REG - Social Housing Reit - RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2025
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RNS Number : 6578Y Social Housing Reit PLC 10 September 2025
10 September 2025
Social Housing REIT plc
(the "Company", "SOHO" or, together with its subsidiaries, the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2025
The Board of Social Housing REIT plc, the real estate investment trust
investing in Specialised Supported Housing ("SSH") across the UK, is pleased
to announce its unaudited results for the six months ended 30 June 2025. The
results demonstrate continued progress in repositioning the Company under a
new management team, driving operational momentum and improved financial
performance.
Chris Phillips, Chair of Social Housing REIT plc, commented:
"We continue to make clear strides in improving transparency, increasing
rental income and reducing costs for the benefit of our shareholders. Since
Atrato's appointment as Investment Manager in January, they have approached
the business with a clear goal to improve earnings and ensure the operational
performance of the portfolio remains strong.
The SSH sector is underpinned by strong fundamentals: a critical societal
need, chronic undersupply and long-term inflation-linked income supported by
public funding. We were pleased to increase our dividend by 3% - the first
rise since 2022. Our increased dividend is fully covered by earnings and has
the potential for further growth. Proactive portfolio management within the
sector is key and Atrato are implementing this to build long-term portfolio
resilience.
Demand for SSH property in the UK is acute - with around 30,000 additional SSH
homes required over the next decade. SOHO is well placed to deliver
much-needed socially impactful housing, while providing our shareholders with
attractive, sustainable returns."
Highlights for the Six Months Ended 30 June 2025
· Adjusted earnings per share rose 21.9% to 3.34p (H1 2024: 2.74p)
The increased earnings resulted in a significant improvement in adjusted
dividend cover to 1.21x (HY 2024: 1.01x; FY 2024: 0.99x).
· Net rental income increased by 18.9% to £19.79 million compared
to H2 2024 (£16.64 million)
Underpinned by rent collection of 91.4% in H1 2025 (87.6% as at FY 2024; 90.8%
at HY 2024).
· Dividend target raised by 3%
Dividends of 2.811 pence per share were declared, in line with the announced
annual target of 5.622 pence. The increase was possible due to successful
lease assignment progress, reduced costs, index-linked rental growth and our
highly attractive, long-term, low cost of debt.
· Substantial cost savings delivered with further savings targeted
EPRA cost ratio improved to 16.5% (HY 2024: 18.7%; FY 2024: 29.9%(1))
following the full transition to a market capitalisation-based fee and a
detailed cost reduction programme initiated by the Investment Manager.
· Highly attractive debt profile with an average cost of 2.74%
The Company has £263.5 million of fixed-rate debt, with a weighted average
maturity of 8.1 years and no near-term refinancing requirements.
· Fitch 'A-' investment grade rating reaffirmed
Reflecting the sustainable income generated by the portfolio, improving rent
collection and low, long-term cost of debt.
· Asset valuation at a Net Initial Yield of 6.42%
The portfolio was valued at £611.8 million reflecting a Net Initial Yield of
6.42% (FY 2024: £626.4 million, 6.22%).
Financial and Operational Summary
Six months to Six months to Year ended
30 June 2025 30 June 2024 31 December 2024
Adjusted Earnings per Share(2) 3.34p 2.74p 5.40p
Dividends per Share (declared) 2.81p 2.73p 5.46p
Adjusted Dividend Cover(3) 1.21x 1.01x 0.99x
EPRA Cost Ratio 16.5% 18.7% 29.9%
Rent Collection 91.4% 90.8% 87.6%
As at As at As at
30 June 2025
30 June 2024
31 December 2024
IFRS & EPRA Net Tangible Assets per share 95.56p 112.38p 99.05p
Net Loan to Value(4) 39.0% 36.0% 37.7%
Number of properties(5) 492 481 494
Number of homes(4) 3,412 3,297 3,424
Operational Highlights
· Stable resident occupancy and rent collection
Resident occupancy was stable at 86%, with rent collection of contracted
income of 91.4% at 30 June 2025.
· Proactive tenant engagement delivering rent collection increases
ahead of plan
The 38 properties assigned from Parasol to Westmoreland have achieved 75% rent
collection during H1 2025, following the successful transfer in August 2024 -
in line with the target set. The stabilised portfolio is expected to achieve
c.90% of the previously contracted rent. Following the My Space CVA in March
2025, 31% of contracted rent has been received with the assignment to
Inclusion Group progressing well, with the first eight properties targeted to
transfer in H2 2025.
· 100% of leases inflation-linked(5)
All contracted rent is indexed to CPI or RPI and reviewed annually, with 86%
of uplifts uncapped. For properties that had a rent review during H1 2025, the
average rental uplift amount was 2.0%. This resulted in an overall
portfolio-level rental increase during the period of 1.4%.
Outlook
SOHO is entering the second half of the year with improved earnings, enhanced
tenant oversight and a more resilient platform. Atrato's focus remains on
continuing to grow earnings, portfolio optimisation and maintaining cost
discipline. SOHO's diverse residential property portfolio benefits from
secure, inflation-linked income ultimately funded by the Government, a growing
dividend and tangible operational progress under the new Investment Manager.
We believe the Company is well placed to continue delivering much-needed
socially impactful housing while providing our shareholders with attractive,
sustainable returns.
Notes:
1 The EPRA cost ratio of 29.9% for FY24 includes termination fees
paid to the previous Investment Manager. Excluding these fees, the ratio would
have been 21.3%.
2 EPRA adjusted earnings basis removes the impact of non-cash
items and the termination payments to the previous investment manager from
IFRS profit.
3 Calculated as EPRA adjusted earnings divided by dividends paid
during the period.
4 Net LTV is calculated as balance sheet borrowings less cash and
cash equivalents divided by investment property.
5 As at 30 June 2024, 13 assets with an aggregate value of £21.8
million were classified as held for sale but not subsequently sold.
6 14% of leases are capped at 4%, with one additional lease capped
at 5%.
Results Presentation - Today
A presentation for analysts will be hosted by SOHO's Investment Manager today
at 08.30am. Those wishing to attend should contact Lauder Teacher on the
details below.
The Company's Interim Results and accompanying presentation will be available
via the SOHO website at www.socialhousingreit.com.
FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:
Social Housing REIT plc Via Lauder Teacher Associates
Chris Phillips
Atrato Partners Limited ir@atratopartners.com
Adrian D'Enrico
Michael Carey
Eddie Gilbourne
Deutsche Numis Tel: +44 (0) 20 7260 1000
(Corporate Broker & Financial Adviser)
Hugh Jonathan
Vicki Paine
Lauder Teacher (Financial PR Adviser) sohoreit@lauderteacher.com
Colm Lauder Tel: +44 (0) 7787 444 960
Andrew Teacher
Shirin Iqbal
The Company's LEI is 213800BERVBS2HFTBC58.
Further information on the Company can be found on its website at
www.socialhousingreit.com.
IMPORTANT INFORMATION
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014, as it forms part of UK Domestic Law
by virtue of the European Union (Withdrawal) Act 2018, as amended and
supplemented ("UK MAR") and is disclosed in accordance with the Company's
obligations under UK MAR. Upon the publication of this announcement, this
inside information will be considered to be in the public domain.
NOTES
The Company primarily invests in residential properties providing social
housing in the UK, with a particular focus on specialised supported housing
("SSH"). SSH provides homes for vulnerable adults requiring support to live
independently, including those with learning difficulties, mental health
problems and physical disabilities. These homes are specially designed or
adapted to meet residents' needs and are managed by Approved Providers who are
predominantly regulated by the Regulator of Social Housing. Approved Providers
consist of Housing Associations and Local Authorities, or other regulated
organisations in receipt of direct rental payments from local Government.
These operational residential properties deliver sustainable, long-term,
growing income for shareholders, improved outcomes for residents and savings
to the taxpayer.
The Company is listed on the Closed-ended investment funds category of the
FCA's Official List and its Ordinary Shares are traded on the LSE's Main
Market.
Atrato Partners Limited is the Company's Investment Manager.
CHAIR'S STATEMENT
Introduction
I am pleased to present Social Housing REIT plc's (the "Company's") interim
results for the six months ended 30 June 2025.
In the first half of 2025, the Company's Portfolio has improved across many
metrics, with consistently high levels of resident occupancy, growing rent
collection and progress in resolving tenant challenges. Our homes remain
critical in supporting the independence and wellbeing of thousands of
vulnerable adults. The Company's commitment to this social purpose underpins
every aspect of our strategy.
We have seen material progress in both operational discipline and transparency
since the Company's last results. The new Investment Manager has taken
decisive steps to address legacy tenant issues, improve risk oversight and
actively engage with the wider market. This enhanced governance and increased
visibility have already translated into positive momentum - evidenced by share
price appreciation and a narrowing of the Company's discount to Net Tangible
Assets ("NTA") per share.
We were pleased to have been able to increase our target dividend by 3% to
5.622 pence per share, as announced in May 2025. This is the first dividend
increase since 2022 and reflects our confidence in the earnings generated by
the portfolio.
Work is also progressing on a broader legal and operational strategy to
strengthen the security over the public sector funding streams that support
SSH. Enhancing the Company's security of these cash flows would materially
reduce counterparty risk and, we believe, provide the basis for a significant
re-rating of the sector once completed.
Sentiment across the broader UK listed investment trust market remains mixed
and the Company continues to trade at a discount to NTA, however the share
price has responded well under the new management. We remain confident that,
as confidence in the SSH sector and operational delivery improves, the
discount should narrow further. The Board continues to focus on capital
discipline and is keeping options for deploying excess funds under constant
review.
Macroeconomic backdrop
Despite ongoing macroeconomic uncertainty in the first half of the year,
including geopolitical tensions and policy announcements such as US tariffs,
the UK equity market has remained relatively resilient, benefitting in part
from global risk aversion.
While refinancing rates remain elevated, the Company benefits from its
attractively priced, long-term debt. All of SOHO's borrowings are fixed rate,
with a weighted average term of 8.1 years and a low average all-in cost of
debt of 2.74%. There are no short-term refinancing requirements.
Sector tailwinds
The UK residential sector continues to face a significant imbalance between
supply and demand. The announcement of a £39 billion, ten-year funding
programme by the Labour Government in June 2025 has provided a welcome boost
to confidence for the affordable housing sector. However, supply-side
responses in the built environment are inherently complex and subject to long
lead times. It will take time for this to translate into a meaningful increase
in development starts and new home additions.
In the meantime, demand in our sector of SSH continues to rise, with a
requirement for nearly 30,000 additional homes projected over the next decade.
This structural demand for SSH will continue to support high levels of
occupancy within the Company's portfolio.
Central and local Government funding continues to support individuals
requiring housing and care. The strong sector demand profile, combined with
inflation-linked rental growth, is expected to underpin a positive valuation
outlook once the tenant-related matters detailed below are resolved.
