Our strategy

Our strategy is to identify new healthcare properties and tenants who will diversify our portfolio and deliver strong economies of scale, with efficient operations alongside a good quality of care. We look for investments that, under our ownership, will provide value for money to our tenants’ customers and residents, while delivering attractive and stable returns to our investors for the long term.

Our objectives

We aim to provide shareholders with attractive long term and sustainable returns, primarily in the form of quarterly dividends. These dividends are underpinned by our secure and stable income, which comes from two tenants within a group that is financially sound and committed to providing high standards of care. We benefit from long leases with inflation-linked annual rent reviews. Through active asset management we also aim to deliver growth in net asset values over the medium term.

Our investment policy

Our investment policy is to acquire, lease, renovate, extend and redevelop high-quality healthcare real estate assets in the UK, and to lease those assets, under full repairing and insuring leases, primarily to operators providing residential healthcare services. We complied with this policy during the period and met our investment objectives, as set out below.

The investment policy set out in the prospectus allows us to invest in a range of healthcare real estate assets, in addition to residential care homes. We have not yet sought to invest in any of these alternative assets.

Our investment policy also allows us to generate up to 15% of our gross income from non-rental revenue or from profit-related payments from tenants. We did not generate any income from these sources during the period.

Investment policies
  • Our target dividend for the first 12 months from admission equates to a yield of 6% per annum on the issue price, on an ungeared basis.
  • We aim for our dividends to be covered by ordinary earnings.†
  • We have a conservative gearing policy. Borrowings as a percentage of our gross assets may not exceed 35% LTV at the time of drawdown.
  • After acquiring the Seed Portfolio and some of the optional assets, we targeted annual rent receivable from our initial tenants of between £11.0 million and £11.6 million.
  • Minimise cash drag.†
  • We manage risk by owning a diversified portfolio, with no single asset exceeding 15% of the Group’s total gross asset value.
  • We also manage risk by limiting our exposure to our tenants’ customers. No single customer paying for care provided in our assets can account for more than 15% of our tenants’ aggregate revenues.
  • We grant leases that are linked to the Retail Prices Index (RPI), have an unexpired term of at least 20 years and are not subject to break clauses. We seek to amend any leases we acquire to obtain similar terms.
  • We will not speculatively develop assets, which means we will not develop a property which has not been leased or pre-leased.
  • We may invest in forward funding agreements or forward commitments to pre-let developments, where we will own the completed asset.
† These were not defined as investment policies at the time of IPO but have since been agreed by the board as appropriate policies for the Group

 

interior-view-of-freeland-house

Freeland House, Oxfordshire, one of the 56 care homes that formed the Seed Portfolio acquired in May 2017