REG - Social Housing Reit - Results For the 12 Months Ended 31 December 2025
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RNS Number : 1698Y Social Housing Reit PLC 26 March 2026
26 March 2026
Social Housing REIT plc
(the "Company", "SOHO" or, together with its subsidiaries, the "Group")
FULL YEAR RESULTS FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2025
The Board of Social Housing REIT plc, a UK Real Estate Investment Trust
investing in Specialised Supported Housing ("SSH"), is pleased to announce its
Audited results for the twelve months ended 31 December 2025. The first year
under the management of Atrato Partners Limited ("Atrato") delivered improved
earnings and strengthened operational oversight.
Chris Phillips, Chair of Social Housing REIT plc, commented:
"As I conclude my tenure as Chair, I would like to thank shareholders,
advisers and my fellow Directors for their support. I am confident that Jos
Short, as Chair-elect, supported by Fionnuala Hogan as Audit Chair, will guide
the Company admirably through its next phase.
With a strengthened platform, an inflation-aligned income profile, and a clear
ambition to build scale responsibly within the listed market, I believe that
SOHO is well-positioned to deliver secure and growing dividends for
shareholders for the long term."
Highlights for the twelve months ended 31 December 2025
· Adjusted earnings per share rose 20.9%
Driven by an increase in rental income collected, fixed cost of debt and a
reduction in operational costs.
· Significant improvement in adjusted dividend cover to 1.17x
(2024: 0.99x).
Reflecting an adjusted EPS of 6.53p per share (2024: 5.40p) compared to total
dividends per share paid in FY25 of 5.58 per share.
· Net rental income increased by 11.7% to £40.03 million compared
to 2024 (£35.85 million)
Driven by inflation-linked rental uplifts and improved rent collection
outcomes of 91.5 per cent in 2025 (87.6% as at FY2024).
· Dividend target raised by 3%
Dividends of 5.622 pence per share were declared, in line with the announced
annual target. 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 reduced to 18.7% (2024: 29.9 per cent), reflecting the
transition to a market capitalisation-based management fee and a detailed cost
reduction programme.
· Highly attractive debt profile with an average fixed cost of
2.74%
The Company has £263.5 million of fixed-rate debt at a weighted average cost
of 2.74%, weighted average maturity of 7.6 years, and no near-term refinancing
requirement, with the earliest maturity in mid-2028.
· Fitch 'A-' investment grade rating reaffirmed
Reflecting improving operating performance, strong debt metrics, and the
long-dated secure income.
· Asset valuation at a Net Initial Yield of 6.42%
The portfolio was valued at £606.3 million at 31 December 2025 (2024 £626.4
million) reflecting a Net Initial Yield of 6.42% (2024: 6.22%).
Financial and Operational Summary
Year ended Year ended
31 December 2025 31 December 2024
Adjusted Earnings per Share(1) 6.53p 5.40p
Dividends per Share (declared) 5.62p 5.46p
Adjusted Dividend Cover(2) 1.17x 0.99x
EPRA Cost Ratio 18.7% 29.9%
Rent Collection 91.5% 87.6%
As at As at
31 December 2025
31 December 2024
IFRS & EPRA Net Tangible Assets per share 94.23p 99.05p
Net Loan to Value(3) 39.5% 37.7%
Number of properties 492 494
Number of homes 3,412 3,424
Operational Highlights
· Continued rent collection progress, supported by robust occupancy
Rent collection for the year was 91.5 per cent of contracted rental income,
reflecting improved performance and active management of legacy counterparty
positions. Resident occupancy remained robust, rising slightly to 87 per
cent(4).
· Proactive counterparty engagement and portfolio optimisation
More than half of the properties assigned from Parasol to Portus (formerly
Westmoreland) have returned to fully repairing and insuring ("FRI") terms with
rents ahead of target. The remaining assigned properties will revert to FRI
terms once stabilisation is reached during 2026. For the properties leased to
My Space, assignments of the performing properties are due to complete
imminently and will move from pass-through to long-term FRI leases following
stabilisation. The remaining assets deemed unsuitable are being sold, or
assigned pending sale once residents are carefully re-housed.
· 100% of leases inflation-linked(5)
Inflation linkage remains central to the investment proposition. All
contracted rent is indexed to CPI or RPI and reviewed annually, with 86 per
cent of uplifts uncapped. For properties that had a rent review during 2025,
the average rental uplift amount was 2.2%. The majority of inflation uplifts
are indexed to September CPI which was 3.8% in September 2025, supporting
strong rental growth for the coming year.
Outlook
The Investment Manager, Atrato, has improved earnings, strengthened
counterparty oversight and Social Housing REIT is now well-positioned for
growth. Atrato's focus remains on earnings growth, portfolio optimisation,
cost discipline, and accretive growth opportunities. The Board believes the
Company is well positioned to continue providing high-quality SSH
accommodation, delivering long-term, predominantly inflation-linked income for
shareholders alongside measurable social impact.
Notes
1 EPRA adjusted earnings basis removes the impact of non-cash
items and the termination payments to the previous investment manager from
IFRS profit.
2 Calculated as EPRA adjusted earnings divided by dividends paid
during the period.
3 Net LTV is calculated as balance sheet borrowings less cash and
cash equivalents divided by investment property.
4 Excluding assets being sold
5 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 Full Year 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) 207 545 8000
(Corporate Broker & Financial Adviser)
Hugh Jonathan
Amit Wangoo
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
It is a privilege to present my final Chair's statement for the Social Housing
REIT plc. As I conclude my nine years as Chair, I am pleased to report that I
leave SOHO in a strong financial position and well positioned for future
growth having completed the appointment of Atrato as Investment Manager in
January 2025 and changed the Company's financial advisers.
Our Specialised Supported Housing ("SSH") portfolio is a key facilitator of
independence for those vulnerable adults who call our properties home. Across
our extensive portfolio, registered providers of social housing ("Approved
Providers") manage our properties and collect rent paid for residents by
housing benefit, funded by central Government. This model continues to
underpin the Company's focus on secure, inflation-aligned income streams,
offering independent living.