Operational performance
Rent collection improved in the six months to 30 June 2025, under Atrato's
proactive management, with 99% of contracted rent collected (excluding My
Space). When accounting for the passthrough arrangements agreed with My Space
post-CVA and Westmoreland, this equates to 91.4% of the overall contracted
rent, comprising the passthrough rent compared to the former My Space and
Westmoreland contractual rent levels.
The assignment of the Parasol leases to Westmoreland resulted in 75% of the
contracted amount collected for these 38 properties during H1 2025 in line
with the plan set out by the Company. We remain confident that Atrato can
facilitate the assignment of the My Space leases during the second half of the
year, having already agreed terms, commenced legal work and undertaken
necessary property inspections and assessments. The successful completion of
these assignments is expected to further improve occupancy and enhance rent
collection from these properties.
The Company's homes are well maintained and well utilised by residents in need
of our specialist, adapted properties. Our EPC Upgrade Programme is now
underway, aimed at improving the energy efficiency of the estate and bringing
the portfolio in-line with anticipated regulatory minimum standards ahead of
currently proposed legislative deadlines.
Our new development scheme in Chorley - a 12-bed purpose-built property,
leased to a new Approved Provider for the Company, Golden Lane Housing -
recently reached practical completion in August 2025 and residents are already
moving in.
Occupancy remained stable at 86% at 30 June 2025, above the 80% occupancy
level typically considered as the profitability threshold for Approved
Providers, with the majority of void units concentrated within properties
originally leased to Parasol and My Space. It is encouraging to see resident
occupancy remaining resilient, with further improvement expected as the My
Space properties are assigned in the coming months.
Atrato has now completed its initial review of the entire property portfolio
and identified a small number of properties which are either unsuitable for
SSH use or do not meet the Company's required standard. These properties will
be disposed of over the coming months. Two properties in Devon were sold at
book value during the first half of the year, initiating this process and the
remainder will be progressed as soon as practically possible over the coming
months.
Outlook
The Board welcomes the passing of all resolutions at the recent Annual General
Meeting. However, we acknowledge that three resolutions, each relating to the
re-election of a Director, received substantial votes against, with opposition
totalling 30% of the total votes validly cast. In accordance with paragraph
5.2.4 of the AIC Code of Corporate Governance, the Board initiated a formal
consultation process to understand the concerns raised by Shareholders.
To facilitate this, Deutsche Numis, our corporate broker, was instructed by
the Board to lead a Shareholder consultation. They have contacted a
significant proportion of the Shareholder register and conducted a detailed
outreach exercise to gather feedback.
Two key themes that emerged from this consultation were:
1. The requirement for Board rotation in the ordinary course of business
to introduce fresh perspectives; and
2. Enhanced communication and disclosure to shareholders.
These insights have been carefully considered by the Board and have informed
our subsequent actions and adjustments to the Company's governance and
strategic approach. The Board has already made meaningful steps to improve
disclosure and transparency.
In addition, following eight years of service on the Board of Social Housing
REIT and as announced at the AGM, I have taken the decision to step down as
Chair. My successor is currently being sought and will be a new addition to
the Board, who will be announced in due course, with a period of transition to
ensure continuity and stability. It has been a privilege to serve on the Board
and to contribute to the growth and impact of the Company and I am confident a
suitable candidate will be chosen to take this Company forward.
Following the appointment of my replacement, they will work with the rest of
the Board to appoint a new Audit Chair to replace Peter Coward, after 8 years
of service to SOHO. We expect the new Audit Chair to be in place such that an
orderly handover and a shadowing of the audit process can take place. I would
like to thank Peter for his service and commitment to SOHO over his tenure. It
has been a pleasure to work alongside Peter and I wish him well on his next
endeavour.
Chris Phillips
Chair
9 September 2025
INVESTMENT MANAGER'S REPORT
Introduction
Following our appointment as Investment Manager in January 2025, we have moved
swiftly to take decisive steps to put SOHO on a stronger footing. Our strategy
has focused on strengthening the portfolio's fundamentals, enhancing income
and moving to restore investor confidence in the SSH sector.
Demonstrating Sector Value and Restoring Investor Confidence
SSH houses vulnerable adults with care and/or support needs, who may have
learning difficulties, mental health issues, physical disabilities or a
combination of diagnoses. Their homes are, in most cases, specially adapted to
ensure their comfort and safety, enabling them to live independently whilst
receiving appropriate assistance. SSH is an essential component of UK social
infrastructure, providing beneficial individual outcomes whilst delivering a
significant saving to the public purse. SOHO's portfolio is estimated to save
the public purse £71.6 million each year 1 . This is a particular benefit in
an era of strained public budgets, at both local and national levels.
In recent years, well-publicised challenges in other listed housing strategies
have overshadowed the clear social and financial benefits that both the sector
and the homes provided by SOHO can deliver for residents and shareholders.
Since our appointment, we have been focused on restoring confidence in the SSH
sector and on demonstrating the strength, quality and long-term value of
SOHO's portfolio.
SOHO benefits from fit-for-purpose specially adapted homes, long-term
residents and a stable, needs-based demand profile. A key part of our role is
to ensure the market understands exactly how SOHO differs - in terms of
quality, strategy and execution - from both the previous management and other
previously listed peers. Rebuilding investor confidence starts with this
differentiation and is reinforced by evidencing and enhancing the portfolio's
performance and dependable income profile. In line with Atrato's investment
management philosophy, we continue to operate transparently with respect to
SOHO's property portfolio, its financials and the social impact that is being
delivered through our homes.
Leveraging our expertise in finance and real estate alongside our deep sector
knowledge, we have begun the process to implement structural changes to tenant
arrangements that will further strengthen the security of SOHO's public-sector
cashflows. Alongside this, our proactive monitoring and early intervention
strategy ensures that, even where individual Approved Providers face
challenges, the wider portfolio remains resilient. By example, through
proactive engagement with Pivotal, who were subsequently served an enforcement
notice by the Regulator of Social Housing, we have been able to move swiftly,
identify an assignee and have already commenced the transition of those two
properties. The ability to proactively assign properties relies on strong
counterparty monitoring and engagement (to act early and decisively), robust
property fundamentals (in this case, well-occupied properties with rents in
payment) and leveraging our sector knowledge and networks. In this instance,
the assignments should see no impact for residents and no credit losses for
shareholders.
We are confident that, over time, our actions will continue to strengthen
market understanding of SOHO's distinct investment case and narrow SOHO's
discount to NTA. Our ambition is clear: provided it delivers the most
accretive long-term returns to shareholders, we will seek to grow the
portfolio in a disciplined way, deploying capital into high-quality assets
that deliver secure, long-term cash flows while providing essential homes for
vulnerable adults.
Financial Review
In the period, the portfolio generated net rental income of £19.79 million -
an increase of £3.2m (19%) compared with the previous six-month period to 31
December 2024. The Group's improved financial performance has been underpinned
by annual inflation-linked rental increases, continued progress with property
assignments, the recommencement of rent collection by the Company from My
Space and a reduction in costs.
As a direct result of the initiatives we have undertaken since taking on the
management of SOHO, we were able to recommend an increased dividend target to
the Board and will keep this under review as the portfolio strengthens
further. The Company has seen adjusted dividend cover increase to 1.21x (FY
2024: 0.99x) and an Adjusted EPS of 3.34 pence per share (H1 2024: 2.74p),
which represents an increase of 21.9%. This progress reinforces our confidence
in the Company's ability to deliver attractive, sustainable income for
shareholders over the long term.
The portfolio Net Initial Yield ("NIY") widened from 6.22% at 31 December 2024
to 6.42% at 30 June 2025. As at 30 June 2025, the portfolio was valued at
£611.8 million, compared to £626.4 million at 31 December 2024. This
represents a 2.3% like-for-like reduction in portfolio value of £14.6
million, reflecting current market sentiment recognised by the valuer. The
valuation assumptions also reflect some properties that have been identified
as not appropriate for SSH - principally within the My Space portfolio - and
are therefore being considered for sale. This is consistent with our broader
objective to improve portfolio quality over time through disciplined asset
management and redeployment into better-quality assets let to stronger,
compliant Approved Providers.
To save costs, to align the Company with standard investment trust market
practice and reflecting the lack of material activity within the portfolio,
the Company has adopted a bi-annual valuation frequency.
Debt Financing
In this period of prolonged higher interest rates, the Group's debt is a
valuable asset. All £263.5 million of the Group's debt is fixed rate with a
very low weighted average fixed coupon of 2.74% and a weighted average
maturity of 8.1 years. The earliest debt maturity will occur in mid-2028,
providing a strong platform for the Company's renewed progressive dividend
policy.
In June 2025, we were pleased that Fitch Ratings re-affirmed the Group's
existing long-term Issuer Default Rating of 'A-' and senior secured ratings of
'A' in respect of both debt facilities. Further information on the Group's
debt facilities is set out in Note 15 of the financial statements.
Asset Management
As at 30 June 2025, the portfolio comprised 492 properties, offering homes for
up to 3,412 vulnerable adults. The properties are geographically diversified
across the UK and leased to 28 Approved Providers.
Tenants in the Company's portfolio do not have strong covenants. We do not see
this as an issue, provided that they deliver strong operational performance,
possess good management skills and personnel and maintain adequate liquidity.
We plan for tenant defaults, but we are confident that we should be able to
avoid further material credit losses, such as those suffered due to the
Parasol and My Space defaults detailed below.
With the increased tenant oversight that we bring to the portfolio, we are
confident that any significant tenant issues can be identified early, allowing
appropriate decisive action to be taken to assign properties to alternative
Approved Providers. The assignment of two properties away from Pivotal to
another Approved Provider within the portfolio evidences this. When acting
early and decisively, and when underlying asset quality is good, assignments
can be effected without impacting residents or shareholders.
As noted earlier, we believe that we can further de-risk the portfolio by:
· Making structural changes to our relationship with tenants to improve
the Company's security over underlying cashflows; and
· Taking advantage of opportunities to rotate capital to introduce
stronger tenants to the Portfolio.
Parasol and My Space
When we took over the management of SOHO, there were two long-standing
portfolio challenges. We are delivering solutions for these two tenants, both
of which are progressing well and are expected to result in long-term,
sustainable solutions for the Company.
Parasol to Westmoreland Assignment
In August 2024, the Parasol Homes ("Parasol") leases were assigned to
Westmoreland Supported Housing ("Westmoreland").
As part of the transfer process, all 38 properties (7.7% of the gross asset
value as at 30 June 2025) previously leased to Parasol moved to an initial
stabilisation period where the Company receives rent on an agreed pass-through
basis. This allows Westmoreland to assess the condition and operating costs of
each property and evaluate the rent levels before they revert to fully
repairing and insuring ("FRI") lease terms. The target was to collect above
75% of the original contracted rent for this initial period prior to leases
reverting to FRI terms.
We are pleased with the progress that Westmoreland is making and the level of
engagement Atrato's operational team have had in this process. Up to 30 June
2025, we have collected 75% of the contracted rent in H1 2025, in line with
target set, resulting from proactive tenant engagement and portfolio
oversight.
