Property investment trusts focusing on the healthcare sector have seen strong returns over the past year, latest figures have suggested.
The specialist Target Healthcare real estate investment trust, which focuses on local authority and self-funded residents, has seen an increase in its net asset value as well as rising dividends.
Its report and accounts over the year end to 30 June 2015 revealed that it has seen a 3.4 per cent rise in NAV to more than 10.3 per cent total return, with strong dividends of 97.9 pence per share over the year.
In the report and accounts, the trust’s board mentioned a political headwind in that the new living wage, which will have a direct effect on the costs of care home staff, will increase the cost of care homes and could “almost certainly increase this disproportionately for self-funded residents”.
However, it believes the diversification of the portfolio will “provide a good investment strategy as our tenants face these uncertain times.”
Analyst View
Jamie Lowe, head of product for Investec Bank, said: “The care sector in the UK is facing headwinds from the introduction of the living wage, which will increase the cost of providing care; uncertainty over government funding of care; and a stronger regulatory regime. That said, the underlying fundamentals of population demographics and supply/demand imbalance of quality UK care home stock are compelling.”
