Resilient performance from our crucial social care infrastructure for vulnerable elderly people, aligned to favourable long-term market growth drivers
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, announces its annual results for the 12 months ended 31 December 2020.
Rupert Barclay, Chairman of Impact Healthcare REIT PLC, commented:
“The human cost of the pandemic has been foremost in our minds and we have looked to do everything we can to help protect the health and wellbeing of our tenants’ residents and their healthcare professionals. Despite these difficult conditions, the Group’s business model has proved resilient, as we have benefited from our deliberate approach to implementing our strategy since IPO.
Our portfolio provides crucial infrastructure supporting vulnerable elderly people across the UK and our tenants use our assets to provide an essential care service, demand for which is not directly correlated with economic conditions. This enabled them, despite the pandemic but with the benefit of grant income to offset incremental costs, to maintain robust rent cover throughout 2020. This in turn has allowed us to collect 100% of the rent due for the year, without putting undue stress on our tenants, and we were therefore able to meet our dividend target.
We remain well-capitalised and are confident that the fundamental drivers of our industry and business remain strong, even if the recovery from COVID-19 is slower than we would all like. We are positioned to deliver further portfolio diversification and sustainable growth that will generate attractive returns for shareholders. At the same time, we will continue to responsibly deliver value to our tenants, their residents and healthcare professionals, over the long term.”
The resilience of the business against the backdrop of COVID-19 enabled us to meet our dividend target for the year ended 31 December 2020 of 6.29 pence per share, contributing to a robust total return performance.
- While responsibly supporting our tenants and their residents through the COVID-19 pandemic dominated much of the year ended 31 December 2020, we continued to make further progress with implementing our sustainable growth strategy.
- 1.77x rent cover: the Group demonstrated its resilience during 2020, reflecting the strength of our partnerships with a diverse group of tenants, strong rent cover, robust lease structures and our healthy balance sheet.
- This resilience enabled us to collect 100% of rent due for the year, with no changes to any lease terms or payment schedules.
- 22 properties acquired with 1,513 beds for a total net consideration of £84.7 million.
- Committed to forward fund a further property with 94 beds. On completion, this will bring our total properties to 108 with 5,924 beds.
- Added three new tenants, giving us 12 tenants4 at the year end. All leases continue to be inflation-linked with upwards only rent reviews.
- Weighted average unexpired lease term (“WAULT”) of 20.0 years at 31 December 2020 (31 December 2019: 19.7 years).
- Rent reviews in the year added £0.54 million to contracted rent, representing a 2.3% increase on the associated portfolio.
- Grew the contracted rent roll by 33.7% to £30.9 million (31 December 2019: £23.1 million).
- Secured a £50 million revolving credit facility with HSBC on 6 April 2020, giving the Group total facilities of £125 million.
Supporting our stakeholders through COVID-19
- Throughout the COVID-19 pandemic, our top priority has been to help protect the wellbeing of the Group’s tenants, their residents and their healthcare professionals, as well as wider stakeholders.
- The need remains strong for good quality care from well maintained, fit for purpose care homes with strong infection controls in place. The Group’s tenants continue to provide an essential service to the communities in which they operate and are playing a critical role in helping to provide high-quality care to vulnerable elderly people during this pandemic.
Effectively managing sustainability issues is fundamental to long-term value creation and we made good progress this year. This included:
- publishing our environmental, social and governance (“ESG”) policy;
- publishing our EPRA sustainability report and achieving EPRA sBPR gold level compliance;
- evaluating Energy Performance Certificate (“EPC”) ratings and the underlying data across the portfolio;
- identifying opportunities to improve energy efficiency and EPC ratings; and
- enhancing the green credentials of our standard lease terms.
Post balance sheet highlights
- Acquired one further property with an existing tenant, taking our total properties owned to 109 and 5,975 beds. Contracted rent has grown to £31.4 million5.
1 Adjusted earnings per share reflects underlying cash earnings per share in the period. The adjustments made to EPS in arriving at EPRA and Adjusted EPS are set out in note 10 to the financial statements.
2 As at 31 December 2020.
3 The removal of amortisation of loan arrangement fees is a change made in the current year and the prior year adjusted earnings figure has been restated to include an adjustment for the amortisation of loan arrangement fees.
4 Minster and Croftwood (both subsidiaries of Minster Care Group), Careport, Prestige, Renaissance, Welford, Maria Mallaband Countrywide Group, NHS Cumbria, Optima, Holmes Care, Silverline and Electus Healthcare.
5 Includes forward-funded developments.
Alternative performance measures have been calculated in line with EPRA best practices recommendation.
For the full RNS please see the attached document.
For further information please contact:
Impact Health Partners LLP via Maitland/AMO
Winterﬂood Securities Limited
Tel: 020 3100 0000
RBC Capital Markets
Tel: 020 7653 4000
Maitland/AMO (Communications Adviser)
Tel: 020 7379 5151
The Company’s LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at www.impactreit.uk.
Impact Healthcare REIT plc is a real estate investment trust (“REIT”) which aims to provide shareholders with an attractive return, principally in the form of quarterly income distributions and with the potential for capital and income growth, through exposure to a diversified portfolio of UK healthcare real estate opportunities, in particular care homes for the elderly. The Group’s investment policy is to acquire, renovate, extend and redevelop high quality healthcare real estate assets in the UK and lease those assets primarily to healthcare operators providing residential healthcare services under full repairing and insuring leases.
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 2021 is 6.41 pence per share*, a 1.91% increase over the 6.29 pence in dividends paid or declared per ordinary share for FY 2020.
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.
* 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.
The Company will hold a presentation today at 9.00am for investors and analysts via a webcast and conference call.
For those who wish to access the live webcast, please register here:
For those who wish to access the live conference call, please contact Maitland/AMO at email@example.com or by telephone on +44 (0) 20 7379 5151.