We continue to actively work with Westmoreland to transfer the properties back
to an FRI basis. As a result of the progress made to date, we are now
forecasting a higher stabilised rent level for the former Parasol portfolio,
equating to c.90% of the previously contracted lease rent, once all properties
return to FRI terms.
My Space to Inclusion Assignment
The Company has 34 properties leased to My Space Housing Solutions ("My
Space"), representing 3.5% of the gross asset value as at 30 June 2025.
Following a period of non-payment dating back to June 2024, My Space entered
into a Company Voluntary Arrangement ("CVA") in March 2025. Under the terms of
the CVA, until assignment, leases were varied such that rents due for the
properties moved to a passthrough basis (being the balance of gross rental
income, net of costs).
We are pleased to note that rental income by the Company has recommenced, with
31% of contractual rent received from My Space from the date of the CVA to 30
June 2025. This exceeds our rent collection assumptions for this transitional
period, whilst the assignment of the properties is implemented.
Legal work has commenced to assign 8 of the 34 properties to an existing
Approved Provider in our portfolio, Inclusion Group, who with their nationwide
platform will be able to operate the geographically dispersed portfolio. This
will be completed under the terms of the option agreement negotiated by Atrato
for the Company, which permits the assignment of SOHO's properties at a point
of our choosing within 12-months of the end of the CVA challenge period. It is
anticipated the first tranche of properties will transfer in H2 2025, with the
remainder transferring shortly thereafter.
During Atrato's extensive review of the My Space properties, we have
identified nine properties where it is more viable to sell the properties. We
expect to be able to sell these properties at, or around, book value and will
provide further updates as this process is completed.
Pivotal Housing Association
As noted earlier, due to an enforcement notice being served on Pivotal, SOHO
have the express right to assign the leases to an alternative Approved
Provider. This is being progressed, with legal work and due diligence already
commenced. Whilst there are only two properties leased to Pivotal, which will
both be assigned. Both properties are well occupied and in full rental
payment. The assignment process evidences the ability to transfer properties
to alternative Approved Providers where property fundamentals are strong,
without impacting residents or shareholders. Our work to optimise the
portfolio is therefore important to ensure that, if any future tenant
challenges arise, we can act swiftly to transfer properties with limited
impact.
Counterparty Exposure and Portfolio Optimisation
Since taking on management of SOHO, we have implemented enhanced monitoring of
our counterparty exposures to better identify potential risks to our
portfolio, the cashflows derived from them and to the vulnerable residents
housed in them. We will continue to evolve and adapt this process to better
assess risks as the sector and our counterparties themselves grow and develop.
We are also assessing potential options to strengthen the security over the
public sector funding streams that support our homes. Enhancing the security
of these cash flows would materially reduce counterparty risk and, we believe,
lead to a significant re-rating of the sector. To date, we have engaged with
the Regulator of Social Housing, received legal advice regarding potential
solutions and are working with two of our Approved Provider lessees to
establish what can be achieved in this regard. As this important workstream
progresses, we will provide further updates to shareholders.
Continued progress on Sustainability Initiatives
Following the publication of the Company's most recent Sustainability Report
and TCFD disclosures within the 2024 Annual Report, we have conducted a review
of the Company's sustainability strategy to assess how its approach to
sustainability and associated reporting can be enhanced going forward.
As a result, we have initiated a materiality assessment for the Company, with
support from specialist sustainability-advisers CEN-ESG, to identify and
understand the relative importance of key sustainability issues to the
business and its stakeholders. The outputs of this assessment will provide a
framework for prioritising the Company's efforts, both now and in the future,
with the launch of the refreshed sustainability strategy due to be released
within the next Annual Report. The materiality assessment findings will also
be integrated into the Company's risk management processes.
In tandem with the materiality assessment project, we have completed a review
of the Company's existing near-term emissions reduction target. Through this
review, we evaluated the target baseline, scope and coverage finding that,
given the recent enhancements made to the Company's emissions data and
calculation processes within the Company's first full GHG Inventory published
in the 2024 Annual Report, the 2024 full year baseline is a more accurate and
complete baseline for an emissions reduction target. The Company has chosen to
utilise this new baseline and enhance its emissions reduction ambitions by
developing a target in line with the Science Based Target initiative's
("SBTi") Building Guidance. The Company is committed to reducing its value
chain emissions in line with 1.5°C. This commitment will be supported by the
Company's new SBTi-aligned near and long-term targets, which it began
preparing post-period end. The Company plans to submit these targets to the
SBTi for validation and approval during the next reporting period.
In line with the Company's dual commitment to improving the energy efficiency
of the portfolio and reducing emissions, the portfolio-wide phase of the
Company's EPC Upgrade Programme has now commenced. A phased approach will see
all required upgrade works completed ahead of the anticipated legislative EPC
and MEES standards and timetable. Further details on the programme are set out
below.
Along with the Company's Board, we remain committed to transparent,
decision-useful sustainability reporting to improve accountability to
stakeholders. As a result, we have prepared and submitted the Company's first
disclosures to the Global Real Estate Sustainability Benchmark ("GRESB") in
June 2025. We continue to monitor the evolution of ESG-related regulation
relevant to the Company, specifically the implementation of the Financial
Conduct Authority's UK Sustainability Disclosure Requirements ("SDR"). As the
Company's sustainability characteristics, disclosures and policies and
procedures remain under review as part of the materiality assessment project,
a sustainable investment label has not yet been adopted by the Company.
Following completion of this review, we will complete an assessment of the
requirements for adoption of the most suitable sustainable investment label by
the Company.
The Company continues to support the responsible investment commitments of
Atrato, including as a signatory to the United Nations Principles for
Responsible Investment ("UN PRI"), with Atrato's UN PRI reporting submitted in
July 2025. The Company remains committed to further enhancing its
sustainability and impact reporting and will provide a more comprehensive
update on progress within its next annual Sustainability Report.
EPC Upgrade Programme
As part of our commitment to future-proofing the portfolio and maintaining
sector leadership in sustainability, the Company has expanded its EPC Upgrade
Programme beyond a successful pilot phase to the remaining targeted homes. The
pilot project saw 11 properties (comprising 30 homes) upgraded in
collaboration with Approved Providers. These properties now benefit from
compliant EPC ratings (the majority being re-rated with EPCs of A or B) and
are already showing significant reductions in occupational energy consumption.
Whilst there are ongoing consultations regarding the structure of Energy
Performance Certificates ("EPCs") and the implementation of Minimum Energy
Efficiency Standards ("MEES") for social housing, it is expected that all
properties will need to meet an EPC rating of C or above (or an equivalent
standard), when the anticipated legislative MEES deadline of 2030 is
implemented.
With 74% of the Company's properties already meeting the minimum EPC level of
C, the portfolio is already materially ahead of the UK housing sector's
average EPC of D. However, the Company is committed to improving the quality
of the portfolio further and being a sector leader when it comes to reducing
emissions.
We believe that this is not only the right thing to do for the environment and
our residents but also underpins the long-term attractiveness of the Company's
properties as homes for vulnerable residents. This will support the long-term
sustainability of the portfolio's income and enhance liquidity of portfolio
assets if any sales are required or pursued.
We expect approximately 60% of the projected EPC Upgrade Programme costs will
be covered by UK ECO4 grant funding. The remaining expenditure will be funded
by the Company, but this is anticipated to be more than offset by
corresponding increases in property valuations, ultimately resulting in no
material change in NTA with the potential for some upside.
The EPC Upgrade Programme is expected to run through to 2028, improving the
thermal efficiency and environmental credentials of SOHO's homes, meeting
legislative targets and enhancing value for shareholders, whilst benefiting
both the environment and our residents.
Lessee Update
It remains important to note that, whilst the SSH sector has often
historically been described as one which offers Government-backed income, the
reality of the sector and its lease counterparts is more nuanced. Robust
contractual arrangements in the form of long-term FRI leases are in place.
However, as noted above, although the Company's lessees are highly specialist
organisations which deliver social good to society's most vulnerable people
and provide access to public sector cashflows, they themselves are not
institutional-grade covenants.
It is key to understand that SSH comprises operational residential properties
and relies on three key elements:
• The property fundamentals of location, structural quality and
functional utility;
• An appropriate rent basis; and
• The operational efficacy of the lessees.
The Group's lessees are instrumental in delivering day-to-day operational
performance. The properties are typically specialised or adapted to house
people often with a variety of complex needs. The lessees' staff are trained
individuals who are passionate about improving people's lives. The properties
require both intensive housing management and to be kept to a high standard.
The properties require specific levels of adaption suitable for residents,
enabling them to live independently with the support they need. These
requirements are far beyond what one would expect to see in the Private Rental
Sector which makes the lessees' expertise vital.
Top 10 Lessees Lessee Type Number of Properties Annual Rent Roll % Rent Roll % 2025 % Resident Occupancy
Rent Collection
Inclusion RP 124 £12,906,682 30.0% 100% 88%
Westmoreland* RP 38 £3,982,242 9.2% 100%* 79%
Hilldale RP 30 £3,629,032 8.4% 100% 91%
Falcon RP 60 £3,605,699 8.4% 100% 86%
My Space** RP 34 £3,410,789 7.9% 100%** 58%
Chrysalis RP 27 £2,382,530 5.5% 100% 90%
BeST RP 41 £2,097,499 4.9% 99.4% 89%
Auckland RP 30 £1,973,462 4.6% 100% 90%
Blue Square RP 12 £1,643,561 3.8% 100% 90%
Care Housing Association RP 11 £1,618,323 3.8% 100% 94%
Top 10 Totals 407 £37,249,819 86.5%
* Following the assignment of leases away from Parasol, Westmoreland have
moved to a passthrough lease basis during the stabilisation phase. Up to 30
June 2025, this has reflected improved rent collection of an aggregate 75%
against the pre-assignment contracted rent level (H1 2025: 75.4%).
** My Space leases, until they are assigned, were varied by their CVA to a
passthrough basis. After entering into the CVA in March 2025, rent collection
has recommenced with 31% of the pre-CVA contractual rent received from the
date of the CVA to 30 June 2025 (H1 2025: 21.0%).
WAULT
As at 30 June 2025, the portfolio had a Weighted Average Unexpired Lease Term
("WAULT") of 23.0 years (31 December 2024: 23.4 years). This WAULT includes
the initial lease term, as well as any reversionary leases and put/call
options available to the Group at expiry of the initial term.
The SSH sector operating model continues to evolve, with investors and valuers
appreciating that strong property fundamentals, sustainable rental levels and
established operational performance are of equivalent or greater value than
long-term lease arrangements alone. Whilst the SOHO portfolio benefits from
many long-term FRI lease arrangements (20 years and above), a history of
strong operational performance and high levels of established occupancy are of
equal or greater importance and we continue to focus on those metrics.
Indexation
100% of the Group's contracted income is generated under leases which benefit
from annual rent reviews indexed on the basis of either CPI (92.1%) or RPI
(7.9%).
