Target Healthcare REIT Ltd (THRL) delivered strong absolute growth in FY22 and continued its record of positive NAV returns. However, with cash drag from slower than originally planned investment, and weak rent collection from a minority of homes, per share earnings and DPS cover declined. Although now fixed, higher interest rates will weigh on earnings and delay acquisitions, but Edison Group expects earnings growth and DPS cover to increase, supported by indexed rent growth and a recovery in rent collection. Target Healthcare REIT invests in modern, purpose-built residential care homes in the UK let on long leases to high-quality care providers.
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