In a listed real estate market where scale and liquidity are increasingly
important to institutional investors, the Board remains clear that relevance
and investability require both income security and credible growth ambitions.
The value of asset-backed residential strategies offering attractive long-term
income is increasingly recognised. The Company continues to engage actively
with shareholders to reinforce understanding of the SSH sector's underlying
fundamentals. These fundamentals are shared by other adjacent living sector
strategies, with demographic drivers and funding reforms reshaping
occupational demand and financial outcomes. The Company is well positioned to
be a beneficiary of this dynamic.
The Board has been encouraged to see the improvement in the Company's share
price and the corresponding improvement in the discount to Net Asset Value
("NAV").
Macroeconomic Backdrop
Several macroeconomic indicators improved during the year, although
geopolitical uncertainty continued to weigh upon markets and economic growth.
Earlier concerns that interest rates would remain elevated placed pressure on
property valuations. Whilst inflation declined meaningfully during 2025,
allowing for a 100 basis point reduction in the UK base rate to 3.75% during
the year, more recent geopolitical events could see a short to medium-term
inflation pick up. We remain optimistic that, over the longer term, lower
inflation will support a more stable interest rate environment, which should
be supportive of income-producing real estate, particularly strategies with
inflation-linked cashflows such as SSH.
The Company continues to benefit from attractive long-term debt. All
borrowings are fixed rate, with a weighted unexpired average term of 7.6 years
and a weighted average fixed rate of 2.74%. This conservative financing
structure supports income resilience and underpins the Company's ambition to
pursue disciplined growth.
Sector Tailwinds
Positive policy reforms introduced by the Labour Government in 2025, including
the £39 billion Affordable Homes Programme and the introduction of a ten-year
CPI plus 1% rent settlement, provide long-term favourable tailwinds for the
sector. Despite this, the UK continues to face a structural supply shortage in
supported housing. Demand for SSH remains strong, driven by demographic trends
and policy preference for community-based living.
The persistent supply/demand imbalance, combined with the appeal of
inflation-linked rental uplifts, has underpinned our portfolio performance
over the past 12 months and provides a strong platform for sustainable income
growth over time.
Operational Performance
Across the portfolio, excluding the Portus and My Space matters noted below,
rent collection remained strong with 100% collected during the year. In total,
the Company has 389 leases with a total annualised contracted rental income of
£43.7 million as at 31 December 2025, an increase of £1.1 million over the
year, resulting from contractual inflation-linked rental uplifts, with all
leases subject to annual index-linked reviews.
The homes within the portfolio continue to be well maintained - over 440 asset
inspections having been completed to ensure they remain safe and compliant.
They are also well utilised, with occupancy rising to 87% following the sale
of non-core assets identified by the Investment Manager. For context, it is
worth noting that sustainable occupancy in the SSH sector is generally
accepted to be around 80%. Our current levels comfortably exceed this
threshold. The Investment Manager continues to undertake property-by-property
reviews of occupancy with its lessees to ensure long-term sustainability and
income visibility.
The Investment Manager inherited a portfolio with two Approved Provider
challenges which were disrupting rent collection. Since its appointment in
early 2025, they have driven rapid progress toward resolving both issues, with
solutions now well advanced.
The Investment Manager has substantially completed the stabilisation of
properties transferred from Parasol to Portus and advanced the lease
assignments from My Space to Inclusion and from Pivotal to IHL. These actions
are on track to strengthen rent collection and asset value, undertaken
throughout with careful prioritisation of vulnerable residents' needs.
In parallel, Atrato is working to mitigate longer term counterparty risk; a
pilot is now being established to improve rent recovery resilience, with plans
for a wider rollout upon successful completion.
Portfolio Optimisation
The Investment Manager has completed the assessment of each property against
five key characteristics of a successful SSH scheme: suitable properties,
appropriate adaptations, identified demand, sustainable rents, and reputable
partners. Through its initial portfolio-wide property review, a small number
of assets were identified as unsuitable or below required standards. These
assets are being disposed of, with sales already progressing at or around book
value. The remaining portfolio is well positioned to provide long-term homes
for residents and durable income for shareholders.
I am pleased to report that our most recent forward-funded scheme in Chorley
reached practical completion during the year and is nearing full occupation.
Looking ahead, the Board expects the Company to move from stabilisation
towards a measured phase of earnings-led growth, focused on scale, liquidity
and sustainable dividend progression.
Alongside social impact benefits, Atrato continues to enhance the
environmental credentials of the portfolio. The portfolio-wide EPC Upgrade
Programme has commenced, and compliance with anticipated legislative standards
improved from 71% to 77% during the year. We expect to achieve full compliance
by 2028, ahead of the anticipated 2030 deadline.
The newly introduced Sustainability Report, which accompanies this Annual
Report and this year's Social Impact Report, exemplifies the Investment
Manager's evolving focus on the wider societal and environmental impacts of
our investment decisions and the role the Company plays in delivering
efficient homes that work for residents and the environment.
2026 Outlook
The Board is confident that improved rent collection, inflation-linked income
growth and disciplined capital allocation will support further narrowing of
the NAV discount. Growth will be pursued only where it reinforces income
quality and strengthens long-term dividend cover.
The dividend target was increased in 2025 to 5.622 pence per share and
remains well covered at 1.17 times. Completion of the Portus and the My Space
assignments is expected to support further dividend growth in 2026.
As I conclude my tenure as Chair, I thank shareholders, advisers and my fellow
Directors for their continued support. I am confident that Jos Short, as
Chair-elect, supported by Fionnuala Hogan as Audit Chair, who replaces Peter
Coward who has also completed nine years of tenure, will guide the Company
admirably through its next phase.
With a strengthened platform, an inflation-aligned income profile, and a clear
ambition to build scale responsibly within the listed market, I believe that
SOHO is positioned to deliver secure and growing dividends for shareholders
over the long term.
Chris Phillips
Chair
25 March 2026
KEY PERFORMANCE INDICATORS
We set out below our key performance indicators for the Company.