In the six months ended 30 June 2025, 74% of the Company's leases benefitted
from an annual index-linked rent review with an average rental uplift amount
was 2.0%. This resulted in an overall portfolio-level rental increase during
the period of 1.4%.
The vast majority of annual inflation uplifts (86%) are uncapped
contractually. However, we have sought to mitigate the risk to our tenants'
financial viability, should Government policy change, through the adoption of
a risk-sharing clause. The clause enables the Boards of the Approved Providers
we work with to demonstrate an improved risk management strategy to help
address a historical concern of the Regulator of Social Housing.
As part of this clause, annual rent increases are set at the lower of the
relevant inflation index and prevailing Government policy in relation to
social housing rent increases, as it applies to SSH. Given that the Government
has recently confirmed an extended ten-year rent settlement at CPI+1% for
social housing rents (from April 2026), this ensures the Company's rental
income will be increased with inflation for the foreseeable future.
The clause also aligns annual rental uplifts to April (which is consistent
with rent setting across the broader Social Housing sector) and enables our
Approved Provider lessees to accurately calculate housing benefit submissions
ahead of the annual uplift.
Outlook
We are proud of the progress made across the portfolio since taking on the
Investment Manager role at the start of the year, summarising our activity to
date as follows:
· Revenue up, costs down
We have increase rental income through a combination of inflation-linked rent
reviews, continued progress with the assignment to Westmoreland and the
recommencement of My Space rent collection post-CVA. Cost savings have been
delivered by re-basing of the management fee to market capitalisation, locking
in alignment with shareholders, and through reviewing all third-party service
provider arrangements as part of a Company-wide, line-by-line analysis of
costs. The combined effect underpinned in our confidence to increase our
dividend and adopt a progressive, inflation-aligned approach going forwards.
· Continued strengthening of portfolio quality and resilience
Focusing initially on proactively managing existing assets, we are exiting
those which are not sustainable or suitable. We are, at the same time,
sourcing new opportunities for deployment, where asset quality and economic
outcomes will be accretive to the portfolio. We have also commenced the
process with a number of Approved Providers and the Regulator of Social
Housing to seek to better secure the public-sector backed cashflows derived
from our properties.
· Resolving tenant challenges quickly and successfully
We are proving, through the Pivotal assignments which are underway, that
well-executed asset transfers are able to be completed swiftly, maintaining
cashflows and without disrupting residents. By removing a small number of
unsuitable properties from the portfolio over the coming months, optimising
our portfolio of assets, we can have further confidence in the long-term
utility and financial benefits of the homes we own.
We look forward to resolving the identified challenges within the portfolio
during the second half of the year. In doing so, we aim to demonstrate the
resilience of SOHO's assets and income streams and to restore investor
confidence in the role of Specialised Supported Housing as a vital and
investible part of the UK's social infrastructure.
Adrian D'Enrico
Fund Manager
9 September 2025
KEY PERFORMANCE INDICATORS
We set out below our key performance indicators for the Company.
KPI Definition Performance (as at 30 June 2025)
1. IFRS & EPRA NTA per share The value of our assets (based on an independent valuation) less the book 95.56p pence per share
value of our liabilities, attributable to Shareholders and calculated in
(31 December 2024: 99.05p)
accordance with EPRA guidelines. Further information is set out in Note 3 of
the Unaudited Performance Measures.
2. Total Accounting Return Total accounting return is measured by reference to the growth in the Group's (0.7)% for the six months to 30 June 2025
share price over a period, plus dividends declared for that period.
(31 December 2024: (8.1)%)
The total accounting return since IPO is 37.6%
3. Adjusted EPS EPRA earnings adjusted for company specific items to reflect the underlying 3.34p pence per share for the six months to 30 June 2025
profitability of the business, calculated on the weighted average number of
(30 June 2024: 2.74p)
shares in issue during the year.
4. Adjusted Dividend Cover Dividends paid or declared in respect of the year ended 31 December 2025, with The dividend was 1.21x covered for the six-month period to 30 June 2025
dividend cover based on adjusted earnings.
(31 December 2024: 0.99x)
5. Net Loan to Value ("LTV") The Group's medium to long-term target LTV is 35% to 40% with a maximum of 39.0%
50%, calculated as balance sheet borrowings divided by gross asset value.
(31 December 2024: 37.7%)
6. Rent Collection Rent collection is one of the Group's principal measures of performance, 91.4% collected for the six months to 30 June 2025 (31 December 2024: 87.6%)
measured against total contracted rent due.
Material rent arrears during the year was mainly attributable to one Approved
Provider, My Space Housing Solutions.
7. Ongoing Charges Ratio A measure of all operating costs incurred, calculated as a percentage of 1.44%
average net assets in that year.
(31 December 2024: 1.64%)
8. EPRA Cost Ratio Administrative & operating costs (including costs of direct vacancy) 16.47%
divided by gross rental income.
(31 December 2024: 29.89%)
9. Exposure to Largest Approved Provider The percentage of the Group's gross assets that are leased to the single 31.3%
largest Approved Provider.
(31 December 2024: 30.9%)
EPRA PERFORMANCE MEASURES
The table below shows additional performance measures, calculated in
accordance with the Best Practices Recommendations of the European Public Real
Estate Association ("EPRA"). We provide these measures to aid comparison with
other European real estate businesses.
For a full reconciliation of all EPRA performance indicators, please see the
Notes to EPRA measures within the supplementary section of the financial
statements.
Measure Definition Performance (as at 30 June 2025)
1. EPRA EPS A measure of EPS designed by EPRA to present underlying earnings from core 3.24 pence per share for the six-months to
operating activities.
30 June 2025
(30 June 2024: 2.90p)
2. EPRA Net Reinstatement Value ("NRV") per share An EPRA NAV per share metric which assumes that entities never sell assets and 104.99 pence per share (31 December 2024: 108.86p)
aims to represent the value required to rebuild the entity.
3. EPRA Net Tangible Assets ("NTA") per share An EPRA NAV per share metric which assumes entities buy and sell assets, 95.56 pence per share
thereby crystallising certain levels of unavoidable deferred tax.
(31 December 2024: 99.05p)
4. EPRA Net Disposal Value ("NDV") per share An EPRA NAV per share metric which represents the Shareholders' value under a 108.97 pence per share (31 December 2024: 113.95p)
disposal scenario, where deferred tax, financial instruments and certain other
adjustments are calculated to the full extent of their liability, net of any
resulting tax.
5. EPRA Net Initial Yield ("NIY") Annualised rental income based on the cash rents passing at the balance sheet 6.68%
date, less non-recoverable property operating expenses, divided by the market
value of the property, increased with (estimated) purchasers' costs. (31 December 2024: 6.44%)
6. EPRA "Topped-Up" Net Initial Yield This measure incorporates an adjustment to the EPRA NIY in respect of the 6.68%
expiration of rent-free periods (or other unexpired lease incentives such as
discounted rent periods and step rents). (31 December 2024: 6.45%)
7. EPRA Vacancy Rate Estimated Market Rental Value ("ERV") of vacant space divided by ERV of the 1.49%
whole portfolio.
(31 December 2024: 0.32%)
8. EPRA Cost Ratio Administrative & operating costs (including costs of direct vacancy) 16.47%
divided by gross rental income.
(31 December 2024: 29.89%)
9. EPRA LTV Net debt divided by total property portfolio and other eligible assets. 38.8%
(31 December 2024: 37.7%)
10. EPRA Like-for-like Rental Growth Changes in net rental income for those properties held for the duration of Rental increase of 1.59% (31 December 2024: 4.16%)
both the current and comparative reporting period.
11. EPRA Capital Expenditure Amounts spent for the purchase and development of investment properties £1.2 million for the year (31 December 2024:
(including any capitalised transaction costs).
£2.2 million)
PRINCIPAL RISKS AND UNCERTAINTIES
The Audit Committee, which assists the Board with its responsibilities for
managing risk, considers that the principal risks and uncertainties as
presented on pages 80 to 83 of our 2024 Annual Report were unchanged during
the six-month period to 30 June 2025.
The Board undertakes a formal risk review, with the assistance of the Audit
Committee twice a year to assess the principal risks and uncertainties. The
Investment Manager on an ongoing basis has responsibility for identifying
potential risks and escalating these in accordance with the risk management
procedures.
The risks are summarised below:
· Approved Provider Default
· Non-payment of Voids by Care Providers
· Potential Impact of Climate Change
· Volatile Trading Market
· Regulatory Change Impacting the Sector
· Non-compliance with Regulatory Standards
· Property Valuation Volatility
· Poor or Inadequate Housing Management
· Debt Covenant Breaches
· Health and Safety Non-compliance
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge this unaudited
condensed set of financial statements has been prepared in accordance with
UK-adopted International Accounting Standard ("IAS") 34 'Interim Financial
Reporting' and that the operating and financial review above includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8 of the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority namely:
· An indication of important events that have occurred during
the six months ended 30 June 2025 and their impact on the condensed financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions in the six months ended
30 June 2025 as disclosed in Note 19 and any material changes in the related
party transactions disclosed in the 2024 Annual Report.
Shareholder information is as disclosed on the Social Housing REIT plc
website, which can be found at www.socialhousingreit.com.
