TIDMIHR
RNS Number : 3297O
Impact Healthcare REIT PLC
31 January 2023
The information contained in this announcement is restricted and
is not for publication, release or distribution in the United
States of America, any member state of the European Economic Area,
Canada, Australia, Japan or the Republic of South Africa.
This Announcement contains inside information for the purposes
of Article 7 of the UK version of EU Regulation 596/2014 (as
incorporated into UK law by virtue of the European Union
(Withdrawal) Act 2018, and as subsequently amended. Upon the
publication of this Announcement, this inside information is now
considered to be in the public domain.
31 Jan 2023
Impact Healthcare REIT plc
("Impact" or the "Company" or, together with its subsidiaries,
the "Group")
NET ASSET VALUE, DIVID DECLARATION, 2023 DIVID TARGET AND
PORTFOLIO AND FINANCE UPDATE
The board of Directors (the "Board") of Impact Healthcare REIT
plc (ticker: IHR), the real estate investment trust which gives
investors exposure to a diversified portfolio of UK healthcare real
estate assets, in particular care homes, is pleased to provide the
following business and trading update for the quarter to 31
December 2022.
NET ASSET VALUE
-- Unaudited net asset value ("NAV") as at 31 December 2022 was
GBP445.9 million, 110.17 pence per share. This represents a
reduction of 5.5%, or GBP26.1 million (6.45 pence per share),
against the 30 September 2022 NAV of GBP472.0 million (116.62 pence
per share).
o The investment portfolio has been independently valued by the
Group's external valuer Cushman & Wakefield. The Group's EPRA
"topped up" Net Initial Yield at 31 December 2022 is 6.98%, an
upward movement of 30 basis points over the quarter as a result of
changes in yields across the real estate sector driven, in large
part, by increases in interest rates during 2022.
Pence per
share
Unaudited NAV per share as at 30 September
2022 116.62
Revaluation gains/(losses) on investment
properties(1) (6.42)
Revaluation gain/(losses) on interest rate
caps (0.07)
Net remaining contribution to reserves 1.68
Quarterly dividend for the period to 30
September 2022 (1.64)
Unaudited NAV per share as at 31 December
2022 110.17
--------------------------------------------- ----------
Percentage change in quarter (5.5)%
--------------------------------------------- ----------
-- The NAV attributable to the ordinary shares of the Company is
calculated under International Financial Reporting Standards
("IFRS") and incorporates the independent portfolio valuation at 31
December 2022 and net income for the period. EPRA NTA as at 31
December 2022 was 110.08 pence per share (30 September 2022: 116.46
pence per share) and excludes the fair value of derivatives.
UNAUDITED TOTAL ACCOUNTING RETURN, DIVID DECLARATION AND 2023
DIVID TARGET
-- The unaudited NAV total return for the year was 3.77%,
comprising dividends paid in the year of 6.508 pence per share and
a 2.26 pence per share reduction in NAV.
-- The Board remains confident in our underlying strategy and
that the business model will continue to deliver attractive returns
to investors.
-- The Board has today declared the Company's fourth interim
dividend for the year ended 31 December 2022 of 1.635 pence per
ordinary share, payable on 24 February 2023 to shareholders on the
register on 10 February 2023. The ex-dividend date will be 9
February 2023. This dividend will be paid as a Property Income
Distribution ("PID"). This delivers on the Company's annual
dividend target of 6.54 pence per share for the year ended 31
December 2022.
o The Company continues to deliver a fully cash covered dividend
from both unaudited EPRA and Adjusted Earnings per share, with
dividend cover of 128% and 108% from EPRA and Adjusted Earnings,
respectively, in the year to 31 December 2022(2) .
-- In line with the Company's progressive dividend policy, under
which it seeks to grow its target dividend in line with the
inflation-linked rental uplifts received by the Group under the
terms of the rent review provisions contained in the Group's leases
in the prior financial year, t he target dividend for the year to
31 December 2023 will increase by 3.53% to 6.77 pence per share(3)
. The annualised average uplift was 4.1%, of which, 3.53% has been
received in cash in the year.
PROPERTY VALUATION
-- The Group's property portfolio ("Portfolio") was
independently valued at GBP532.5 million as at 31 December 2022
(valuation as at 30 September 2022: GBP543.0 million) . This
represents a 4.0% or GBP21.6 million decrease in value on a
like-for-like basis in the quarter and a net decrease of 1.9% over
the quarter including the acquisition of two homes and a disposal.