KPI and Definition Performance (as at 31 December 2025)
1. IFRS & EPRA NTA Per Share
The value of our assets (based on an independent valuation) less the book 94.23 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 0.8% for the year
share price over a period, plus dividends declared for that period.
(31 December 2024: -8.1%)
The total accounting return since IPO is 39.1%
3. Adjusted EPS
EPRA earnings adjusted for company specific items to reflect the underlying 6.53 pence per share for the year
profitability of the business, calculated on the weighted average number of
(31 December 2024: 5.40p)
shares in issue during the year.
4. Adjusted Dividend Cover
Dividends paid or declared in respect of the year ended 31 December 2025 The dividend was 1.17x covered for the year
totalled 5.622 pence, with dividend cover
(31 December 2024: 0.99x)
based on adjusted earnings.
5. Net Loan to Value ("LTV")
Net LTV is calculated as net borrowings (being total borrowings less cash and 39.5%
cash equivalents) divided by the gross carrying value of investment properties
(31 December 2024: 37.7%)
and other relevant property assets.
6. Rent Collection
Rent collection is one of the Group's principal measures of performance, 91.5% for the year
measured against total contracted rent due.
(31 December 2024: 87.6%)
Material rent arrears during the year mainly attributable to two Approved
Providers, My Space Housing Solutions and Portus Supported Housing Limited.
7. Ongoing Charges Ratio
A measure of all operating costs incurred, calculated as a 1.51%
percentage of average net assets in that year.
(31 December 2024: 1.64%)
8. EPRA Cost Ratio
Administrative & operating costs (including costs of direct 18.68%
vacancy) 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 33.4%
to the single largest Approved Provider.
(31 December 2024: 30.9%)
Adjusted earnings is a performance measure used by the Board to assess the
Group's financial performance and dividend payments. The metric adjusts EPRA
earnings for non-cash items such as the amortisation of finance costs and the
movement in lease incentive debtor. Adjusted earnings is considered a better
reflection of the measure over which the Board assesses the Group's trading
performance and dividend cover.
Adjusted EPS reflects the adjusted earnings defined above attributable to each
share.
The Group uses alternative performance measures including the European Public
Real Estate ("EPRA") Best Practice Recommendations ("BPR") to supplement its
IFRS measures as the Board considers that these measures give users of the
financial statements the best understanding of the underlying performance of
the Group's property portfolio. The EPRA measures are widely recognised and
used by public real estate companies and investors and seek to improve
transparency, comparability and relevance of published results in the sector.
The EPRA cost ratio does not exclude the impact of non-operational or
exceptional items.
Reconciliations between EPRA measures and the IFRS financial statements can be
found in the unaudited performance measures section.
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 and Definition Performance (as at 31 December 2025)
1. EPRA EPS
A measure of EPS designed by EPRA to present underlying earnings from core 6.37 pence per share for the year
operating activities.
(31 December 2024: 5.08p)
2. EPRA Net Reinstatement Value ("NRV") Per Share
An EPRA NAV per share metric which assumes that entities never sell assets and 103.56 pence per share
aims to represent the value required to re-build the entity.
(31 December 2024: 108.86p)
3. EPRA Net Tangible Assets ("NTA") Per Share
An EPRA NAV per share metric which assumes entities buy and sell assets, 94.23 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 106.62 pence per share
disposal scenario, where deferred tax, financial instruments and certain other
(31 December 2024: 113.95p)
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 6.82%
date, less non-recoverable property operating expenses, divided by the market
(31 December 2024: 6.44%)
value of the property, increased with (estimated) purchasers' costs.
6. EPRA "Topped-Up" Net Initial Yield
This measure incorporates an adjustment to the EPRA NIY in respect of the 6.82%
expiration of rent-free periods (or other unexpired lease incentives such as
(31 December 2024: 6.45%)
discounted rent periods and step rents).
7. EPRA Vacancy Rate
Estimated Market Rental Value ("ERV") of vacant space divided by ERV of the 1.54%
whole portfolio.
(31 December 2024: 0.32%)
8. EPRA Cost Ratio
Administrative & operating costs (including costs of direct vacancy) 18.68%
divided by gross rental income.
(31 December 2024: 29.89%)
9. EPRA LTV
Net debt divided by total property portfolio and other 39.08%
eligible assets.
(31 December 2024: 37.66%)
10. EPRA Like-For-Like Rental Growth
Changes in net rental income for those properties held for the duration of Rental increase of 2.21% for the year
both the current and comparative reporting period.
(31 December 2024: 4.16%)
11. EPRA Capital Expenditure
Amounts spent on the purchase and development of investment properties £2.2 million for the year
(including any capitalised transaction costs).
(31 December 2024: £2.2 million)
FUND MANAGER'S REPORT
Introduction
This report marks our first anniversary as Investment Manager for Social
Housing REIT plc ("SOHO"). Over the past year, we have made considerable
progress in remediating not only the existing portfolio, but also confidence
in the asset class.
Specialised Supported Housing ("SSH") remains a vital component of the UK
residential market, providing specifically adapted homes for vulnerable adult
residents and enabling independent living with support. This long-term housing
solution delivers improved wellbeing outcomes for residents and material
savings to the public purse, representing an invaluable win-win in an era of
constrained public finances.
Demonstrating Sector Value and Restoring Investor Confidence
Despite our confidence in both the sector and SOHO's portfolio, the
well-publicised failures of other, different social housing models have
affected shareholder and public sector confidence in SSH.
It is therefore essential that we demonstrate SOHO's continued ability to
deliver secure, inflation-aligned income for shareholders, whilst also playing
an active role in restoring confidence in the sector as a viable private
sector asset class.
We are pleased to see momentum returning, reflected in the SOHO share price
and the narrowing of the discount to NAV during the year. Improved investor
sentiment has been supported by continued progress in portfolio optimisation.
This includes enhanced asset standards, clearer counterparty expectations, the
replacement of underperforming lessees, and the disposal of noncore assets.
