Target Sustainability Repot

Sustainability in action

At Target Healthcare REIT, we believe that the provision of high-quality real estate is a key element in ensuring that residents can lead their lives in environments that are comfortable, homely and can support their care needs.

Our flagship REIT, Target Healthcare REIT plc, has published its fourth Sustainability Report, covering the year to 31 December 2025. It highlights how we continue to curate a portfolio with sector leading environmental and social credentials, as well as the continued progress we are making accelerating our green agenda as part of our 2040 net zero carbon target.

Recognised as the UK’s first social impact investment trust, ESG has been integral to our approach from day one. Our purpose is owning modern, fit-for-purpose real estate and accelerating the improvement in physical standards of UK care: better care home real estate results in positive social impact for residents, their carers and local communities.

Highlights from the report include:

• At the end of 2025, 42% of homes had onsite renewable energy generation and 63% had green leases, this has subsequently increased to 43% and 65% respectively
• PV panels installed at eight care homes, delivering meaningful reductions in energy consumption, carbon emissions and energy cost volatility
• Maintaining a portfolio with 100% of homes EPC A-B rated
• Reaching 100% en suite wet-rooms across the portfolio
• Inclusion into the 2026 Green Economy Mark, a LSEG initiative to recognise companies contributing to the growth of the global green economy
• On average the panels have generated approximately one third of the electrical energy consumed at each home, reducing carbon emissions by c. 50,000kg CO₂e in total for these five homes over 2025
• Net annual cost savings for operators has averaged around £10,000 per home
• A reduction in the operator’s exposure to energy price volatility
  
  
  The report demonstrates how a holistic and collaborative approach to responsible investment can deliver positive environmental outcomes alongside long-term social impact.
   
  Michael Brodtman, Target Healthcare REIT ESG Committee Chair: “Our purpose remains to accelerate the improvement in physical standards of UK care homes through long-term, responsible investment that delivers attractive returns to shareholders. Quality and sustainability have always been at the heart of what the Board and Investment Manager do.”

Targeting Tomorrow: our pathway to net zero carbon

Target Healthcare REIT's Net Zero Carbon Pathway sets out a clear, science-based roadmap to achieve net zero carbon emissions across firstly, our operations and then, secondly, our portfolio.
 
While Scope 1 and Scope 2 net zero carbon emissions were achieved in 2024, the focus now is on reducing property-related emissions through a series of practical, measurable actions.

• Energy efficiency measures, including thermal wrap installations in plant rooms of a further five homes and ongoing analysis of energy usage across the portfolio
• At the end of 2025 42% of homes had onsite renewable energy generation, including solar PV, solar thermal panels and heat pumps, this figure is now 43%
• At the end of 2025 33% of the portfolio's homes had either PV or solar thermal panels installed supporting our ambition to increase PV and solar thermal panel coverage towards 100% of the portfolio, this figure is now 34%
• We continue to monitor the development of net zero carbon technologies, including heat pumps, as we progress the phased replacement of gas boilers and associated infrastructure upgrades
• Strong building performance, with 100% of the portfolio EPC A or B rated and fully compliant with anticipated legislative standards
  
  

Importantly, our pathway includes an interim target for renewable energy generation at 50% of homes by 2030 and an ambitious but realistic science-based target to achieve net zero carbon by 2040 – 10 years ahead of the UK's 2050 target.

Investing in quality care environments  

The energy efficiency is a specific consideration in our investment analysis for acquisitions, developments and portfolio management decisions. In 2024, we implemented a project to start retrofitting PV panels to care homes in order to reduce carbon emissions and the tenant’s energy costs, whilst delivering an attractive return on the capital deployed.

The recent refurbishment of a care home demonstrated how we work with our tenants and stakeholders to ensure that our real estate maintains and delivers a positive social impact for residents.

Following a consensual retenanting, as a result of a change in strategy of the incumbent operator, we agreed an investment programme to improve environmental standards and enhance the living environment for residents.

Whilst the fundamentals of the home were sound, a comprehensive refurbishment programme was undertaken, including:

• Full redecoration throughout the home
• New furniture and furnishings
• Replacement carpets and flooring
• Improvements to communal spaces, helping to create a more homely environment for residents

The investment and vision ensured the building was transformed from being operated as a "functional" nursing home into becoming a genuine "home" that enhanced the living environment for residents and returned the property to its rightful place as a key facility for the local community.

Sustainability is not only about reducing carbon emissions. It is also about ensuring our homes remain high-quality environments that support residents' wellbeing over the long term. Through ongoing investment in our real estate, alongside initiatives such as energy efficiency improvements, renewable energy generation, green leases and our pathway to net zero carbon by 2040, we continue to deliver positive environmental and social outcomes across the portfolio.

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