The key movements included:
o 16 rent reviews completed in the quarter at an average uplift
of 4% per annum in line with the rental increase cap on these
leases, contributing an extra GBP0.2 million to contracted
rent.
o The like-for-like movement in value was primarily driven by
the shift in market yields partially offset by the increased rent
from the 16 rent reviews outlined above. The EPRA 'topped up' net
initial yield moved out 30 basis points to 6.98% as at 31 December
2022 (30 September 2022: 6.68%) and reflects the independent
valuation of our portfolio with the outward movement reflecting a
sector wide change in yields .
o In addition, a further GBP1.0 million was invested in the
quarter on asset management activity, primarily on the
refurbishment at Fairview with our operator Welford.
o GBP13.6 million related to the acquisition of two care homes
in the southeast with Belmont healthcare.
o The sale of Attlee, a 68-bed care home in Wakefield, for
GBP2.65 million, which was 4% above its 30 June 2022 book value. As
part of our active portfolio management strategy, we are looking at
opportunities to dispose of some further care homes which are
classified as non-core.
-- In addition, our investment in a portfolio of 12 care homes
operated by Holmes group, which we invested in by way of a loan,
was independently valued at GBP36.3 million (30 September 2022:
GBP38.1 million) a 4.7% reduction of GBP1.8 million, similarly
reflecting the upward shift in valuations across the sector.
PORTFOLIO UPDATE
-- Rent cover across our Portfolio remains strong and was just
over 1.8x on average for the 12 months to 30 September 2022, and
1.9x for the quarter to the end of September 2022. Tenants'
detailed operational performance reporting for the quarter to
December will be received in February 2023.
-- Occupancy at 30 December 2022 was 86.6%, down 0.7% on 30
September 2022 (87.3%), but in line with expected seasonal
fluctuations over the Christmas and New Year holiday period.
Occupancy has started to recover in January 2023.
-- Contracted rent remained flat at GBP43.1 million(4) at the
year-end (at 30 September 2022: GBP43.2 million) with the increase
from 16 rent reviews offsetting the lost rent from the disposal of
one care home. Following the year-end, with the investment in the
six care homes in January 2023, contracted rent has risen to
GBP47.0 million.
-- At 31 December 2022, the Portfolio comprised 135 healthcare
properties(5) , of which 133 are care homes managed by 13
tenants(6) either by way of a loan with an option to purchase and
lease on our standard terms (12 homes), or on fixed-term leases of
20 to 35 years (no break clauses), subject to annual upward-only
Retail Price Index-linked rent reviews (with a floor and cap at 2%
p.a. and 4% p.a., respectively on 99 leases, and 1% p.a. and 5%
p.a. on nine). In addition, the Group owns two healthcare
facilities leased to the NHS with an annual CPI uplift. In total,
the Group had 14 tenants(6) across its Portfolio.
-- Weighted average unexpired lease term across the Portfolio of
19.7 years as at 31 December 2022.
-- The Group charges rent quarterly or monthly in advance and
has received 100% of rent payments due for the quarter to 31
December 2022. For the quarter to 31 March 2023, the Group has
currently received 97% of rent due, including 1% from rent
deposits. The overdue rent (GBP0.4 million) is owed by a single
tenant, with whom the Investment Manager is in active discussions
regarding rental payments.
FINANCING
-- The Group's gross loan to value ("LTV") ratio was 23.9% as at
31 December 2022 (30 September 2022: 21.4%) following the drawdown
of GBP10 million under its existing revolving credit facilities.
The Group has maintained a healthy level of cash reserves, which
stood at GBP22.5 million at the quarter end.
-- In the quarter, the Group increased its revolving credit
facility ("RCF") with HSBC to GBP75 million and increased its RCF
with Virgin Money from GBP25 million to GBP50 million and extended
the maturity to 2029. The Group also cancelled the GBP15 million
RCF with Metro. The Group has increased the available debt from
GBP206 million to GBP241 million and the weighted average term of
debt from 6.2 years to 6.9 years, with lower margins over
SONIA.