SOHO's increasingly refined portfolio demonstrates the benefits of proactively
managed SSH assets and we remain focused on evidencing those outcomes.
Portfolio Optimisation
At its core, SSH is simply operational residential real estate. This requires
the right property in the right location, with the correct adaptations. Given
those factors, occupancy will be high and rents sustainable. Leveraging our
experienced operational team and sector expertise, we are working to
strengthen lessee relationships, enhance property quality, and improve both
resident and financial outcomes.
Our primary focus since appointment has centred on two workstreams. First,
completing the assignments from Parasol Homes ("Parasol") to Portus and
implementing solutions in respect of My Space Housing Solutions ("My Space").
Second, acting decisively on the outcomes of our comprehensive portfolio
review. Both workstreams have progressed materially and once completed, will
result in improved occupancy, enhanced rent collection, and strengthened
income visibility.
Lease Assignments
Parasol to Portus
In the second half of 2024, the Parasol leases were assigned to Portus.
Post-assignment, all 38 properties moved to an initial stabilisation period,
where the Company receives rent on an agreed pass-through basis. Portus has
now assessed maintenance costs and sustainable rental levels. We are pleased
to confirm that 20 properties have reverted back to long-term fully repairing
and insuring ("FRI") leases at the top end of the previously indicated target
range (75-85%) of the previously contracted rents. The remaining properties
assigned to Portus are expected to revert to FRI terms during 2026.
My Space
The principal portfolio challenge relates to the My Space portfolio of 34
properties. My Space ceased paying rent in June 2024 due to financial
difficulties. In March 2025, My Space entered into a Company Voluntary
Arrangement ("CVA"). Prior to the CVA vote, we secured an option agreement on
behalf of the Company permitting assignment of SOHO's properties within 12
months of the challenge period.
Whilst rent collection has recommenced under a pass-through arrangement, we
concluded that assignment of these properties to stronger approved providers
was in shareholders' best interests.
A two-part solution is being implemented:
· Notice has been served to assign eight well-occupied properties to
Inclusion. This is due to complete imminently and will move from pass-through
to long-term FRI leases following stabilisation. Since the option was agreed,
86% of the contracted rent was collected in these properties.
· Of the remaining My Space properties, those which are vacant will be
sold once deeds of surrender are agreed. Those which have been assessed as
unsuitable or economically unviable, will temporarily be assigned to Granville
Community Homes to facilitate the transfer of residents to more appropriate
accommodation, after which vacant possession will be secured and the
properties will be sold.
Throughout this process, all vulnerable residents will be fully supported to
ensure their housing needs remain met and that any transfers are handled
sensitively with the residents and their representatives.
This structured approach is consistent with our earnings-led strategy and
focus on strengthening income quality.
Asset Disposals
Following our appointment in early 2025, we conducted a full portfolio review
to identify property and operational issues. This comprehensive review
identified selected properties which we deemed unsuitable or economically
unviable. These properties were largely contained within the portfolio leased
to My Space (referred to above). However, they also included four properties
leased to Portus (three within the portfolio leased to Portus and one to
BeST), and individual properties leased to Blue Square and Falcon.
In respect of vacant properties, two were immediately sold to a Local
Authority. For the remainder, lease surrenders are, or will be, agreed and
sales achieved via auction. Three sales have already completed, with a further
ten sales agreed via auction, post-year end.
For the other partially occupied properties, we have been working with the
respective Approved Providers to achieve vacant possession. Any residents will
be moved to alternative suitable properties in conjunction with the relevant
stakeholders, before the leases are surrendered. They will then be similarly
sold via auction over the coming months.
Auction sales achieved to date have been at or around book value.
Disposal proceeds will be redeployed into accretive opportunities consistent
with our focus on strengthening income and improving portfolio quality whilst
maintaining a disciplined capital allocation approach.
Asset Management
Assignments and disposals have been a key focus of our portfolio optimisation,
however we remain focused on ensuring our properties are well managed and
maintained, benefiting our residents both now and into the future.
During 2025, 442 inspections were completed across our portfolio of 492
assets. These inspections collect valuable information about the condition and
operation of our homes. They also complement the health and safety and other
mandatory regulatory information we receive from our Approved Provider
lessees. They guide our engagement with the lessees and ensure that both
standards and contractual obligations are met.
We have commenced the roll out of the EPC Upgrade Programme, which will ensure
that all properties have an Energy Performance Certificate ("EPC") rating of C
or above in advance of the expected legislative deadline of 2030. Whilst the
portfolio was already materially more efficient (average EPC 'C') than the
wider housing market (average EPC 'D'), the Company is committed to being a
sector leader when it comes to reducing emissions.
By 2028, the Programme will deliver both compliant EPC ratings and reductions
in occupational energy consumption. Already, at the end of 2025, 77% of the
Company's properties now benefit from an EPC of C or better, improving 6% over
the year and overall energy consumed across the portfolio is declining -
benefiting the environment and reducing the costs incurred by residents.
Our Sustainability Report, which accompanies this Annual Report, contains
further detail on our progress, certifications and ambitions as we work to
future-proof our homes, make them more comfortable for residents, and achieve
our Net Zero targets.
Proactive Asset Management
The immediacy of our actions in assigning underperforming counterparties and
exiting unsuitable properties reflects our proactive approach. Whilst doing
so, we will continue to operate with transparency, ensuring shareholders are
informed of our actions and intentions.
We also continue to evolve our asset management processes iteratively,
leveraging operational data and sector expertise to mitigate risk proactively.
By doing so, we seek to avoid tenant issues such as those experienced with
Parasol and My Space. Where they do arise, we will deliver solutions in a more
expeditious manner than has been achieved historically, seeking to avoid
future material credit losses.
With the right properties, assignments to new approved provider lessees can be
facilitated, leaving residents, income and value unaffected. Our assignment
from Pivotal to Independent Housing (IHL) of two properties in Cornwall
(undertaken in 2025 and completing early in 2026) typifies this principle and
our proactive approach.
