Impact Healthcare - Q4 2022 NAV, Dividend Declaration and Update
31/01/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230131:nRSe3297Oa&default-theme=true
RNS Number : 3297O Impact Healthcare REIT PLC 31 January 2023
The information contained in this announcement is restricted and is not for
publication, release or distribution in the United States of America, any
member state of the European Economic Area, Canada, Australia, Japan or the
Republic of South Africa.
This Announcement contains inside information for the purposes of Article 7 of
the UK version of EU Regulation 596/2014 (as incorporated into UK law by
virtue of the European Union (Withdrawal) Act 2018, and as subsequently
amended. Upon the publication of this Announcement, this inside information is
now considered to be in the public domain.
31 Jan 2023
Impact Healthcare REIT plc
("Impact" or the "Company" or, together with its subsidiaries, the "Group")
NET ASSET VALUE, DIVIDEND DECLARATION, 2023 DIVIDEND TARGET AND PORTFOLIO AND
FINANCE UPDATE
The board of Directors (the "Board") 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, is pleased to provide the following business and trading update for the
quarter to 31 December 2022.
NET ASSET VALUE
· Unaudited net asset value ("NAV") as at 31 December 2022 was
£445.9 million, 110.17 pence per share. This represents a reduction of 5.5%,
or £26.1 million (6.45 pence per share), against the 30 September 2022 NAV of
£472.0 million (116.62 pence per share).
o The investment portfolio has been independently valued by the Group's
external valuer Cushman & Wakefield. The Group's EPRA "topped up" Net
Initial Yield at 31 December 2022 is 6.98%, an upward movement of 30 basis
points over the quarter as a result of changes in yields across the real
estate sector driven, in large part, by increases in interest rates during
2022.
Pence per share
Unaudited NAV per share as at 30 September 2022 116.62
Revaluation gains/(losses) on investment properties((1)) (6.42)
Revaluation gain/(losses) on interest rate caps (0.07)
Net remaining contribution to reserves 1.68
Quarterly dividend for the period to 30 September 2022 (1.64)
Unaudited NAV per share as at 31 December 2022 110.17
Percentage change in quarter (5.5)%
· The NAV attributable to the ordinary shares of the Company is
calculated under International Financial Reporting Standards ("IFRS") and
incorporates the independent portfolio valuation at 31 December 2022 and net
income for the period. EPRA NTA as at 31 December 2022 was 110.08 pence per
share (30 September 2022: 116.46 pence per share) and excludes the fair value
of derivatives.
UNAUDITED TOTAL ACCOUNTING RETURN, DIVIDEND DECLARATION AND 2023 DIVIDEND
TARGET
· The unaudited NAV total return for the year was 3.77%, comprising
dividends paid in the year of 6.508 pence per share and a 2.26 pence per share
reduction in NAV.
· The Board remains confident in our underlying strategy and that
the business model will continue to deliver attractive returns to investors.
· The Board has today declared the Company's fourth interim
dividend for the year ended 31 December 2022 of 1.635 pence per ordinary
share, payable on 24 February 2023 to shareholders on the register on 10
February 2023. The ex-dividend date will be 9 February 2023. This dividend
will be paid as a Property Income Distribution ("PID"). This delivers on the
Company's annual dividend target of 6.54 pence per share for the year ended 31
December 2022.
o The Company continues to deliver a fully cash covered dividend from both
unaudited EPRA and Adjusted Earnings per share, with dividend cover of 128%
and 108% from EPRA and Adjusted Earnings, respectively, in the year to 31
December 2022((2)).
· In line with the Company's progressive dividend policy, under
which it seeks to grow its target 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
target dividend for the year to 31 December 2023 will increase by 3.53% to
6.77 pence per share((3)). The annualised average uplift was 4.1%, of which,
3.53% has been received in cash in the year.
PROPERTY VALUATION
· The Group's property portfolio ("Portfolio") was independently
valued at £532.5 million as at 31 December 2022 (valuation as at 30 September
2022: £543.0 million). This represents a 4.0% or £21.6 million decrease in
value on a like-for-like basis in the quarter and a net decrease of 1.9% over
the quarter including the acquisition of two homes and a disposal. The key
movements included:
o 16 rent reviews completed in the quarter at an average uplift of 4% per
annum in line with the rental increase cap on these leases, contributing an
extra £0.2 million to contracted rent.
o The like-for-like movement in value was primarily driven by the shift in
market yields partially offset by the increased rent from the 16 rent reviews
outlined above. The EPRA 'topped up' net initial yield moved out 30 basis
points to 6.98% as at 31 December 2022 (30 September 2022: 6.68%) and reflects
the independent valuation of our portfolio with the outward movement
reflecting a sector wide change in yields.
o In addition, a further £1.0 million was invested in the quarter on asset
management activity, primarily on the refurbishment at Fairview with our
operator Welford.
o £13.6 million related to the acquisition of two care homes in the
southeast with Belmont healthcare.
o The sale of Attlee, a 68-bed care home in Wakefield, for £2.65 million,
which was 4% above its 30 June 2022 book value. As part of our active
portfolio management strategy, we are looking at opportunities to dispose of
some further care homes which are classified as non-core.
· In addition, our investment in a portfolio of 12 care homes
operated by Holmes group, which we invested in by way of a loan, was
independently valued at £36.3 million (30 September 2022: £38.1 million) a
4.7% reduction of £1.8 million, similarly reflecting the upward shift in
valuations across the sector.
PORTFOLIO UPDATE
· Rent cover across our Portfolio remains strong and was just over
1.8x on average for the 12 months to 30 September 2022, and 1.9x for the
quarter to the end of September 2022. Tenants' detailed operational
performance reporting for the quarter to December will be received in February
2023.
