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08 March 2021

Target Healthcare Benefits from COVID Security

In one of the first measures of England’s lockdown easing schedule, the Government announced that from today (8th March), care home residents in England will be allowed one regular visitor. While this visitor will have to be tested beforehand and wear PPE, they will be allowed to meet indoors and even hold hands, providing many with the first physical contact with someone outside their household in months. This will be a much-welcomed move for those care home residents and their loved ones, with stringent rules around visitors leaving many with a lack of meaningful communication with close members of their family.

The COVID-19 pandemic has undoubtedly increased the need for high-quality care facilities for many in the elderly population, especially those with long-term illnesses, with those in the 80+ age category most at risk of death from Coronavirus.

While it has been a tough period for care home providers, Target has remained resilient with occupancy rates falling just 5% from 90% in December last year to 85% in September 2020. This resilience has likely been aided by Target’s high-quality accommodation, with the majority of residents having access to en-suites, high-quality amenities and trained staff. In Target’s care homes, COVID-19 case rates have been relatively low, with just 3.2% of homes reporting cases of the virus during the late April peak last year and 2.4% as of January 2021. This is particularly important given the at-risk nature of its residents and duty of care that their families place on the company.

The vaccine roll out across the group has also been swift. In just 42 days between 9th December and 20th January, 86% of Target’s residents were vaccinated against COVID-19, with the firm predicting close to 100% rollout soon after. This has meant that low infection rates and high occupancy rates have kept rent collections high, with rental cover of its tenants also stable and at a healthy level of 1.6x.

While occupancy and rent collection rates have both remained fairly resilient, we would hope to see a return to pre-pandemic levels in late 2021/early 2022. Now that the vast majority of the elderly community are vaccinated, we would expect to see a larger proportion of families be more comfortable with the reduced risk of infection and, by association, death, with more consistent and personal visiting hours also encouraging for loved ones looking to help provide their elderly relatives with stable and professional care.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Target Healthcare Benefits from COVID Security
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