When Pivotal received an Enforcement Notice from the Regulator of Social
Housing during the year, we moved quickly to identify an alternative lessee,
engaged with the Local Authority and care providers, effecting the assignment
with no impact to residents. Rental income continued to be paid by Housing
Benefit in respect of the two properties and care provision to the residents
was unaffected.
Central to this process was strong engagement with counterparties, leveraging
our networks (including facilitating the introduction of a new care provider
to one of the schemes) to implement a solution. The process completed in early
2026. We look forward to working with IHL going forwards on the two schemes,
which are well-occupied and well-supported by the Local Authority.
Enhanced Lessee Monitoring
We maintain rigorous oversight of our Approved Providers through financial
monitoring, KPI tracking, regular meetings, and property inspections. By
working proactively with our lessees, we seek to minimise the occurrence of
operational risks. Where challenges arise, we work collaboratively to remedy
any issues swiftly. If required, we will not hesitate to assign leases to more
appropriate approved providers or find alternative solutions for properties.
It is important to reiterate 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 fully repairing and
insuring ("FRI") leases are in place. However, although the Company's lessees
are highly specialist organisations which deliver social good to society's
most vulnerable people, they are not institutional grade covenants.
As noted earlier, it is key to understand that SSH comprises operational
residential properties and relies on two key elements:
· The property fundamentals of location, structural quality and
functionality with 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,
requiring specific levels of adaption to ensure that residents' homes are
comfortable and safe.
These requirements are far beyond what one would expect to see in the Private
Rental Sector which makes the lessees' expertise vital.
Valuation
Market pricing certainty continues to be hampered by limited transactional
activity across the SSH sector. After a 20bps softening of the portfolio Net
Initial Yield ("NIY") in the first half of 2025, which saw the portfolio yield
move from 6.22% to 6.42% at 30 June 2025, there were no further movements
during the second half of the year. At 31 December 2025, the portfolio NIY
therefore remained at 6.42%, reflecting an EPRA NIY of 6.82%.
Reflecting this outward shift in investment yields over the year, the
portfolio value as at 31 December 2025 was £606.3 million compared to £626.4
million at 31 December 2024, representing a decline of 3.2% over the period,
driven in large part by a reduction in the valuation attributed to properties
being considered for sale.
All of SOHO's leases are reviewed annually, with the majority of
inflation-linked uplifts occurring in April, based on the prior September
reference rate in line with the wider social housing sector. For April 2026,
this reference rate will be 3.8%.
Income Security Enhancement
We continue to explore structuring options to strengthen the security of
rental income from our occupied homes. While legislative change would be
required for us to receive rental income directly, we are, together with one
of our Approved Providers, segregating rental cashflows for a number of
properties into a dedicated account from which SOHO is the sole payee. This
approach, supported by legal advice, has been discussed with the Regulator of
Social Housing, and the Approved Provider will be seeking the regulator's
views once implemented.
Subject to the Regulator's acceptance and confirmation that the change has no
adverse impact on the Approved Provider's financial viability, we plan to
replicate this structure across the wider portfolio.
Over the medium term, we will continue to advocate for reform of the sector's
financial model to provide clearer visibility and greater control over rental
income. We believe that achieving a more direct link to government sourced
cashflows could materially lower the risk profile of SSH, reduce the cost of
capital, and attract new investment to support the delivery of more homes at
lower rents.
We will continue to keep shareholders updated as this work progresses.
Outlook
As we look ahead to 2026, we remain confident in SOHO's trajectory. Our
near-term priorities are:
· Portfolio optimisation: sales, assignments and asset enhancements. We are
nearing completion of the Parasol to Portus stabilisation and have commenced a
solution for the My Space portfolio, including assignments to stronger
counterparties and sales of non-core assets. These initiatives will lead to
improved occupancy, rental levels, rent collection and will be supportive to
asset value of assets held. Concurrently, we will continue to enhance the
energy efficiency of our homes, ensuring they are suitable for our residents
now and into the future.
· Restoring confidence with continued transparency. We remain strong and
vocal advocates for the sector and the benefits it can deliver for residents,
shareholders and the public purse and will continue working to restore
investor confidence in the SSH model. Restoring confidence in the ability of
SSH to deliver long-term inflation-aligned income whilst delivering positive
social impact, should support a further narrowing of the share price discount
to NAV.
· Strategic growth: diversification and accretive investment. Our work to
optimise our extensive, established SSH portfolio will provide a strong
foundation for responsible growth, increasing scale and diversification for
shareholders and delivering secure and growing dividends over the long term.
We look forward to building on the positive momentum achieved during the year
as SOHO progresses into its next phase.
Adrian D'Enrico
Fund Manager, Atrato Living
25 March 2026
STRATEGY and growth
Following a period of operational stabilisation and financial repair, the
Company can now enter the next phase of its development from a position of
strength. Investors in the UK REIT sector value scale and liquidity and, as a
result, companies fulfilling those criteria are seen as more attractive
investment propositions. Increasing scale and liquidity, together with strict
capital discipline, are at the forefront of SOHO's future strategic plans.
Over the medium term, we are working with the Board to consider options to
retain the Company's core strategy of delivering sustainable income and
capital growth, whilst evaluating the ability to capitalise on accretive
opportunities to scale the Company.
The UK housing and care landscape continues to evolve and it is key to the
long-term success of the Company that its strategy evolves to reflect this.
Demographic change and funding reform are reshaping demand across the living
sector and the Company is well positioned to be a beneficiary of this dynamic.
SSH will always remain a cornerstone of the Company. However, we believe there
is an accretive and logical growth opportunity within the wider UK living
sector in appropriate, affordable and fit-for-purpose accommodation and the
Company's future strategy could evolve to capitalise on this broader
opportunity, whilst retaining a firm anchor in secure, inflation-aligned
income.
Any material changes to the Company's strategy would be subject to the
necessary regulatory and shareholder approvals.
