Healthcare (care home) Reits
Posted: August 23rd, 2019, 7:49 pm
I have mixed feelings about these. First they provide me with a reasonable income and I obviously want that maximized. but I may have to purchase care from them and obviously I want to do that for the lowest price possible
There are two that I look at and hold (or not depending where they are on their annual SP walkabout)
~~ Impact Healthcare Reit (IHR) on a forward yield of 5.6%
~~ Target Healthcare Reit (THRL) also on a forward yield of 5.5%
So two recent announcements made me stop and think
First IHT announced they had bought two new care homes with 98 beds between them for £12.9 million (£131,000 per room) with an initial rent will be £950,000. That's about £10 k per room per year in rent and the tenant still has to 'maintain' the building' etc. Rent goes up each year. No wonder it's so expensive in a care home.
Secondly THRL also announced they had bought two new care homes for GBP18.6 million with 137 bedrooms between them or about £136,000 per room. They don't say what the rent is but of one they say: "The home is operationally mature and its current trading performance is delivering a strong rent cover in excess of 2.0x".
Now just what does that word "cover" mean. Is it good for investors?
There are two that I look at and hold (or not depending where they are on their annual SP walkabout)
~~ Impact Healthcare Reit (IHR) on a forward yield of 5.6%
~~ Target Healthcare Reit (THRL) also on a forward yield of 5.5%
So two recent announcements made me stop and think
First IHT announced they had bought two new care homes with 98 beds between them for £12.9 million (£131,000 per room) with an initial rent will be £950,000. That's about £10 k per room per year in rent and the tenant still has to 'maintain' the building' etc. Rent goes up each year. No wonder it's so expensive in a care home.
Secondly THRL also announced they had bought two new care homes for GBP18.6 million with 137 bedrooms between them or about £136,000 per room. They don't say what the rent is but of one they say: "The home is operationally mature and its current trading performance is delivering a strong rent cover in excess of 2.0x".
Now just what does that word "cover" mean. Is it good for investors?