Half year results for the six months ended 30 June 2023, and dividend declaration
The Board of Directors 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, today announces the Company’s half year results for the six months ended 30 June 2023 and declares the Company’s second quarter interim dividend.
Simon Laffin, Chairman of Impact Healthcare REIT plc, commented:
“We are continuing to deliver a resilient performance in a challenging economic environment. In the first half of the year, rent increases and a stable rental yield drove a 2.4% increase in like-for-like investment property value. As a result, Net Asset Value grew by 5.6% to £470.9 million. Our total accounting return for the period was 6.2%.
We maintained a strong balance sheet, with £250 million of committed debt facilities and a weighted average term of 6.8 years(1). Our drawn debt was £190.8 million, giving us a gross LTV of 28.5% and a net LTV of 27.6%.
The vast majority of our rent increases are capped at 4.0%. This has provided much needed respite to tenants, suffering general inflation of 9.3% and in many cases, even higher wage costs. Our tenant operators generally managed to increase fees, improved occupancy to 88.3%(2) and most benefited from low or zero leverage. As a result, our annual adjusted rent cover improved slightly to 1.8 times(3). The affordability of our rent to tenants, and indeed the affordability of care home fees to residents, are crucial to the continued successful provision of residential care. This in turn enables us to provide quality premises to tenants and long-term sustainable returns to shareholders.”
Financial Highlights
- Second quarter dividend declared of 1.6925p, in line with the 3.5% increase targeted for this year of 6.77 pence per share(4). This dividend is 122% covered by our EPRA EPS and 109% by adjusted EPS.
- Our total accounting return for the period to 30 June 2023 was 6.17% (six months only).
Good financial performance since 31 December 2022
- 12.2% increase in property investments5 independently valued at £638.2 million as at 30 June 2023.
- 2.4% increase in like-for-like portfolio value.
- 5.6% increase in total NAV to £470.9 million.
- 3.2% increase in NAV per share to 113.64 pence over the six-month period, reflecting shares issued to part fund the acquisition of six care homes.
Strong balance sheet at 30 June 2023
- £250.0 million committed bank facilities of which £190.8 million was drawn.
- 28.5% gross LTV (31 December 2022: 23.9%) and a net LTV of 27.6% (31 December 2022: 22.6%). Weighted average term of debt facilities (excluding options to extend) was 6.8 years1.
- 66% of our drawn debt facilities are fixed or hedged against interest rate rises.
- 4.85% average cost of drawn debt at 30 June 2023.
- £59.2 million of undrawn debt facilities and £22.1 million cash.
Driving the growth of our annual contracted rental income
- Acquired six high quality care homes on attractive terms and sold one, so that the Group now owns 140 properties with 7,725 beds(5).
- 4.0% increase in rent for 90 homes following rent reviews in the first half 2023.
- 11.6% increase to £48.1 million in contracted rent roll6, up from £43.1 million at 31 December 2022.
Operational highlights
- 1.8 times annual adjusted rent cover3 to 30 June 2023, similar to recent years and to before the pandemic.
- 98% collected of the rent due in the period with no voids. Firm action taken this year to replace our one tenant who got into significant difficulties, with positive early signs of improvement in these homes.
- 88.3%2 occupancy at the end of June 2023, up from 86.6% at the start of the period.
- £9.8 million of asset management projects underway in first half of 2023. 24 projects in the pipeline, with anticipated capital funding of £35 million over the next two to three years.
Developing plans to improve the social impact and environmental sustainability of our portfolio
- Target of net zero status by 2045 with an interim target to reduce like-for-like carbon emissions by 50% by 2030.
- Looking at refurbishing and recycling existing buildings to reduce carbon impact.
Dividend declaration
- The Company declares its second quarter dividend of 1.6925 pence per ordinary share. This dividend is for the period from 1 April 2023 to 30 June 2023 and is payable on 20 September 2023 to shareholders on the register on 18 August 2023. The ex-dividend date will be 17 August 2023. This dividend will be a property income distribution dividend (“PID”). This dividend is in line with the aggregate total dividend target of 6.77 pence per share4 for the year ending 31 December 2023.
HALF YEAR RESULTS PRESENTATION
The Company presentation for investors and analysts will take place at 10.00am (UK) today via a live webcast and conference call.
To access the live webcast, please register in advance here:
https://brrmedia.news/IHR_HY23
The live conference call dial-in is available using the below details:
Password to quote: Impact Healthcare Interim Results
Participants can type questions into the webcast question box or ask questions verbally via the conference call.
The recording of the results presentation will be available later in the day via the Company’s website: https://www.impactreit.uk/investors/reporting-centre/presentations/
FOR THE FULL RESULTS, PLEASE SEE THE ATTACHED PDF
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners LLP via Maitland/AMO
Andrew Cowley
Mahesh Patel
David Yaldron
Jefferies International Limited
Tom Yeadon, tyeadon@jefferies.com
Neil Winward, nwinward@jefferies.com
Ollie Nott, onott@jefferies.com
Tel: +4420 7029 8000
Winterflood Securities Limited
Neil Langford, neil.langford@winterflood.com
Joe Winkley, joe.winkley@winterflood.com
Tel: +4420 3100 0000
H/Advisors Maitland (Communications Adviser)
James Benjamin, 07747 113 930
Rachel Cohen, 020 7379 5151
impacthealth-maitland@h-advisors.global
The Company’s LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT plc is available at www.impactreit.uk.
NOTES:
Impact Healthcare REIT plc is a specialist and responsible owner of care homes and other healthcare properties across the UK. Elderly care is an essential service and demand for it is high and continues to grow as the UK’s population gets older. We work with our tenants so we can grow together and help them care for more people, while continuing to improve our homes for their residents.
We take a long-term view and look to generate secure and growing income. This has allowed us to provide our shareholders with attractive and rising dividends and the potential for capital growth.
The target total dividend for the year ending 31 December 2023 is 6.77 pence per share4, a 3.5% increase over the 6.54 pence in dividends paid 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.
Notes
1 This assumes the extensions of the NatWest facility have not been exercised, including these the weighted average term of debt facilities would be 7.2 years.
2 Excludes one new home in build-up and three turn-around assets which have not reached maturity.
3 Adjusted rent cover excludes seven turnaround homes which were re-tenanted in May 2023 and one new home in build-up. These were also excluded in the quoted comparative adjusted rent covers.
4 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.
5 This relates to the property portfolio along with property portfolios that have been invested in via loans to operators with an option for the Group to acquire. Bed numbers do not include those that are under construction.
6 Contracted rent includes all post-tax income from investment in properties, whether generated from rental income or post-tax interest income.
7 Including Croftwood and Minster, which are both part of the Minster Care Group, and Melrose Holdings Limited which is an affiliate of the Minister Care Group.
