Transcript
Speaker: I'm Martin King, Property Analyst at Edison Investment Research, and I'm joined by Kenneth McKenzie, Chief Executive of Target Fund Managers, the ah the fund manager for Target Healthcare REIT.
Speaker: Welcome back, Kenneth. Good to see you, Martin. Excuse my croaky voice today. I seem to have got a bit of a croak this morning, but I'm delighted to speak with you.
Speaker: Okay, well, we can hear you. that Fine, that's great. um Kenneth, you that the company published its latest quarterly announcement a couple of days ago, and it's a familiar pattern, a very welcome familiar pattern of inflation-linked rent growth, asset management activity, driving earnings, and driving capital growth. It was 2.5% accounting total return in the period.
Speaker: And that makes around 12 percent for the year. And if you look over three years, it's around 34 percent. So that's pretty good. And I think the that the the the recent performance is even better if you think about the the drag from reinvesting the proceeds of last year's large portfolio sale.
Speaker: Can you talk more about how that is going, the the redeployment of the of the capital from that? yeah Yeah, 85% of the proceeds are now committed and they're committed through four standing assets and two forward funds. One of the forward funds actually completes in the next few weeks. So we're we're well on with the use of the proceeds from the sale and the overall results Martin really emanate from the the long stable nature of what we're trying to do in a sector that has excellent head tailwinds, not headwinds. As I said, asset management also had a a role to play. You've been very active, as always, on that front.
Speaker: Can you talk some more about what you've been doing and in recent months? Yes, you know, over the 13 years of the trust, we've always been active from an asset management point of view, a perhaps changing tenants, a finding a tenant that worked better in a particular area. And in the period under review, There was some fruits up from some of that in particular resulting from re-tenanting that we did probably two and a bit, three years ago.
Speaker: And a there was like a kind of trigger point in terms of the lease whereby the rental level would rise if they got to good rent covers at the level at which they were operating the home and they did that. And so we've had a nice little uplift on that.
Speaker: m Also during the period we sold the the one home that was still causing a little bit of trouble in terms of rent receipts and and we sold it at NAV. So yeah, always active. I think I've told you before Martin that we have four people who physically visit all of our homes. I was actually in a couple of them myself with one of the ladies 10 days ago and um From that a very a granular view that we have of the performance of a home and the performance of the carers and the management team in the home, we're able to come to a view as to what is the appropriate next step for that particular home. And we've done that quite a few times, as you say. And yeah ah I forgot to point out, Rind Collection has been running at a high level for for some time now, but you're now back...
Speaker: fully at 100%. That's right, we're now about at fully 100%, which is what we were, Martin, a pre-COVID, if you'll remember. and ah And of course, the other interesting thing about us as a real estate investment trust is that we have no voids whatsoever, never have had voids. So we've never had assets sitting empty, wondering who will get a tenant. we've always a we're We've never been in that situation. Kenneth, I talked about the strong accounting total return over the last three years, but the share price actually has done even better than that. It's risen around 60%. If you add in the dividends paid, then the shareholder total return is is around 90%. That's a fantastic performance.
Speaker: What can shareholders expect from here? You know, when we started this REIT 13 years ago, it was all about long-term performance, Martin, a predicated on really good stable income.
Speaker: And a that's that's really how it has worked out. We have this recurring income stream and that aligned with the ongoing increase in value of the underlying assets. are what enable total accounting returns and it's been something that we're thankful for to see the share price having recovered quite a bit in over this last year and obviously our hope and desire would be for more of the same going forward so that we can
Speaker: continue on the mission of a creating great great real estate for our residents and also providing long stable returns and a income and dividends and so on for our shareholders.
Speaker: And that capital redeployment isn't immediately coming through to earnings. So you've still got that to come through and also the further deployment. Yes, we have we we have some, as I say, we've bought four standing assets. so that rental is in the last quarter's results. But as you say, as we do more forward funds, we'll see these flow through to higher rental levels with all of the implications for that higher income levels.
Speaker: Well, thanks for joining us. It's been a ah great period for the company. Let's look forward to that continuing. Yeah, well, if we stay humble, we might be all right, Martin. Thanks very much. Thanks.
