Target Healthcare REIT Posts 12% Annual Return as Earnings Rise

Target Healthcare REIT reported a 12% total accounting return for the year ended June 30, 2026, its strongest since its 2013 listing. Adjusted earnings per share rose 7.6% to 6.54 pence, the UK care-home landlord said in annual results published September 22.

The return combines growth in net tangible assets with dividends paid. Net tangible assets per share climbed 6.4% to 122.1 pence, while the annual dividend rose 2.5% to 6.032 pence. Earnings covered that payout by 108%.

The company’s 87-property portfolio was valued at £924.1 million. Like-for-like property values increased 4.9%, mainly reflecting rent reviews linked to inflation, while contractual rents grew 3.7%. Adjusted earnings reached £40.6 million, up from £37.7 million.

Target sold 11 care homes for £97 million, 11% above their carrying value. It reinvested £73 million in four operating homes and two development-related investments, at yields above 6%, according to the results. The sales also helped reduce exposure to its largest tenant.

Care-home operations showed steady performance: mature properties maintained rent cover of 1.9 times, and resident occupancy held near 85%. Rent collection averaged 99% during the year and returned to 100% by year-end, after the company recovered £1.9 million in arrears tied to three re-tenanted homes.

The balance sheet also had room for further investment. Net loan-to-value fell to 16.1% from 21.8% a year earlier, and the £200 million of drawn debt carried an average 3.89% cost, hedged against rate increases until at least September 2030.

For the current financial year, the board is targeting a 3% dividend increase to 6.212 pence per share. That planned rise is below the portfolio’s rent growth, leaving the company room to strengthen dividend coverage as it pursues a pipeline of care-home investments.