Target Healthcare REIT LON:THRL, the listed specialist investor in modern, purpose-built UK care homes, has reported a solid set of full-year results for the 12 months to 30 June 2025, underscoring the resilience of its portfolio despite a challenging operating environment.
The group achieved a total accounting return of 9.3 per cent, compared with 11.8 per cent the previous year, continuing its record of outperforming the MSCI UK Annual Healthcare Property Index every year since its 2013 IPO. Net tangible assets (NTA) per share increased 3.7 per cent to 114.8 pence, while adjusted EPRA earnings per share were broadly stable at 6.08 pence.
The board declared a fully covered annual dividend of 5.884 pence, up 3.0 per cent on the prior year and covered 103 per cent by earnings. A further increase is targeted for FY2026, with a dividend of 6.032 pence per share, representing a 2.5 per cent rise.
Chair Alison Fyfe said the performance “shows the resilience of our business model,” noting that despite a “challenging backdrop,” the portfolio continued to generate stable returns supported by strong tenant trading and long leases.
Target Healthcare’s portfolio strength and rental growth
Target’s portfolio comprises 93 properties: 92 operational care homes and one pre-let site—leased to 34 tenants. The total portfolio value rose 2.4 per cent to £929.9 million, driven by like-for-like growth of 2.6 per cent. Contractual rent grew 4.0 per cent to £61.2 million per annum, reflecting rent reviews and strong trading across mature homes, where rent cover remained steady at 1.9x and occupancy around 86 per cent.
With a weighted average unexpired lease term of 25.9 years, one of the longest in the listed UK property sector, and rent collection of 97 per cent, the group maintains a defensive income profile. Fyfe said that two tenant issues which affected rent collection and costs during the year had been resolved after year-end.
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Following the reporting period, Target completed the £85.9 million disposal of nine care homes, representing an 11.6 per cent premium to their June 2025 carrying value and an implied net initial yield of 5.2 per cent. The sale reduced exposure to its largest tenant and demonstrated, the company said, “the realisable value of a representative cross-section of the portfolio.”
Proceeds to be redeployed into “earnings-enhancing acquisitions”
The group also refinanced £130 million of debt, resulting in an average cost of 4.3 per cent on drawn borrowings and extending its weighted average term to maturity to 5.9 years. Around 81 per cent of debt is now fully hedged against future rate rises until at least 2030. Net loan-to-value stood at 21.8 per cent, down from 22.5 per cent a year earlier.
Target continues to position itself as a responsible investor in the care home sector, highlighting progress in energy efficiency and quality standards. All assets are now EPC rated A or B, and every room across the portfolio offers en suite wet-room facilities, a feature available in only about a third of UK care homes.
Fyfe said demographic trends, particularly the ageing population, continued to provide a powerful structural tailwind for the sector. “Our portfolio remains future-proofed and best in class,” she said. “We are ready to act nimbly to take advantage of opportunities that uncertain market conditions may present.”
The company’s pipeline of new investment opportunities, offering an estimated blended yield of around 6 per cent, suggests management remains focused on steady, long-term growth.
At a time when many real estate sectors remain under pressure, Target Healthcare REIT’s combination of long leases, inflation-linked income, and strong ESG credentials has helped it maintain its reputation as a defensive play in UK property markets.
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