· Occupancy at 30 December 2022 was 86.6%, down 0.7% on 30
September 2022 (87.3%), but in line with expected seasonal fluctuations over
the Christmas and New Year holiday period. Occupancy has started to recover in
January 2023.
· Contracted rent remained flat at £43.1 million((4)) at the
year-end (at 30 September 2022: £43.2 million) with the increase from 16 rent
reviews offsetting the lost rent from the disposal of one care home.
Following the year-end, with the investment in the six care homes in January
2023, contracted rent has risen to £47.0 million.
· At 31 December 2022, the Portfolio comprised 135 healthcare
properties((5)), of which 133 are care homes managed by 13 tenants((6)) either
by way of a loan with an option to purchase and lease on our standard terms
(12 homes), or on fixed-term leases of 20 to 35 years (no break clauses),
subject to annual upward-only Retail Price Index-linked rent reviews (with a
floor and cap at 2% p.a. and 4% p.a., respectively on 99 leases, and 1% p.a.
and 5% p.a. on nine). In addition, the Group owns two healthcare facilities
leased to the NHS with an annual CPI uplift. In total, the Group had 14
tenants((6)) across its Portfolio.
· Weighted average unexpired lease term across the Portfolio of
19.7 years as at 31 December 2022.
· The Group charges rent quarterly or monthly in advance and has
received 100% of rent payments due for the quarter to 31 December 2022. For
the quarter to 31 March 2023, the Group has currently received 97% of rent
due, including 1% from rent deposits. The overdue rent (£0.4 million) is owed
by a single tenant, with whom the Investment Manager is in active discussions
regarding rental payments.
FINANCING
· The Group's gross loan to value ("LTV") ratio was 23.9% as at 31
December 2022 (30 September 2022: 21.4%) following the drawdown of £10
million under its existing revolving credit facilities. The Group has
maintained a healthy level of cash reserves, which stood at £22.5 million at
the quarter end.
· In the quarter, the Group increased its revolving credit facility
("RCF") with HSBC to £75 million and increased its RCF with Virgin Money from
£25 million to £50 million and extended the maturity to 2029. The Group
also cancelled the £15 million RCF with Metro. The Group has increased the
available debt from £206 million to £241 million and the weighted average
term of debt from 6.2 years to 6.9 years, with lower margins over SONIA.
· Shortly after the year end, the Group completed on an investment in
six care homes for £56 million and drew a further £45 million from banking
facilities (with the balance paid for through a share issue). As a result,
the Group's drawn debt increased to £187 million with a gross LTV of
28.7%(7). The Group secured a further £50 million interest rate cap at a
cost of £1.5 million, which caps SONIA at 3.0% for two years.. The Group has
now hedged the interest rates on 80% (£150 million) of drawn debt. The
current average cost of drawn debt, including hedging and fixed rate
borrowings, is 3.86%.
Summary balance sheet (unaudited)
Dec-22 Sep-22 Dec-21
£'m £'m £'m
Property portfolio* 532.5 543.0 459.4
Property Investments via loans* 36.3 38.1 37.5
Cash 22.5 23.2 13.3
Other net assets/(liabilities)* (3.2) (1.7) (1.5)
Borrowings (142.3) (130.6) (114.5)
Net assets 445.9 472.0 394.2
NAV per share (pence) 110.17 116.62 112.43
* Properties within the portfolio and Property Investments via loans
are stated at the market value provided by the external valuer and excludes
the IFRS effects of guaranteed rent reviews and initial lease rental payments.
Notes:
((1) ) Includes investment in properties directly and by way
of loans.
((2)) Based on weighted average shares for the year. This does
not take into consideration the incremental shares issued on 11 January 2023.
((3)) 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.
((4) ) Contracted rent includes all post tax income from
investment in properties, whether generated from rental income or post tax
interest income.
((5) ) Includes exchanged and under construction assets.
((6)) Belmont, Careport, Carlton Hall, Electus Healthcare, Holmes
Care, Maria Mallaband Countrywide Group, Minster and Croftwood (both
subsidiaries of Minster Care Group), NHS Cumbria, Optima, Prestige,
Renaissance, Silverline and Welford.
((7) ) Current debt drawn, divided by Gross Assets as at 31
December 2022 plus acquisitions at cost completed since 31 December 2022.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Impact Health Partners LLP Via H/Advisors Maitland
Andrew Cowley
Mahesh Patel
David Yaldron
Jefferies International Limited +44 20 7029 8000
Tom Yeadon tyeadon@jefferies.com
Ollie Nott onott@jefferies.com
Winterflood Securities Limited +44 20 3100 0000
Neil Langford neil.langford@winterflood.com
Joe Winkley joe.winkley@winterflood.com
H/Advisors Maitland (Communications advisor) +44 7747 113 930
James Benjamin impacthealth-maitland@h-advisors.global
Alistair de Kare-Silver
The Company's LEI is 213800AX3FHPMJL4IJ53.
Further information on Impact Healthcare REIT is available at
www.impactreit.uk (http://www.impactreit.uk/) .
NOTES:
Impact Healthcare REIT plc acquires, renovates, extends and redevelops high
quality healthcare real estate assets in the UK and lets these assets on
long-term full repairing and insuring leases to high-quality established
healthcare operators which offer good quality care, under leases which provide
the Company with attractive levels of rent cover.
The Company aims to provide shareholders with an attractive sustainable
return, principally in the form of quarterly income distributions and with the
potential for capital and income growth, through exposure to a diversified and
resilient portfolio of UK healthcare real estate assets, in particular care
homes for the elderly.
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 2023
is 6.77 pence per share((3)), a 3.53% increase over the 6.54 pence in
dividends paid or declared 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END DIVURVAROWUAOUR