Approval
This Directors' responsibilities statement was approved by the Board of
Directors and signed on its behalf by:
Chris Phillips
Chair
9 September 2025
GROUP FINANCIAL STATEMENTS
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2025
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Income
Rental income 4 20,415 20,540 39,072
Expected credit loss 4 (623) (1,436) (3,329)
Insurance charge income 4 324 - 713
Insurance charge expense 4 (324) - (713)
Other income 24 3 106
Total income 19,816 19,107 35,849
Expenses
Directors' remuneration (174) (150) (307)
General and administrative expenses (1,611) (1,344) (3,556)
Management fees 5 (1,576) (2,349) (7,814)
Total expenses (3,361) (3,843) (11,677)
Loss from fair value adjustment on investment properties 8 (15,590) (6,122) (53,030)
Operating profit/(loss) 865 9,142 (28,858)
Finance income 105 22 148
Finance costs 6 (3,833) (3,864) (7,679)
(Loss)/profit before tax (2,863) 5,300 (36,389)
Taxation 7 - - -
(Loss)/profit and total comprehensive income (2,863) 5,300 (36,389)
IFRS Earnings per share - basic and diluted 22 (0.73)p 1.35p (9.25)p
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
As at 30 June 2025
30 June 2025 31 December 2024 30 June 2024
Note (unaudited) (audited) (unaudited)
£'000 £'000 £'000
Assets
Non-current assets
Investment properties 8 610,193 624,695 648,848
Trade and other receivables 10 2,997 3,306 5,036
Total non-current assets 613,190 628,001 653,884
Current assets
Assets held for sale 9 - - 21,755
Trade and other receivables 11 3,885 3,315 3,054
Cash, cash equivalents and restricted cash 12 25,145 27,492 29,260
Total current assets 29,030 30,807 54,069
Total assets 642,220 658,808 707,953
Liabilities
Current liabilities
Trade and other payables 13 3,132 6,095 3,153
Total current liabilities 3,132 6,095 3,153
Non-current liabilities
Other payables 14 1,530 1,528 1,304
Bank and other borrowings 15 261,578 261,441 261,320
Total non-current liabilities 263,108 262,969 262,624
Total liabilities 266,240 269,064 265,777
Total net assets 375,980 389,744 442,176
Equity
Share capital 3,940 3,940 3,940
Share premium reserve 203,753 203,753 203,753
Treasury shares reserve (378) (378) (378)
Capital redemption reserve 16 93 93 93
Capital reduction reserve 16 155,359 155,359 155,359
Retained earnings 13,213 26,977 79,409
Total equity 375,980 389,744 442,176
IFRS Net asset value per share - basic and diluted 23 95.56p 99.05p 112.38p
The Condensed Group Interim Financial Statements were approved and authorised
for issue by the Board on 9 September 2025 and signed on its behalf by:
Chris Phillips
Chair
9 September 2025
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2025
For the six months ended 30 June 2025 (unaudited) Note Share capital £'000 Share premium reserve Treasury shares reserve Capital redemption reserve £'000 Capital reduction reserve £'000 Retained earnings £'000 Total equity £'000
£'000
£'000
Balance at 1 January 2025 3,940 203,753 (378) 93 155,359 26,977 389,744
Loss and total comprehensive income for the period - - - - - (2,863) (2,863)
Transactions with owners
Dividends paid 17 - - - - - (10,901) (10,901)
Balance at 30 June 2025 (unaudited) 3,940 203,753 (378) 93 155,359 13,213
375,980
For the year ended 31 December 2024 (audited) Note Share capital £'000 Share premium reserve Treasury shares reserve Capital redemption reserve £'000 Capital reduction reserve £'000 Retained earnings £'000 Total equity £'000
£'000
£'000
Balance at 1 January 2024 3,940 203,753 (378) 93 155,359 84,850 447,617
Loss and total comprehensive income for the year - - - - (36,389) (36,389)
-
Transactions with owners
Dividends paid 17 - - - - - (21,484) (21,484)
Balance at 31 December 2024 (audited) 3,940 203,753 (378) 93 155,359 26,977 389,744
For the six months ended 30 June 2024 (unaudited) Note Share capital £'000 Share premium reserve Treasury shares reserve Capital redemption reserve £'000 Capital reduction reserve £'000 Retained earnings £'000 Total equity £'000
£'000
£'000
Balance at 1 January 2024 3,940 203,753 (378) 93 155,359 84,850 447,617
Profit and total comprehensive income for the period - - - - - 5,300 5,300
Transactions with owners
Dividends paid 17 - - - - - (10,741) (10,741)
Balance at 30 June 2024 (unaudited) 3,940 203,753 (378) 93 155,359 79,409 442,176
CONDENSED GROUP STATEMENT OF CASH FLOWS
For the six months ended 30 June 2025
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
Note £'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit before income tax (2,863) 5,300 (36,389)
Adjustments for:
Expected credit loss 623 1,436 3,329
Loss from fair value adjustment on investment properties 8 15,590 6,122 53,030
Finance income (105) (22) (148)
Finance costs 6 3,833 3,864 7,679
Operating results before working capital changes 17,078 16,700 27,501
Increase in trade and other receivables (1,148) (1,429) (1,853)
(Decrease)/increase in trade and other payables (2,981) 96 3,421
Net cash generated from operating activities 12,949 15,367 29,069
Cash flows from investing activities
Capital expenditure on investment properties (1,155) (1,113) (2,271)
Proceeds from sale of assets 350 - -
Restricted cash movement - 65 (155)
Interest received 84 - 103
Net cash used in investing activities (721) (1,048) (2,323)
Cash flows from financing activities
Loan arrangement fees paid - - (29)
Dividends paid 17 (10,901) (10,741) (21,484)
Interest paid (3,674) (3,705) (7,348)
Net cash used in financing activities (14,575) (14,446) (28,861)
Net decrease in cash and cash equivalents (2,347) (127) (2,115)
Cash and cash equivalents at the beginning of the period 26,899 29,014 29,014
Cash and cash equivalents at the end of the period 12 24,552 28,887 26,899
NOTES TO THE CONDENSED GROUP INTERIM FINANCIAL STATEMENTS (UNAUDITED)
For the six months ended 30 June 2025
1. CORPORATE INFORMATION
Social Housing REIT plc (the "Company") is a Real Estate Investment Trust
("REIT") incorporated in England and Wales under the Companies Act 2006 as a
public company limited by shares on 12 June 2017. The address of the
registered office is The Scalpel, 18th Floor, 52 Lime Street, London, United
Kingdom, EC3M 7AF. The Company is registered as an investment company under
section 833 of the Companies Act 2006 and is domiciled in the United Kingdom.
The principal activity of the Company is to act as the ultimate parent company
of Social Housing REIT plc and its subsidiaries (the "Group") and to provide
shareholders with an attractive level of income, together with the potential
for capital growth from investing in a portfolio of social homes.
2. BASIS OF PREPARATION
These condensed Group interim financial statements for the six months ended 30
June 2025 have been prepared in accordance with IAS 34 "Interim Financial
Reporting" and also in accordance with the measurement and recognition
principles of UK-adopted international accounting standards. They do not
include all of the disclosures that would otherwise be required in a complete
set of financial statements and should be read in conjunction with the 2024
Annual Report.
The comparative figures for the financial year ended 31 December 2024
presented herein do not constitute the full statutory accounts within the
meaning of section 434 of the Companies Act 2006. Those accounts have been
reported on by the Group's auditors and delivered to the registrar of
companies. The report of the auditor (i) was unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
The condensed Group interim financial statements for the six months ended 30
June 2025 have been reviewed by the Company's Auditor, BDO LLP, in accordance
with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity. The
condensed Group interim financial statements are unaudited and do not
constitute statutory accounts for the purposes of the Companies Act 2006.
The condensed Group interim financial statements have been prepared on a
historical cost basis, as modified for the Group's investment properties,
which have been measured at fair value. Gains or losses arising from changes
in fair values are included in profit or loss.
The Group has applied the same accounting policies and method of computation
in these condensed Group interim financial statements as in its 2024 annual
financial statements and are expected to be consistently applied during the
year ending 31 December 2025. At the date of authorisation of these financial
statements, there were a number of standards and interpretations which were in
issue but not yet effective. The Group has assessed the impact of these
amendments and has determined that the application of these amendments and
interpretations in current and future periods will not have a significant
impact on the financial statements.
2.1. Going concern
The Group benefits from a secure income stream from long leases which are not
overly reliant on any one tenant and present a well-diversified risk. The
Directors have reviewed the Group's forecast which shows the expected
annualised rental income exceeds the expected operating costs of the Group.
91.4% of rental income due and payable for the six months ended 30 June 2025
has been collected, rent arrears are predominantly attributable to two
Approved Providers, My Space Housing Solutions and Westmoreland Supported
Housing Ltd.
The Directors believe that the Group is still well placed to manage its
financing and other business risks and that the Group will remain viable,
continuing to operate and meet its liabilities as they fall due. During the
period, Fitch Ratings Limited assigned the Company an investment Long-Term
Issuer Default Rating 'A-' with a negative outlook and a senior secured rating
of 'A' for the Group's existing loan notes.
The Directors have performed an assessment of the ability of the Group to
continue as going concern, for a period of at least 12 months from the date
these condensed Group interim financial statements have been authorised for
issue. The Directors have considered the expected obligations of the Group for
the next 12 months and are confident that all will be met.
The Directors have also considered the financing provided to the Group.
Norland Estates Limited and TP REIT Propco 2 Limited have bank facilities with
MetLife and MetLife and Barings respectively.
The loans secured by Norland Estates Limited and TP REIT Propco 2 Limited are
subject to asset cover ratio covenants and interest cover ratio covenants
which can be found in the table below. The Directors have also considered
reverse stress testing and the circumstances that would lead to a covenant
breach. Given the level of headroom, the Directors are of the view that the
risk of scenarios materialising that would lead to a breach of the covenants
is remote.
Norland Estates Limited TP REIT Propco 2 Limited
Asset Cover Ratio (ACR)
Asset Cover Ratio Covenant x2.00 x1.67
Asset Cover Ratio at 30 June 2025 x2.42 X1.96
Blended Net initial yield 6.85% 6.40%
Headroom (yield movement) 135bps 104bps
Interest Cover Ratio (ICR)
Interest Cover Ratio Covenant 1.75x 1.75x
Interest Cover Ratio at 30 June 2025 4.78x 4.40x
Headroom (rental income movement) 63% 58%
Under the downside model the forecasts have been stressed to show the effect
of some Care Providers ceasing to pay their voids liability, and as a result
Approved Providers defaulting under some of the Group's leases. Under the
downside model the Group will be able to settle its liabilities for a period
of at least 12 months from the date these condensed Group interim financial
statements have been authorised for issue. As a result of the above, the
Directors are of the opinion that the going concern basis adopted in the
preparation of the condensed Group interim financial statements is
appropriate.
The Group has no short or medium-term refinancing risk given the 8.1 year
average maturity of its long-term debt facilities with MetLife and Barings,
the first of which expires in June 2028, and which are fully fixed at an
all-in weighted average rate of 2.74%.
Based on the forecasts prepared and the intentions of the Group, the Directors
consider that the Group will be able to settle its liabilities for a period of
at least 12 months from the date these condensed Group interim financial
statements have been authorised for issue and therefore has prepared these
condensed Group interim financial statements on the going concern basis.
2.2. Reporting period
These condensed Group interim financial statements have been prepared for the
six months ended 30 June 2025. The comparative periods are the six months
ended 30 June 2024 and the year ended 31 December 2024.
2.3. Currency
The Group's financial information is presented in Sterling which is also the
Group's functional currency.
2.4 Assets held for sale
An asset is classified as held for sale in line with IFRS 5 'Non-Current
Assets Held for Sale and Discontinued Operations' if its carrying value is
expected to be recovered through a sale transaction rather than continuing
use. Such assets are generally measured at the lower of their carrying amount
and fair value less costs to sell. An asset will be classified in this way
only when a sale is highly probable, management are committed to selling the
asset at the year-end date, the asset is available for immediate sale in its
current condition and the asset is expected to be disposed of within 12 months
after the date of the statement of financial position. Impairment losses on
initial classification as held for sale and subsequent gains and losses on
remeasurement are recognised in profit or loss.
3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. In the Directors' view, there have been no significant changes since
the annual report for the year ended 31 December 2024, to the extent of
estimation uncertainty, key assumptions or valuation techniques relating to
investment properties as a result of the current macroeconomic environment.
Further details can be found in note 8.