Earnings Growth-Led Diversification
SOHO's investment approach will always be centred around earnings growth,
focused on the sustainability and security of underlying cashflows. Its core
objective remains clear: to deliver secure, inflation-aligned sustainable
income which supports a progressive dividend policy. Through sustained, proven
performance, we believe that, as Investment Manager, we can achieve a
re-rating of SSH, reduce the Company's cost of capital and deliver attractive
returns to shareholders. But SOHO could further reduce its cost of capital by
achieving greater scale, increasing relevance, enhancing liquidity and
significantly broadening its potential investor base.
Broadening the scope of its investment policy could afford SOHO the
flexibility to pursue accretive growth opportunities across the broader living
sector. This would enable it to invest into adjacent UK living sectors, which
share common characteristics with the existing portfolio - being
structurally-supported by population demographics, housing demand pressures
and affordability needs. Investments in adjacent sectors would, of course,
have to offer income characteristics that are accretive and meet the Company's
sustainable income and inflation-aligned requirements. Each new target sector
would similarly need to offer stable income streams, be resilient across
economic cycles and comprise assets that fit within Atrato's operational
expertise, to ensure they are acquired well and managed efficiently. A revised
investment policy, if adopted, would allow the Company to deliver growth while
maintaining its attractive income profile.
Responsibility and Long-Term Relevance
An expanded, strategic approach for the Company could combine sectors that
address essential housing needs and reflect long-term demographic trends,
favouring community-based independent living. While social outcomes would not
be expected to be codified within the investment policy, they would be able to
be clearly evidenced. Measurable indicators, for example average resident
tenure, would be essential to provide insight into occupational stability and
resident satisfaction, reinforcing the Company's role as a responsible
long-term investor.
Looking ahead, we believe the Company is well positioned for the next phase of
its corporate strategy. With strengthened financials offering a strong
foundation, by adopting a new, broader investment policy the Company would be
able to stay committed to remaining as a listed company whilst becoming more
investable to a broader universe of REIT investors.
As we look ahead, we will work with the Board to consider a future strategy
that continues to deliver growth via secure, inflation-aligned income across
compatible living sectors. We, along with the Board, are committed to
maintaining a progressive dividend policy and to building a robust and
resilient platform for shareholders.
Michael Carey
Managing Director, Atrato Living
Chief Financial Officer's Report
I am pleased to present the financial results for the year ended 31 December
2025.
Financial Results
31 December 31 December
2025
2024
£'000s £'000s
Net rental income 40.0 35.8
Administrative expenses(1) (7.2) (7.4)
Net finance expenses(2) (7.1) (7.2)
Adjusted earnings 25.7 21.2
Net Rental Income
In the year, the portfolio generated net rental income of £40.0 million (31
December 2024: £35.8 million), representing an increase of £4.2 million or
11.7% compared to the prior year. This increase was driven by the impact of
increases from our inflation-linked leases, combined with improved collection
in respect of the My Space and Portus(3) properties.
All of the Group's contracted income is generated from leases which benefit
from annual uplifts linked to inflation. The majority of these uplifts are
based on CPI inflation (88% of rental income), with the remainder being linked
to CPI +1% (4%), RPI (4%) or RPI +1 (4%). In 2025, the Company's weighted
average annual rental uplift was 2.2% (2024: 4.3%). The majority of the
portfolio (61% weighted by income) have annual rent reviews which occur in
April. The April 2026 rent reviews are predicated on the prevailing inflation
rate six months prior: the September 2025 reference CPI figure used as the
basis to determine the uplift will be 3.8%, and RPI will be 4.5%.
In total, the Company has 389 leases (31 December 2024: 391) with a total
annualised contracted rental income of £43.7 million as at 31 December 2025
(31 December 2024: £42.6 million). Over the past 12 months, the Company has
collected 91.5% of this contracted rental income. As set out below, the
shortfall relates to the difference in rent collected in respect of My Space
and Portus where leases have been varied to a pass-through basis (whereby the
Company is only paid the net rent collected by the Approved Provider) and the
write-off of expected credit losses in relation to My Space and Pivotal.
At At
31 December 31 December
2025
2024
£m £m
Annualised contracted rental income 43.7 42.6
Shortfall due to pass-through mechanism(4) (3.0) (2.5)
Expected Credit Losses (0.7) (3.3)
Movement in Lease Incentive Debtor 0.0 (1.0)
Net rental income 40.0 35.8
Administrative and other expenses and EPRA cost ratio
Administrative and other expenses, which comprise all operational costs of
running the business, including irrecoverable property costs, decreased by
£4.1 million to £7.6 million (2024: £11.7 million). This reduction was
driven primarily by the change in the Investment Management fee basis from NAV
to market capitalisation, aligning the Investment Manager more closely with
shareholders. Included within these totals are the negative pass-through rent
balances of £0.7 million (2024: £nil), which reflect instances where
expenses exceed rental income received on properties and legacy costs related
to the Parasol to Portus transfers (£0.25 million).
31 December 31 December
2025
2024
EPRA cost ratio including direct vacancy costs 18.7% 29.9%
EPRA cost ratio excluding direct vacancy costs 18.0% 29.8%
Adjusted earnings
The Directors consider adjusted earnings a key measure of the Company's
underlying operating performance and a reference through which the Board
measures dividend cover.
Adjusted earnings therefore exclude one-off items which are non-recurring in
nature and non-cash items such as the amortisation of finance costs and the
movement in lease incentive debtors.
Adjusted earnings for the year ended 31 December 2025 were £25.7 million (31
December 2024: £21.2 million). On a per share basis, adjusted earnings
increased by 1.13 pence to 6.53 pence for the year to 31 December 2025 an
increase of 21.0% (31 December 2024: 5.40 pence).
A full reconciliation between IFRS and Adjusted earnings can be found in note
35 of the Financial Statements.
Dividends
Declared Pence per Share In respect of financial year ended Paid
20 March 2025 1.3650 31 December 2024 11 April
2025
20 May 2025 1.4055 31 December 2025 27 June
2025
9 September 2025 1.4055 31 December 2025 3 October 2025
27 November 2025 1.4055 31 December 2025 19 December 2025
The dividend was 1.17x (2024: 0.99x) covered on an adjusted basis for the
year. This measure is based upon adjusted earnings relative to dividends paid
in the 12-month period.
