Target Healthcare REIT enters FTSE 250

Zina Fragkiadaki
June 21, 2022

Following the quarterly FTSE index series review, care homes investor Target Healthcare REIT has entered the FTSE 250, a capitalisation-weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange. HealthInvestor caught up with Kenneth MacKenzie, Target’s founder and chief executive, to find out more.

Target’s portfolio market value has increased by roughly £215 million, or 31%, to £900 million compared to June 2021.

The market cap of the REIT has been largely stable since its £125 million fundraising in September 2021, MacKenzie explained adding that it’s probably more about other companies having their market caps drop rather than Target having significant growth.

“Since 2013 when we went public, we’ve been on a steady trajectory of adding one-by-one modern purpose-built homes. Target really tries to be in the vanguard of homes that have great ESG credentials and are modern and purpose-built.”

MacKenzie also underlined the importance of keeping Target’s underlying tenants profitable in times of inflation and ever-higher interest rates

He continued: “The E bit of ESG is very good and we perform well on governance because we’re following all the best practice of the Financial Conduct Authority. Our borrowing is around 20%. And during the last couple of years, we’ve fixed our long-term debt. So that’s been really helpful as interest rates are changing. We’ve also been adding a diversity of income sources, because we do think that there is risk in the sector. Today, we have 35 different tenants and continue to grow slowly.”

Asked how the future for Target will look, he said: “We see ourselves continuing on a gradual path. Obtaining properties that have sustainable rents are really important in this market. We will continue to add one, two or three homes every now and then. But we don’t have a target. Target has the capital to grow its portfolio but it always needs to be capital that makes sense for the overall mission as a business.”

Target has 101 homes in its portfolio today.

Target Healthcare REIT’s share price is trading at 113p at the time of writing.

Merchants trust, run by Allianz Global Investors, and the Supermarket Income REIT also entered the FTSE 250 following the quarterly FTSE index series review.

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