%
----------------------------------------- --------- ------------ ---------
Total Return - the return to shareholders calculated on a per
share basis by adding dividends paid in the period to the increase
or decrease in the Share Price or NAV. The dividends are assumed to
have been reinvested in the form of Ordinary Shares or Net
Assets.
Period ended Period ended
31 December 2022 31 December 2021
--------------------------- --------- ------------------------------- -------------------------------
EPRA IFRS Share EPRA IFRS Share
NTA NAV price NTA NAV price
(pence) (pence) (pence) (pence) (pence) (pence)
--------------------------- --------- --------- --------- --------- --------- --------- ---------
Value at start of
period (a) 112.3 112.7 108.4 110.4 110.5 115.4
Value at end of period (b) 103.0 103.9 80.2 110.8 110.9 118.0
--------------------------- --------- --------- --------- --------- --------- --------- ---------
Change in value during
period (b-a) (c) (9.3) (8.8) (28.2) 0.4 0.4 2.6
Dividends paid (d) 3.4 3.4 3.4 3.4 3.4 3.4
Additional impact
of dividend reinvestment (e) (0.2) (0.1) (0.2) (0.1) - -
--------------------------- --------- --------- --------- --------- --------- --------- ---------
Total gain in period
(c+d+e) (f) (6.1) (5.5) (25.0) 3.7 3.8 6.0
--------------------------- --------- --------- --------- --------- --------- --------- ---------
Total return for
the period = (f/a) (5.4)% (4.9)% (23.1)% 3.4% 3.5% 5.2%
--------------------------- --------- --------- --------- --------- --------- --------- ---------
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