Post-period end, the Company declared an interim dividend in respect of the
financial year ended 31 December 2025 of 1.4055 pence per Ordinary share (the
'Fourth Quarterly Dividend'). The Fourth Quarterly Dividend was declared on 20
March 2026 and will be a Property Income Distribution ("PID") to shareholders
on the register as at 7 April 2026.
The Company has now declared four quarterly dividends totalling 5.622 pence
per share in respect of the financial year ended 31 December 2025.
EPRA net tangible assets and IFRS net assets
31 December 31 December
2025
2024
£m £m
Investment Property 602.8 624.7
Assets Held for Sale 2.0 -
Bank and other borrowings (261.7) (261.4)
Cash 25.4 27.5
Other net assets/(liabilities) 2.3 (1.1)
IFRS net asset value & EPRA net tangible assets 370.8 389.7
As set out above, the EPRA Net Tangible Assets ("EPRA NTA") per share at 31
December 2025 was 94.23 pence per share, the same as the IFRS NAV per share,
compared to 99.05 pence per share as at 31 December 2024. The decrease was
principally a result of a reduction in the value of the investment properties.
Debt Financing
With volatility in UK interest rates over recent years, the Group's debt
continues to be a valuable asset. All £263.5 million of the Group's debt is
fixed-rate, with a weighted average coupon of 2.74%. It is also predominantly
long term, with a weighted average maturity of 7.6 years. The earliest debt
maturity will occur in mid-2028, providing strong protection from currently
elevated, albeit falling, interest rates. Whilst the debt is recorded at
historic cost, it has a mark to market value of £48.7 million, which is not
reflected in the net asset value. Further information on the Group's debt
facilities is set out in Note 19 of the financial statements.
In June 2025, 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. Fitch published its first rating on the Company in August
2021 with the same Investment Grade distinctions.
The Group continues to monitor its banking covenants and maintains adequate
headroom on its Interest Cover Ratio ("ICR") and Asset Cover Ratio ("ACR")
covenants across both debt facilities. Further information on the Group's
covenant headroom is set out in Note 2.1 of the financial statements.
Natalie Markham
CFO, Social Housing REIT
1 Net of movement on Lease incentive debtor and one-off termination
fees.
2 Excludes amortisation of finance costs.
3 Formerly Westmoreland. Portus resulted from the merger of
Westmoreland Supported Housing and Bespoke Supportive Tenancies (BeST) on 1
December 2025.
4 For 2024 this includes a Parasol to Portus rent-free impact.
GOING CONCERN AND VIABILITY
Going Concern
The Strategic Report and financial statements have set out the current
financial position of the Group and Company. The Board has regularly reviewed
the position of the Group and its ability to continue as a going concern in
Board meetings throughout the year.
The Directors have reviewed the Group's forecast which shows the expected
annualised rental income exceeds the expected operating and financing costs of
the Group. 91.5% of rental income due and payable for the year ended 31
December 2025 has been collected. Rent arrears are predominantly attributable
to two Approved Providers, My Space Housing Solutions and Portus Supported
Housing (Formerly Westmoreland) both of whom have leases on a passthrough
basis which materially reduces the rent received when compared to the
contracted rent.
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
year, Fitch Ratings Limited assigned the Company an investment Long-Term
Issuer Default Rating of 'A-' with a stable outlook.
The Directors have performed an assessment of the ability of the Group to
continue as a going concern, for a period of at least 12 months from the date
of signing these financial statements. The Directors have considered the
expected obligations of the Group during this period 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 on the right. 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 TP REIT
Estates
Propco 2
Limited
Limited
Asset Cover Ratio (ACR)
ACR Covenant x2.00 x1.67
ACR 31 December 2025 x2.39 x1.96
Blended Net initial yield 7.03% 6.40%
Headroom (yield movement) 128bps 104bps
Interest Cover Ratio (ICR)
ICR Covenant 1.75x 1.75x
ICR 31 December 2025 4.89x 4.82x
Headroom (rental income movement) 64% 61%
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
this causes Approved Providers to default under some of the Group leases. The
assumptions of rent paid by two Approved Providers have been sensitised, and
for an additional 5% non-rent collection provision has been made for all other
Approved Providers. Under the downside model the Group will be able to settle
its liabilities for a period of at least 12 months from the date of signing
these financial statements. As a result of the above, the Directors are of the
opinion that the going concern basis adopted in the preparation of the
financial statements is appropriate.
The Group has no short term refinancing risk given the 7.6 year weighted
average maturity of its 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 Company, the
Directors consider that the Group will be able to settle its liabilities for a
period of at least 12 months from the date of signing these financial
statements and therefore have prepared these financial statements on the going
concern basis.
Viability Statement
In accordance with Principle 21 of the AIC Code, the Board has assessed the
prospects of the Group over a period longer than 12 months required by the
relevant 'Going Concern' provisions. The Board has considered the nature of
the Group's assets and liabilities, and associated cash flows, and has
determined that five years, up to 31 December 2030, is the maximum timescale
over which the performance of the Group can be forecast with a material degree
of accuracy and therefore is the appropriate period over which to consider the
viability.
In determining this timescale, the Board has considered the following:
· The length of the service level agreements between Approved Providers and
care providers.
· The future growth of its investment portfolio of properties is achieved
through long-term, inflation linked, fully repairing and insuring leases.
· The Group's property portfolio has a WAULT of 22.4 years to expiry,
representing a long-term income stream for the period under consideration.
· The Group's Loan Notes have a weighted average term of 7.6 years.
In assessing the Company's viability, the Board has carried out a robust
assessment of the emerging risks and principal risks facing the Group,
including those that would threaten its business model, future performance,
solvency, liquidity and dividend cover for a five-year period.
