Target Healthcare REIT (THRL) H1 2026 earnings summary

Executive summary

• Achieved the highest half-year returns since 2013, with a 6.8% total accounting return for the six months to 31 December 2025, driven by robust portfolio management and asset disposals at a premium.

• Outperformed the MSCI UK Annual Healthcare Property Index by 93% cumulatively over 11 years.

• Portfolio comprised 86 high-quality care homes valued at ~£900m, with 5,885 beds, 32 tenants, nearly £60m rental income, 100% inflation-linked income, and a 26-year average lease length.

• Completed 10 disposals at an 11.7% premium and acquired three modern care homes plus a forward commitment for a new home, redeploying proceeds into new acquisitions.

• Recovered £1.9m in rent arrears and executed five re-tenantings with no incentives, receiving a £1.4m surrender premium.

Financial highlights

• Like-for-like rental income increased 1.8% over six months, driven by inflation-linked leases.

• EPRA EPS rose 8.5% to £0.034, with £0.0018 from non-recurring arrears recovery; dividend per share up 2.5% to £0.0302.

• EPRA NTA per share rose 4% to 119.4p, supported by property value uplifts and disposals at a premium.

• IFRS profit for the period was £47.0m, up 57% from the prior year.

• Adjusted EPRA cost ratio at 15.4% (12.7% unadjusted), with costs normalized after prior period one-offs.

Outlook and guidance

• Confident in growing annualized contracted rent (£59.5m at Dec 2025) as proceeds are redeployed and pipeline investments made.

• LTV expected to rise from 15% toward 25% as new assets are acquired and capital is redeployed.

• Pipeline of accretive opportunities exceeds available capital, with focus on high-quality, inflation-linked assets at blended net initial yields above 6%.

• Expectation of returning to 100% rent collection by year-end and maintaining near full rent collection.

• Sector outlook remains positive, underpinned by demographic trends and strong demand for modern care homes.