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 audited results for the 12 months ended 31 December 2019.
Please see the attached document for the full RNS release.
* 2017 – Period from the Company’s IPO on 7 March 2017 to 31 December 2017
¹ Adjusted earnings 5.10p per share reflects underlying cash earnings per share in the year. The adjustments made to EPS in arriving at EPRA and Adjusted EPS are set out in note 10 of the Group Financial Statements
² Annualised for 2017
- This was the first year of implementing our progressive dividend policy, under which we aim to grow the target dividend in line with the inflation-linked rental uplifts received in the previous year.
- Paid four dividends of 1.5425p each in relation to 2019, thereby meeting our target for the year of 6.17p per share, an increase of 2.83% on the 6.0p paid in respect of 2018.
- Dividends 112.6% covered by our EPRA earnings per share, which increased 7.4% to 6.95p (2018: 6.47p).
- Portfolio valuation increased by 42.4% to £318.8 million as at 31 December 2019 (as at 31 December 2018: £223.8 million), reflecting £73.8 million of acquisitions, £7.2 million invested in capital improvements and a value uplift of £13.9 million. The value uplift was driven by rent increases and the Group’s investment in capital improvements.
- NAV per share increased 3.5% to 106.81p (31 December 2018: 103.18p).
- NAV total return for the period of 9.46%, composed of a dividend paid in the period of 6.13p per share and 3.63p per share growth in NAV.
- Delivered a 59.9% increase in profit before tax to £26.3 million (31 December 2018: £16.5 million).
- Our shares were admitted to the premium listing segment of the Official List and to trading on the premium segment of the main market of the London Stock Exchange from February 2019 and we were included in the FTSE EPRA/NAREIT Global Real Estate Index Series from the end of June.
Operational highlights
- Acquired 14 properties with 757 beds in 2019. At the year end, the portfolio comprised 86 properties with 4,274 registered beds, let to nine tenants1.
- Adding three new tenants increasing the total number of tenants to nine1. All leases continue to be inflation-linked with upwards only rent reviews.
- Weighted average unexpired lease term (“WAULT”) of 19.7 years at 31 December 2019 (31 December 2018: 19.5 years).
- Rent reviews in the year added £0.41 million to contracted rent, representing a 2.3% increase on the associated portfolio.
- Grew the contracted rent roll by 30.1% to £23.1 million (31 December 2018: £17.8 million).
- Two equity raises gave proceeds of £135 million. A further £25 million debt facility was also secured.
¹ Including Croftwood and Minster, which are both part of the Minster Care Group.
Post balance sheet highlights
- Exchanged contracts to acquire for £68.5 million of capital 17 care homes with a total of 1,194 beds. The acquisition of eight of these homes have completed, with an average yield of 7.5%.
- Agreed new leases with two new tenants, Holmes Care and Silverline Care. The new leases have fixed terms of 25 years and annual inflation-linked adjustments.
- New transactions increase contracted rent roll on completion by 25.5% (£5.9 million) to £29.0 million.
- 170 beds of asset management: Completed projects added 76 new beds at Freeland House and Diamond House and entered into a forward funding agreement for the development of a new 94-bed care home in Hartlepool.
- Secured a new £50 million revolving credit facility with HSBC.
COVID-19
As the quarter unfolded, the COVID-19 virus evolved from a potential threat to the full-blown pandemic that we are in the midst of. We believe that the Group has good resilience in the face of this crisis which comes from the satisfactory operational and financial position of our tenants and the healthy financial position of the Group.
The Group’s tenants provide an essential service to the communities in which they operate and will play a critical role in helping to provide care to vulnerable elderly people during the COVID-19 pandemic. Our top priority remains the health, welfare and safety of the Group’s tenants, care home residents, care professionals and wider stakeholders.
Up to the date of the publication of this report, there had been no direct effect on our tenants measured by occupancy at their homes, which the Investment Manager is now monitoring on a weekly basis. The Group’s tenants have a strong level of rent cover, with an average of 1.8 times rent cover across Impact’s portfolio in the year to 31 December 2019. They have limited debt in their businesses and all care home rents due to 30 June have been paid to the Group.
The Group is in a healthy financial position. We have deliberately maintained low gearing with a loan to value (“LTV”) ratio of 6.8% at 31 December 2019 rising to a maximum of 18% if all the post balance sheet transactions mentioned above are completed. The Group does not have to refinance any debt before June 2023 and has £110 million of cash and available undrawn facilities against a maximum of £62 million of commitments to acquisitions, asset management, and potential deferred payments.
Rupert Barclay, Chairman of Impact Healthcare REIT PLC, commented:
“We are a long-term business and we do not expect the fundamentals of our industry to change. The provision of residential care for the elderly is an essential service, and can be critical in reducing pressure on healthcare provided by the NHS, particularly at times of crisis. There is an imbalance between demand for care and the supply of beds creating a need for permanent capital to support the operations and growth of capable tenants and we are well-placed to provide that capital.
However, the outcomes of the COVID-19 crisis are uncertain and although we enter this period well positioned, with tenants with a current high level of rent cover and little debt on their balance sheets, we cannot rule out the possibility of one or more of our tenants defaulting. We believe the strength of our balance sheet will enable us to withstand the potential effects of this and to come though this period in a position to grow and thrive in the medium and longer term.”
For further information please contact:
Impact Health Partners LLP via Maitland/AMO
Mahesh Patel
Andrew Cowley
Winterflood Securities Limited
Joe Winkley
Neil Langford
Tel: 020 3100 0000
RBC Capital Markets
Rupert Walford
Matthew Coakes
Tel: 020 7653 4000
Maitland/AMO (Communications Adviser)
James Benjamin
Tel: 020 7379 5151
Email: impacthealth-maitland@maitland.co.uk
The Company’s LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at www.impactreit.uk.
NOTES:
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.
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.
The Company presentation of its full year results for investors and analysts will take place via a webcast and conference call at 9.00am on the day.
For those who wish to access the live conference call, please contact Maitland/AMO at impacthealth-maitland@maitland.co.uk or by telephone on +44 (0) 20 7379 5151.
The recording of the webcast/conference call will also be made available later in the day via the Company website: http://www.impactreit.uk/documents
The Annual Report and Accounts will today be available on the Company’s website at www.impactreit.uk. In accordance with Listing Rule 9.6.1, copies of these documents will also be submitted today to the UK Listing Authority via the National Storage Mechanism and will be available for viewing shortly at www.morningstar.co.uk/uk/NSM.