-- Shortly after the year end, the Group completed on an
investment in six care homes for GBP56 million and drew a further
GBP45 million from banking facilities (with the balance paid for
through a share issue). As a result, the Group's drawn debt
increased to GBP187 million with a gross LTV of 28.7% (7) . The
Group secured a further GBP50 million interest rate cap at a cost
of GBP1.5 million, which caps SONIA at 3.0% for two years.. The
Group has now hedged the interest rates on 80% (GBP150 million) of
drawn debt. The current average cost of drawn debt, including
hedging and fixed rate borrowings, is 3.86%.
Summary balance sheet (unaudited)
Dec-22 Sep-22 Dec-21
GBP'm GBP'm GBP'm
--------------------------------- -------- -------- --------
Property portfolio* 532.5 543.0 459.4
Property Investments via
loans* 36.3 38.1 37.5
Cash 22.5 23.2 13.3
Other net assets/(liabilities)* (3.2) (1.7) (1.5)
Borrowings (142.3) (130.6) (114.5)
--------------------------------- -------- -------- --------
Net assets 445.9 472.0 394.2
--------------------------------- -------- -------- --------
NAV per share (pence) 110.17 116.62 112.43
* Properties within the portfolio and Property Investments via
loans are stated at the market value provided by the external
valuer and excludes the IFRS effects of guaranteed rent reviews and
initial lease rental payments.
Notes:
(1) Includes investment in properties directly and by way of
loans.
(2) Based on weighted average shares for the year. This does not
take into consideration the incremental shares issued on 11 January
2023.
(3) This is a target only and not a profit forecast. There can
be no assurance that the target will be met and it should not be
taken as an indicator of the Company's expected or actual
results.
(4) Contracted rent includes all post tax income from investment
in properties, whether generated from rental income or post tax
interest income .
(5) Includes exchanged and under construction assets.
(6) Belmont, Careport, Carlton Hall, Electus Healthcare, Holmes
Care, Maria Mallaband Countrywide Group, Minster and Croftwood
(both subsidiaries of Minster Care Group), NHS Cumbria, Optima,
Prestige, Renaissance, Silverline and Welford.
(7) Current debt drawn, divided by Gross Assets as at 31
December 2022 plus acquisitions at cost completed since 31 December
2022.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners Via H/Advisors
LLP Maitland
Andrew Cowley
----------------------------------------- ---------------
Mahesh Patel
----------------------------------------- ---------------
David Yaldron
----------------------------------------- ---------------
Jefferies International +44 20 7029
Limited 8000
---------------
Tom Yeadon tyeadon@jefferies.com
----------------------------------------- ---------------
Ollie Nott onott@jefferies.com
----------------------------------------- ---------------
Winterflood Securities +44 20 3100
Limited 0000
---------------
Neil Langford neil.langford@winterflood.com
----------------------------------------- ---------------
Joe Winkley joe.winkley@winterflood.com
----------------------------------------- ---------------
H/Advisors Maitland +44 7747 113
(Communications advisor) 930
---------------
James Benjamin impacthealth-maitland@h-advisors.global
----------------------------------------- ---------------
Alistair de Kare-Silver
---------------
The Company's LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at
www.impactreit.uk .
NOTES:
Impact Healthcare REIT plc acquires, renovates, extends and
redevelops high quality healthcare real estate assets in the UK and
lets these assets on long-term full repairing and insuring leases
to high-quality established healthcare operators which offer good
quality care, under leases which provide the Company with
attractive levels of rent cover .
The Company aims to provide shareholders with an attractive
sustainable return, principally in the form of quarterly income
distributions and with the potential for capital and income growth,
through exposure to a diversified and resilient portfolio of UK
healthcare real estate assets, in particular care homes for the
elderly.
The Company has a progressive dividend policy with a target to
grow its annual aggregate dividend in line with the
inflation-linked rental uplifts received by the Group under the
terms of the rent review provisions contained in the Group's leases
in the prior financial year.
On this basis, the target total dividend for the year ending 31
December 2023 is 6.77 pence per share (3) , a 3.53% increase over
the 6.54 pence in dividends paid or declared per ordinary share for
the year ended 31 December 2022.
The Group's Ordinary Shares were admitted to trading on the main
market of the London Stock Exchange, premium segment, on 8 February
2019. The Company is a constituent of the FTSE EPRA/NAREIT
index.
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