3.1 Expected Credit Losses (ECL)
The previous balance at 31 December 2024 related solely to one Approved
Provider, My Space. A default probability for each of the Approved Providers,
representing the estimated percentage likelihood of them paying arrears due at
30 June 2025, was determined based on their latest known financial position
and any repayment plans that had been agreed or discussed. For each Approved
Provider the estimated percentage probability of receiving arrears has been
multiplied by the arrears as at the statement of financial position date. The
Group recognised an additional ECL provision of £0.6 million in the current
period in relation to rental income charged to My Space Housing Solutions
Limited 'My Space' (30 June 2024: £1.4 million, 31 Dec 2024: £3.3 million).
The provision was subsequently fully written off after My Space entered into a
CVA during March 2025 resulting in a total ECL provision of nil as at 30 June
2025 (30 June 2024: £8.1 million, 31 Dec 2024: £8.0 million). The expected
credit loss for the current period relates wholly to one tenant (30 June 2024:
two tenants, 31 December 2024: one tenant).
3.2 Lease incentive debtor
The lease incentive debtor recognised from rent smoothing adjustments are not
considered to be financial assets as the amounts are not yet contractually
due. As such, the requirements of IFRS 9 (including the expected credit loss
method) are not applied to those balances. The credit risk associated with the
tenant is considered in the determination of the fair value of the related
property. In the current period, the expense recognised in respect of such
rent smoothing amounted to £32,000 (30 June 2024: £763,000 income), which is
primarily driven by the lower number of properties in current rent-free
periods compared to the prior year.
4. RENTAL INCOME
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Rental income - freehold assets 19,290 19,290 36,709
Rental income - leasehold assets 1,125 1,250 2,363
20,415 20,540 39,072
Expected credit loss (623) (1,436) (3,329)
Insurance charge income 324 - 713
Insurance charge expense (324) - (713)
Other income 24 3 106
19,816 19,107 35,849
The lease agreements between the Group and the Approved Providers are fully
repairing and insuring leases. The Approved Providers are responsible for the
settlement of all present and future rates, taxes, costs and other impositions
payable in respect of the properties. As a result, no direct property expenses
were incurred by the Group.
All rental income arose within the United Kingdom.
The movement in the expected credit loss provision during the period has been
set out below:
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Opening expected credit loss provision 8,021 6,666 6,666
Increase in provision for My Space Housing 623 1,436 3,329
Write off of Parasol debtor - - (1,974)
Write off of My Space Housing debtor (8,644) - -
Closing expected credit loss provision - 8,102 8,021
5. MANAGEMENT FEES
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Management fees 1,576 2,349 4,651
Termination fees - - 3,163
1,576 2,349 7,814
On 1 January 2025 Atrato Partners Limited ("Atrato") was appointed as the
Investment Manager of the Company by entering into the Investment Management
agreement. Under this agreement the Investment Manager will advise the Company
and provide certain management services in respect of the property portfolio.
The management fee is calculated quarterly, in arrears, as a percentage of the
Company's average market capitalisation at the end of each quarter. The
Management Fee will be calculated using the following fee thresholds and
rates:
Market capitalization threshold Relevant fee rate (per annum)
Up to and include £150 million 1.25% per annum (equivalent to 0.3125% per quarter)
Above £150 million, up to and including £300 million 1.00% per annum (equivalent to 0.25% per quarter)
Above £300 million 0.7% per annum (equivalent to 0.175% per quarter)
Management fees of £1.6 million were chargeable during the six months ended
30 June 2025 (six months ended 30 June 2024: £2.3 million, year ended 31
December 2024: £4.7 million).
6. FINANCE COSTS
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Interest payable on bank borrowings 3,609 3,609 7,217
Amortisation of loan arrangement fees 137 137 287
Lender property valuation fees 60 91 121
Head lease interest expense 22 22 44
Total finance cost for financial liabilities not held at fair value through 3,828 3,859 7,669
profit or loss
Bank charges 5 5 10
Total finance costs 3,833 3,864 7,679
Under the terms of the debt facilities the lenders require an independent
valuation to be undertaken at the Company's expense. The cost of these
valuations is set out above.
7. TAXATION
As a UK REIT, the Group is exempt from corporation tax on the profits and
gains from its property investment business, provided it meets certain
conditions as set out in the UK REIT regulations. For the six months ended 30
June 2025, the Group did not have any non-qualifying profits and accordingly
there is no tax charge in the period. If there were any non-qualifying profits
and gains, these would be subject to corporation tax.
It is assumed that the Group will continue to be a group UK REIT for the
foreseeable future, such that deferred tax has not been recognised on
temporary differences relating to the property rental business.
8. INVESTMENT PROPERTIES
Operational assets
£'000
As at 1 January 2025 624,695
Acquisitions and additions* 1,172
Disposals (350)
Fair value adjustment*** (15,326)
Movement in head lease ground rent liability 2
As at 30 June 2025 (unaudited) 610,193
As at 1 January 2024 675,497
Acquisitions and additions* 2,221
Fair value adjustment (53,027)
Movement in head lease ground rent liability 4
As at 31 December 2024 (audited) 624,695
As at 1 January 2024 675,497
Acquisitions and additions* 1,226
Fair value adjustment (6,122)
Movement in head lease ground rent liability 2
Reclassified to assets held for sale** (21,755)
As at 30 June 2024 (unaudited) 648,848
*Additions in the table above differs to the total capital expenditure amount
in the condensed Group statement of cash flows due to retentions no longer
payable which were credited to Investment Property additions.
**13 assets with fair value of £21.8 million were reclassified to assets held
for sale during the six months period ended 30 June 2024. See note 9 for
further details.
***The difference between the loss from fair value adjustment on investment
properties presented in the Statement of Comprehensive Income and Statement of
Cash Flows compared to note 8 is £264k. This relates to the lease incentive
balances associated with 36 Oxford Grove and 38 Oxford Grove, which were sold
during the period.
Reconciliation to independent valuation:
30 June 2025 31 December 2024 30 June 2024
£'000 £'000 £'000
Investment property valuation 611,786 626,351 652,689
Fair value adjustment - head lease ground rent 1,470 1,468 1,243
Fair value adjustment - lease incentive debtor* (3,063) (3,124) (5,084)
610,193 624,695 648,848
*Excluding lease incentive debtors related to the properties reclassified as
assets held for sale as at 30 June 2024.
The carrying value of leasehold properties at 30 June 2025 was £35.3 million
(30 June 2024: £28.9 million, 31 December 2024: £35.9 million). The
investment property valuation above excludes the fair value of the assets held
for sale at the end of each reporting period.
In accordance with "IAS 40: Investment Property", the Group's investment
properties have been independently valued at fair value by Jones Lang LaSalle
Limited ("JLL"), an accredited external valuer with recognised and relevant
professional qualifications. JLL provide their fair value of the Group's
investment property portfolio every six months.
JLL were appointed as external valuer by the Board on 11 December 2017. The
proportion of the total fees payable by the Company to JLL's total fee income
is minimal. Additionally, JLL has a rotation policy in place whereby the
signatories on the valuations rotate after five years.
% Key Statistics
Portfolio Metrics 30 June 2025 31 December 2024 30 June 2024
Capital Deployed (£'000)* 575,181 576,804 556,473
Number of Properties*** 492 494 481
Number of Tenancies 389 391 378
Number of Registered Providers 28 28 28
Number of Local Authorities 151 148 148
Number of Care Providers 116 109 109
Average Net Initial Yield** 6.42% 6.22% 5.97%
* calculated excluding acquisition costs
** calculated using IAS 40 valuations (excluding forward funding acquisitions)
*** excluding 13 properties that have been classified as assets held for sale
at 30 June 2024
Regional exposure
30 June 2025 31 December 2024** 30 June 2024
Region *Cost £'000 % of funds invested *Cost £'000 % of funds invested *Cost £'000 % of funds invested
North West 111,206 19.3 111,206 19.3 101,466 18.2
West Midlands 93,006 16.2 93,006 16.1 92,993 16.7
Yorkshire 81,781 14.2 87,103 15.1 84,498 15.2
East Midlands 69,276 12.0 63,979 11.1 62,853 11.3
North East 56,678 9.9 56,653 9.8 56,653 10.2
London 49,626 8.6 54,366 9.4 49,626 8.9
South East 54,869 9.6 49,626 8.6 49,490 8.9
South West 26,476 4.6 28,099 4.9 28,108 5.1
East 23,703 4.1 24,206 4.2 24,206 4.3
Scotland 5,900 1.0 5,900 1.0 5,900 1.1
Wales 2,660 0.5 2,660 0.5 680 0.1
Total 575,181 100 576,804 100 556,473 100.0
* excluding acquisition costs
** excluding 13 properties that have been classified as assets held for sale
at 30 June 2024
Fair value hierarchy
Date of valuation Total Quoted prices in active markets Significant observable inputs Significant unobservable inputs
(Level 1) (Level 2) (Level 3)
£'000 £'000 £'000 £'000
Assets measured at fair value: 30 June 2025 610,193 - - 610,193
Investment properties
Investment properties 31 December 2024 624,695 - - 624,695
Investment properties 30 June 2024 648,848 - - 648,848
There have been no transfers between Level 1 and Level 2 during the period,
nor have there been any transfers between Level 2 and Level 3 during the
period.
The valuations have been prepared in accordance with the RICS Valuation -
Global Standards (commonly known as the "Red Book") by JLL, one of the leading
professional firms engaged in the social housing sector.
As noted previously all of the Group's investment properties are reported as
Level 3 in accordance with IFRS 13 where external inputs are "unobservable"
and value is the Directors' best estimate, based upon advice from relevant
knowledgeable experts.
In this instance, the determination of the fair value of investment properties
requires an examination of the specific merits of each property that are in
turn considered pertinent to the valuation.
These include i) the regulated social housing sector and demand for the
facilities offered by each Specialised Supported Housing (SSH) property owned
by the Group; ii) the particular structure of the Group's transactions where
lessees, at their own expense, meet the majority of the refurbishment
costs of each property and certain purchase costs; iii) detailed financial
analysis with discount rates supporting the carrying value of each property;
iv) underlying rents for each property being subject to independent
benchmarking and adjustment where the Group considers them too high
(resulting in a price reduction for the purchase or withdrawal from the
transaction); and v) a full repairing and insuring lease with annual
indexation based on CPI or CPI+1% and effectively 25 years outstanding, in
most cases with a Registered Provider itself regulated by the Regulator of
Social Housing.
Descriptions and definitions relating to valuation techniques and key
unobservable inputs made in determining fair values are as follows:
Valuation techniques: Discounted cash flows
The discounted cash flows model considers the present value of net cash flows
to be generated from the properties, taking into account the expected rental
growth rate and lease incentive costs such as rent-free periods. The expected
net cash flows are then discounted using risk-adjusted discount rates.
