Investment case

Our aim is to provide shareholders with an attractive return, by investing in a diversified portfolio of UK healthcare real estate assets, in particular residential and nursing care homes.

This return will primarily be in the form of quarterly dividends. High-quality and financially sound tenants, long leases and inflation-linked rent reviews give us secure and stable income, which underpins our dividend payments. Our ability to add value through selective acquisitions and asset management offers the potential for income and capital growth for shareholders.

We and our Investment Manager believe that residential healthcare is a significant investment opportunity in the UK. A growing and ageing population is increasing demand for care, while the supply of suitable assets for providing that care is falling. As a well-capitalised landlord with an experienced Investment Manager, we should be well positioned to deliver attractive returns to investors, while providing stability to residents and a commitment to enhance their homes wherever possible.

1. A large and growing market

Each year, £17.3 billion pounds is spent on providing residential care for elderly people in the UK, which is approximately 0.8% of UK GDP. It is critical social care infrastructure and the value of the market is expected to grow as the population ages. Demand for care is non-cyclical and hence more predictable, enabling us to plan for the longer term.

2. Risk-adjusted returns

We consider risk at different levels: ensuring balance sheet strength with modest debt; carefully selecting tenants and monitoring their performance; maintaining rent cover as we add tenants; managing assets and the overall portfolio to add value; and focusing on our long-term sustainability, both environmental and economic. This allows us to generate returns with lower risk.

3. Experienced and strategic management team

We benefit from the knowledge, expertise and relationships of our Investment Manager. They allow us to source and negotiate deals off market, which offer shareholders good value and give vendors the certain execution they are looking for. One of the priorities of our Investment Manager is to establish and develop long-term partnerships with our tenants.

4. Strong cash generation and dividend growth

Our portfolio generates a high-quality, sustainable and growing income stream. This allows us to target a progressive dividend policy. We aim to grow shareholder returns through dividend increases and capital appreciation. Our strong lease structures offer us 100% inflation-linked income with low volatility.

5. Adding value through asset management

Our portfolio is carefully constructed to combine core high-quality and resilient assets which generate predictable income and assets where there is potential to add value through asset management initiatives. Asset management benefits our shareholders, our tenants and the residents in our homes.

6. Positioned for further accretive growth

At the end of 2020 we owned just over 1% of the operational beds in the highly-fragmented UK elderly care market. Since early 2018, we have been growing our portfolio, adding ten new tenants and acquiring homes which are accretive to our portfolio, while exercising strong capital discipline.