There are three main unobservable inputs that determine the fair value of the
Group's investment properties:
1. The rate of inflation as measured by CPI; it should be noted that all
leases benefit from either CPI or RPI indexation;
2. The estimated rental value ('ERV') based on market conditions
prevailing at the valuation date; and
3. The discount rate applied to the rental flows.
Key factors in determining the discount rates to assess the level of
uncertainty applied include the performance of the regulated social housing
sector and demand for each specialist supported housing property owned by the
Group, costs of acquisition and refurbishment of each property, the
anticipated future underlying cash flows for each property, benchmarking of
each underlying rent for each property (passing rent), and the fact that all
of the Group's properties have the benefit of full repairing and insuring
leases entered into by a Housing Association.
All of the properties within the Group's portfolio benefit from leases with
annual indexation based upon CPI or RPI. A decrease in ERV would decrease the
fair value. A decrease in discount rate would increase the fair value. The
fair value measurement is based on the above items, highest and best use,
which does not differ from their actual use. The valuer also considers the
resulting net initial yield for each property for appropriateness.
Sensitivities of measurement of significant unobservable inputs
The Group's property portfolio valuation is open to judgements and is
inherently subjective by nature. The estimates and associated assumptions have
a significant risk of causing a material adjustment to the carrying amounts of
investment properties. The valuation is based upon assumptions including
future rental income (with growth in relation to inflation) and the
appropriate discount rate.
As a result, the following sensitivity analysis has been prepared:
Key unobservable inputs - discount rate and inflation:
30 June 2025 31 December 2024 30 June 2024
Range of discount rates 6.3%-10.2% 6.4%-10.4% 6.6%-10.5%
Average discount rate 7.7% 7.6% 7.4%
Range of Rental values (passing rents or ERV as relevant) of Group's £0.07m-£0.56m £0.07m-£0.55m £0.07m-£0.55m
Investment Properties
Average of Rentals values (passing rents or ERV as relevant) of Group's £0.1m £0.1m £0.1m
Investment Properties
CPI/RPI increases over the term of the relevant leases 2/2.5% 2/2.5% 2/2.5%
The tables below analyse the sensitivity on the fair value of investment
properties for changes in discount rates and inflation rates. As a result of
the indexation within the leases the inflation sensitivity captures the impact
of changes to rental values.
-1% change in +1% change in +0.5% change in -0.5% change in
Discount Rate Discount Rate CPI CPI
£'000 £'000 £'000 £'000
Changes in the IFRS fair value of investment properties as at 30 June 2025 66,935 (56,797) 33,781 (31,219)
Changes in the IFRS fair value of investment properties as at 31 December 2024 70,645 (59,690) 36,318 (33,639)
Changes in the IFRS fair value of investment properties as at 30 June 2024 76,400 (64,140) 38,033 (35,170)
Valuations have weakened generally, reflecting:
1. achieved market pricing for transactions which have occurred or are
reasonably expected to occur for opportunities currently being marketed.
2. while the average ERV across the portfolio is consistent with the prior
year, there is a softening of valuation assumptions relating to properties
with challenging lessee situations within the portfolio (including My Space in
particular), reflecting updated expectations on rent collection and
longer-term achievable rent levels.
3. softening of discount rates.
4. adjustment of expectations regarding a number of properties, moving towards
vacant possession value.
9. ASSETS HELD FOR SALE
Management considers none of the Group's properties (30 June 2024: 13; 31
December 2024: nil) to meet the conditions relating to assets held for sale,
as per IFRS 5: Non-current Assets Held for Sale and Discontinued Operations.
Assets held for sale are disclosed at their fair value.
The fair value of these properties, and its comparative value, is disclosed in
the table below along with associated assets and liabilities:
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Assets held for sale - - 21,755
- - 21,755
10. TRADE AND OTHER RECEIVABLES (non-current)
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Lease incentive debtor 2,852 3,156 4,881
Other receivables 145 150 155
2,997 3,306 5,036
The Directors consider that the carrying value of trade and other receivables
approximate their fair value. All amounts are due to be received in more than
one year from the reporting date.
11. TRADE AND OTHER RECEIVABLES (current)
30 June 2025 (unaudited) 31 December 2024 (unaudited) 30 June 2024 (audited)
£'000 £'000 £'000
Rent receivable 3,533 2,667 2,273
Lease incentive debtor 211 202 207
Prepayments 120 164 209
Other receivables 21 282 365
3,885 3,315 3,054
The Directors consider that the carrying value of trade and other receivables
approximate their fair value. All amounts are due to be received within one
year from the reporting date. Rent receivable and other receivables are
presented net of ECL provision of nil as at 30 June 2025 (30 June 2024: £8.1
million and 31 December 2024: £8.0 million). The change in the ECL balance is
attributable to the full write-off of the debt and the related provision as a
result of the CVA with My Space entered in March 2025.
The Group applies the general approach in providing for expected credit losses
under IFRS 9 for rent and other receivables. Where the credit loss relates to
revenue already recognised in the statement of comprehensive income, the
expected credit loss allowance is recognised in the Statement of Comprehensive
Income. Expected credit losses totalling £0.6 million (30 June 2024: £1.4
million, 31 December 2024: £3.3 million) were charged to the Statement of
Comprehensive Income in the period. The expected credit loss in the period
relates entirely to the unpaid rent from My Space up to the date of the CVA.
12. CASH, CASH EQUIVALENTS AND RESTRICTED CASH
30 June 2025 31 December 2024 30 June 2024
(unaudited) (audited) (unaudited)
£'000 £'000 £'000
Cash at bank 16,511 26,899 28,878
Restricted cash 593 593 373
Cash held by lawyers 41 - 9
Liquidity funds 8,000 - -
25,145 27,492 29,260
Cash held by lawyers is money held in a client account in relation to the
upcoming assignment of My Space Housing Solutions properties. These funds are
available immediately on demand.
Restricted cash represents monies held in escrow in relation to the transfer
of leases during 2020.
Liquidity funds represent surplus cash deposited with Treasury Spring across
multiple accounts with varying maturities. This arrangement was implemented to
achieve improved interest returns on available cash.
30 June 2025 31 December 2024 30 June 2024
(unaudited) (audited) (unaudited)
£'000 £'000 £'000
Total cash, cash equivalents and restricted cash 25,145 27,492 29,260
Restricted cash (593) (593) (373)
Cash reported on Group statement of cash flows 24,552 26,899 28,887
13. TRADE AND OTHER PAYABLES
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Trade payables 1,047 139 103
Accruals 1,235 5,522 2,262
Head lease ground rent 40 40 40
Assets held for sale liability - - 222
Other creditors 810 394 526
3,132 6,095 3,153
The Other Creditors balance consists of retentions due on completion of
outstanding works, accrued acquisition costs and reclassification of negative
rent receivable balances as at 30 June 2025. The Directors consider that the
carrying value of trade and other payables approximate their fair value. All
amounts are due for payment within one year from the reporting date.
14. OTHER PAYABLES
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Head lease ground rent 1,430 1,428 1,204
Rent deposit 100 100 100
1,530 1,528 1,304
15. BANK AND OTHER BORROWINGS
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Bank and other borrowings drawn at period end 263,500 263,500 263,500
Unamortised costs at beginning of period (2,059) (2,317) (2,317)
Less: loan issue costs incurred - (29) -
Add: loan issue costs amortised 137 287 137
Unamortised costs at period end (1,922) (2,059) (2,180)
Balance at period end 261,578 261,441 261,320
At 30 June 2025 there were no undrawn bank borrowings (30 June 2024: £nil, 31
December 2024: £nil).
As at 30 June 2025, the Group's borrowings comprised two debt facilities:
• a long-dated, fixed rate, interest only financing
arrangement in the form of a private placement of loan notes in an amount of
£68.5 million with MetLife Investment Management (and affiliated funds); and
• £195.0 million long-dated, fixed rate, interest only
sustainability-linked loan notes through a private placement with MetLife
Investment Management clients and Barings.
Loan Notes
The Loan Notes of £68.5 million are secured against a portfolio of specialist
supported housing assets throughout the UK, worth approximately £166.0
million (30 June 2024: £186.9 million, 31 December 2024: £170.0 million).
The details of the notes are set out in the table below. At 30 June 2025, the
Loan Notes have been independently valued at £60.8 million (30 June 2024:
£58.1 million, 31 December 2024: £59.0 million) which has been used to
calculate the Group's EPRA Net Disposal Value in note 2 of the Unaudited
Performance Measures. The fair value is determined by comparing the discounted
future cash flows using the contracted yields with the reference gilts plus
the margin implied. The reference gilts used were the Treasury 3.666% 2028
Gilt (Tranche A) and Treasury 4.090% 2033 Gilt (Tranche B), with an implied
margin that is unchanged since the date of fixing.
Loan Note Principal LTV Term Repayment date All in rate Independent Valuation
Tranche A £41.5 million 40% 10 years 30 June 2028 2.924% £38.5 million
Tranche B £27.0 million 40% 15 years 30 June 2033 3.215% £22.3 million
Blended Tranche A & B £68.5million 40% 12 years 3.039% £60.8 million
In August 2021, the Group put in place Loan Notes of £195.0 million. The Loan
Notes are secured against a portfolio of specialist supported housing assets
throughout the UK, worth approximately £382.6 million (30 June 2024: £375.9
million, 31 December 2024: £392.0 million). The details of the notes are set
out in the table below. At 30 June 2025, the Loan Notes have been
independently valued at £148.0 million (30 June 2024: £140.9 million, 31
December 2024: £143.8 million) which has been used to calculate the Group's
EPRA Net Disposal Value in note 2 of the Unaudited Performance Measures. The
fair value is determined by comparing the discounted future cash flows using
the contracted yields with the reference gilts plus the margin implied. The
reference gilts used were the Treasury 3.886% 2031 Gilt (Tranche A) and
Treasury 4.490% 2036 Gilt (Tranche B), with an implied margin that is
unchanged since the date of fixing.
Loan Note Principal LTV Term Repayment date All in rate Independent Valuation
Tranche A £77.5 million 40% 10 years 26 August 2031 2.403% £64.0 million
Tranche B £117.5 million 40% 15 years 26 August 2036 2.786% £84.0 million
Blended Tranche A & B £195.0 million 40% 13 years 2.634% £148.0 million
The Group's loan to value at 30 June 2025 was 41.0% (30 June 2024: 37.2%; 31
December 2024: 40.0%). The loans are considered a Level 2 fair value
measurement.
The Group has complied with all the financial covenants related to the above
loans throughout the period.
Effect of covenants
All of the Group's non-current loans and borrowings contain covenants, which,
if not met, would result in the borrowings becoming repayable on demand. These
borrowings are otherwise repayable more than 12 months after the end of the
reporting period. As at 30 June 2025, the Group complied with all the
covenants that were required to be met on or before 30 June 2025. The
covenants that are required to be complied with after the end of the current
period do not affect the classification of the related borrowings as current
or non-current at the statement of financial position date. Therefore, all
these borrowings remain classified as non-current liabilities.
16. CAPITAL REDUCTION RESERVE
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Balance at beginning of period 155,359 155,359 155,359
Balance at end of period 155,359 155,359 155,359
The capital reduction reserve is a distributable reserve that was created on
the cancellation of share premium.
No shares were repurchased in the current period.
CAPITAL REDEMPTION RESERVE
30 June 2025 (unaudited) 31 December 2024 (audited) 30 June 2024 (unaudited)
£'000 £'000 £'000
Balance at beginning of period 93 93 93
Balance at end of period 93 93 93
The Capital Redemption Reserve is the nominal value of the shares cancelled
from the share buybacks in 2023.
17. DIVIDENDS
For the six months ended 30 June 2025 For the year ended 31 December 2024 For the six months ended 30 June 2024
(unaudited) (audited) (unaudited)
£'000 £'000 £'000
1.365p for the 3 months to 31 December 2023 paid on 28 March 2024 - 5,371 5,371
1.365p for the 3 months to 31 March 2024 paid on 28 June 2024 - 5,371 5,370
1.365p for the 3 months to 30 June 2024 paid on 4 October 2024 - 5,371 -
1.365p for the 3 months to 30 September 2024 paid on 13 December 2024 - 5,371 -
1.365p for the 3 months to 31 December 2024 paid on 11 April 2025 5,371 - -
1.4055p for the 3 months to 31 March 2025 paid on 27 June 2025 5,530 - -
10,901 21,484 10,741
On 9 September 2025 the Company declared an interim dividend of 1.4055 pence
per Ordinary Share for the period 1 April 2025 to 30 June 2025. The total
dividend of £5,530,172 will be paid on or around 3 October 2025 to Ordinary
shareholders on the register on 18 September 2025.
The Company intends to pay dividends to shareholders on a quarterly basis and
in accordance with the requirements of the REIT regime. Dividends are not
payable in respect of the Treasury shares held by the Company.
18. SEGMENTAL INFORMATION
All of the Group's properties are engaged in a single segment business with
all revenue, assets and liabilities arose in the UK, therefore, no
geographical segmental analysis is required by IFRS 8 for the reasons provided
in the 31 December 2024 Annual Report.
19. RELATED PARTY DISCLOSURE
Directors
Directors are remunerated for their services at such rate as the Directors
shall from time to time determine. The Chairman receives a director's fee of
£75,000 per annum (30 June 2024: £75,000, 31 December 2024: £75,000), and
the other Directors of the Board receive a fee of £50,000 (30 June 2024:
£50,000, 31 December 2024: £50,000) per annum. The Directors are also
entitled to an additional fee of £7,500 in connection with the production of
every prospectus by the Company. No prospectus was produced in the year ended
31 December 2024 nor in the current period.
Dividends of the following amounts were paid to the Directors during the
period:
Chris Phillips: £1,520 (30 June 2024: £1,498, 31 December 2024: £2,995)
Peter Coward: £2,219 (30 June 2024: £2,186, 31 December 2024: £4,372)
Tracey Fletcher-Ray: £1,045 (30 June 2024: £1,030, 31 December 2024: £2,060)
No shares were held by Cecily Davis & Bryan Sherriff as at 30 June 2025
(31 December 2024 and 30 June 2024: nil).
Ian Reeves resigned as director effective 19 May 2025.
Investment Manager
The Company considers Atrato Partners Limited (the 'Investment Manager') as a
key management personnel and therefore a related party. Further details of the
investment management contract and transactions with the Investment Manager
are disclosed in note 5.
20. POST BALANCE SHEET EVENTS
Dividends
On 9 September 2025, the Company declared an interim dividend of 1.4055 pence
per Ordinary Share for the period 1 April 2025 to 30 June 2025. The total
dividend of £5,530,172 will be paid on or around 3 October 2025 to Ordinary
shareholders on the register on 19 September 2025.
21. CAPITAL COMMITMENTS
The Group does not have capital commitments in both the prior year and the
current period.
22. EARNINGS PER SHARE
Earnings per share ("EPS") amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Company by the weighted
average number of Ordinary Shares in issue during the period. As there are no
dilutive instruments outstanding, both basic and diluted earnings per share
are the same.
The calculation of basic and diluted earnings per share is based on the
following:
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
Calculation of Earnings per share
Net (loss)/profit attributable to ordinary shareholders (£'000) (2,863) 5,300 (36,389)
Weighted average number of ordinary shares (excluding treasury shares) 393,466,490 393,466,490 393,466,490
IFRS Earnings per share - basic and diluted (0.73)p 1.35p (9.25)p
Calculation of EPRA Earnings per share
For the six months ended 30 June 2025 For the six months ended 30 June 2024 For the year ended 31 December 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net (loss)/profit attributable to ordinary shareholders (£'000) (2,863) 5,300 (36,389)
Loss from fair value adjustment on investment properties (£'000) 15,590 6,122 53,030
Termination fees (£'000) - - 3,343
EPRA earnings (£'000) 12,727 11,422 19,984
Non-cash adjustments to include:
Movement in lease incentive debtor 296 (763) 965
Amortisation of loan arrangement fees (£'000) 137 137 287
Adjusted earnings (£'000) 13,160 10,796 21,236
Weighted average number of ordinary shares (excluding treasury shares) 393,466,490 393,466,490 393,466,490
EPRA Earnings per share - basic and diluted 3.24p 2.90p 5.08p
Adjusted earnings per share - basic and diluted 3.34p 2.74p 5.40p
EPRA released revised Best Practice Reporting guidelines during September 2024
which are effective for reporting periods beginning on or after 1 October
2024. The Company has early adopted these guidelines for the year ended 31
December 2024. The revised guidelines permit adjustments in respect of
non-operating or exceptional items within EPRA earnings as they are unusual in
nature and very unlikely to reoccur in the foreseeable future.
The termination payments of £3.3 million in respect of the change in
Investment manager are considered to be exceptional items and have been added
back in arriving at EPRA earnings. There is no impact in respect of previous
periods as there were no items that fall within this category.
Adjusted earnings is a performance measure used by the Board to assess the
Group's dividend payments. The metric adjusts EPRA earnings for non-cash
items, including amortisation of ongoing loan arrangement fees and the
movement in the lease incentive debtor. The Board sees these adjustments as a
reflection of actual cashflows which are supportive of dividend payments. In
the previous year, an amount of £1,984,000 was written off in respect of a
lease incentive debtor relating to Parasol when the leases were transferred to
Westmoreland as this is not reflective of the actual cashflows. The Board sees
these adjustments as a reflection of actual cashflows which are supportive of
dividend payments. The Board compares adjusted earnings to the available
distributable reserves when considering the level of dividend to pay.
For this EPRA measure and proceeding EPRA measures, please refer to
explanations and definitions of the EPRA performance measures that can be
found below.
23. NET ASSET VALUE PER SHARE
Basic Net Asset Value per share is calculated by dividing net assets in the
Condensed Group Statement of Financial Position attributable to Ordinary
equity holders of the Company by the number of Ordinary Shares outstanding at
the end of the period. Although there are no dilutive instruments outstanding,
both basic and diluted NAV per share are disclosed below.
Net asset values have been calculated as follows:
30 June 2025 31 December 2024 30 June 2024
(unaudited) (audited) (unaudited)
Net assets at end of period (£'000) 375,980 389,744 442,176
Shares in issue at end of period (excluding shares held in treasury) 393,466,490 393,466,490 393,466,490
IFRS NAV per share - basic and dilutive 95.56p 99.05p 112.38p
UNAUDITED PERFORMANCE MEASURES
1. EPRA Net Reinstatement Value
30 June 2025 30 June 2024 31 December 2024
IFRS NAV/EPRA NAV (£'000) 375,980 442,176 389,744
Include:
Real Estate Transfer Tax* (£'000) 37,118 41,754 38,594
EPRA Net Reinstatement Value (£'000) 413,098 483,930 428,338
Fully diluted number of shares 393,466,490 393,466,490 393,446,490
EPRA Net Reinstatement value per share 104.99p 122.99p 108.86p
* Purchaser's costs
2. EPRA Net Disposal Value
30 June 2025 30 June 2024 31 December 2024
IFRS NAV/EPRA NAV (£'000) 375,980 442,176 389,744
Include:
Fair value of debt* (£'000) 52,799 62,385 58,605
EPRA Net Disposal Value (£'000) 428,779 504,561 448,349
Fully diluted number of shares 393,466,490 393,466,490 393,446,490
EPRA Net Disposal Value per share** 108.97p 128.23p 113.95p
* Difference between interest-bearing loans and borrowings included in
Condensed Group statement of financial position at amortised cost, and the
fair value of interest-bearing loans and borrowings.
** Equal to the EPRA NNNAV disclosed in previous reporting periods.
3. EPRA Net Tangible Assets
30 June 2025 30 June 2024 31 December 2024
IFRS NAV/EPRA NAV (£'000) 375,980 442,176 389,744
EPRA NTA (£'000) 375,980 442,176 389,744
Fully diluted number of shares 393,466,490 393,466,490 393,446,490
EPRA NTA per share * 95.56p 112.38p 99.05p
*Equal to IFRS NAV and previous EPRA NAV metric as none of the EPRA Net
Tangible Asset adjustments are applicable as at 30 June 2025, 30 June 2024 or
31 December 2024.
4. EPRA net initial yield (NIY) and EPRA "topped up" NIY
30 June 2025 30 June 2024 31 December 2024
£'000 £'000 £'000
Investment Properties - wholly owned (excluding head lease ground rents) 608,723 647,605 623,227
Assets held for sale - 21,755 -
Completed property portfolio 608,723 669,360 623,227
Allowance for estimated purchasers' costs 37,118 41,754 38,594
Gross up completed property portfolio valuation 645,841 711,114 661,821
Annualised passing rental income 43,141 42,362 42,606
Annualised net rents 43,141 42,362 42,606
Contractual increases for lease incentives 18 256 83
Topped up annualised net rents 43,159 42,618 42,689
EPRA NIY 6.68% 5.96% 6.44%
EPRA Topped Up NIY 6.68% 5.99% 6.45%
5. Ongoing Charges Ratio
30 June 2025 30 June 2024 31 December 2024
£'000 £'000 £'000
Annualised ongoing charges 5,521 6,797 6,885
Average undiluted net assets 382,862 444,896 418,681
Ongoing charges 1.44% 1.53% 1.64%
6. EPRA Vacancy Rate
30 June 2025 30 June 2024 31 December 2024
£'000 £'000 £'000
Estimated Market Rental Value (ERV) of vacant spaces 655 138 138
Estimated Market Rental Value (ERV) of whole portfolio 43,814 42,756 42,826
EPRA Vacancy Rate 1.49% 0.32% 0.32%
7. EPRA Cost Ratio
30 June 2025 30 June 2024 31 December 2024
£'000 £'000 £'000
Total administrative and operating costs 3,361 3,843 11,677
Gross rental income 20,415 20,540 39,072
EPRA cost ratio 16.47% 18.71% 29.89%
1 SOHO Impact Report 2024, The Good Economy
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