The Directors' assessment has been made with reference to the principal risks
and uncertainties and emerging risks and how they could impact the prospects
of the Group and Company both individually and in aggregate. The following
risks in particular have been addressed in the assessment:
1. Approved Provider default (taking into account that two of the
Group's lessees have built up arrears since 2022)
2. Non-payment of voids cover by Care Providers.
The business model was subject to a sensitivity analysis, which involved
flexing a number of key assumptions underlying the forecasts. The
sensitivities performed were designed to provide the Directors with an
understanding of the Group's performance in the event of a severe but
plausible downturn scenario, taking full account of mitigating actions that
could be taken to avoid or reduce the impact or occurrence of the underlying
risks outlined below:
· Rental income: It is assumed that some care providers do not meet their
void payment obligations, and this causes Approved Providers to default under
some of the Group's leases; and rental receipts from two Approved Providers
are lower than the previously contracted rent levels. An additional 5%
non-rent collection was included for other Approved Providers.
· Property valuations: It is assumed that where there are void units
Approved Providers will default on their leases, and those units will be
valued significantly below their vacant possession value. We believe this
represents a severe reduction in value.
· Inflation: No inflation uplift on rental income but costs increase in
line with inflation.
The outcome in the downturn scenario on the Group's covenant testing is that
there are no breaches, and the Group can maintain a covenant headroom on
existing facilities.
In the downturn scenario mitigating actions to reduce variable costs would be
required to enable the Group to meet its future liabilities.
The remaining principal risks and uncertainties, whilst having an impact on
the Group's business, are not considered by the Directors to have a reasonable
likelihood of impacting the Group's viability over the five-year period.
Based on the results of this analysis, the Directors have a reasonable
expectation that the Group and Company will be able to continue in operation
and meet its liabilities as they fall due during the period up to 31 December
2030.
STRATEGY AND BUSINESS MODEL
The Board is responsible for the Company's Investment Objective and Investment
Policy, which is kept under constant review, and has overall responsibility
for ensuring the Group's activities are in line with this overall strategy.
Atrato, the Company's new investment manager, undertook a thorough review of
the properties, lessees and relevant metrics as part of its onboarding of the
portfolio. Whilst the overarching strategy of the Company is unchanged, the
approach being implemented by Atrato is one of transparency, proactive asset
management and a renewed focus on property fundamentals. The social housing
team at Atrato comprises individuals with deep sector experience, knowledge
and connections. We believe Atrato is well placed to deliver on the Company's
Investment Objective, optimising the Company for success.
Investment Objective
The Group's Investment Objective is to provide shareholders with stable,
long-term, inflation-linked income from a portfolio of social housing assets
in the United Kingdom with a focus on Specialised Supported Housing assets.
The portfolio comprises investments in operating assets and the forward
funding of pre-let development assets. The Group seeks to optimise the mix of
these assets to enable it to pay a covered dividend increasing in line with
inflation and so generate an attractive risk-adjusted total return.
Investment Policy(1)
To achieve its Investment Objective, the Group invests in a diversified
portfolio of freehold or long leasehold social housing assets in the UK.
Supported Housing assets account for at least 80% of the Group's gross asset
value. The Group acquires portfolios of social housing assets and single
social housing assets, either directly or via SPVs. Each asset is subject to a
lease or occupancy agreement with an Approved Provider. The rent payable
thereunder is, or is expected to be, subject to adjustment in line with
inflation (generally CPI) or central housing benefit policy. Title to the
assets remains with the Group under the terms of the relevant lease. The Group
is not primarily responsible for any management or maintenance obligations
under the terms of the lease or occupancy agreement, which typically are
serviced by the Approved Provider lessee, save that the Group may take
responsibility for funding the cost of planned maintenance. The Group is not
responsible for the provision of care to residents of Supported Housing
assets.
The social housing assets are sourced in the market by the Investment Manager.
In asset selection, consideration is given to the alignment of an asset to
supporting the impact objective sought.
The Group intends to hold its portfolio over the long-term, benefiting from
generally long term upward only leases which are, or are expected to be,
linked to inflation or central housing benefit policy. The Group may sell
investments should an opportunity arise that would enhance the value of the
Group as a whole.
The Group may forward fund the development of new social housing assets when
the Investment Manager believes that to do so would enhance returns for
shareholders and/or secure an asset for the Group's portfolio at an attractive
yield. Forward funding will only be provided in circumstances in which:
(a) there is an agreement to lease the relevant property upon completion in
place with an Approved Provider;
(b) planning permission has been granted in respect of the site; and
(c) the Group receives a return on its investment (at least equivalent to
the projected income return for the completed asset) during the construction
phase and before the start of the lease.
For the avoidance of doubt, the Group will not acquire land for speculative
development of social housing assets. In addition, the Group may engage third
party contractors to renovate or customise existing social housing assets as
necessary.
Gearing
The Group uses gearing to enhance equity returns.
The Directors will employ a level of borrowing that they consider prudent for
the asset class and will seek to achieve a low cost of funds while maintaining
flexibility in the underlying security requirements and the structure of both
the Company's portfolio and the Group.
The Directors intend that the Group will target a level of aggregate
borrowings over the medium-term equal to approximately 40% of the Group's
gross asset value. The aggregate borrowings will always be subject to an
absolute maximum, calculated at the time of drawdown, of 50% of the Group's
gross asset value.
Debt will typically be secured at the asset level, whether over a particular
property or a holding entity for a particular property (or series of
properties), without recourse to the Group and having consideration for key
metrics including lender diversity, cost of debt, debt type and maturity
profiles.
Use of Derivatives
The Group may use derivatives for efficient portfolio management. In
particular, the Group may engage in full or partial interest rate hedging or
otherwise seek to mitigate the risk of interest rate increases on borrowings
incurred in accordance with the Investment Policy as part of the Group's
portfolio management. The Group will not enter into derivative transactions
for speculative purposes.
Investment Restrictions
The following investment restrictions apply:
· the Group will only invest in social housing assets located in the United
Kingdom;
· the Group will only invest in social housing assets where the
counterparty to the lease or occupancy agreement is an Approved Provider.
Notwithstanding that, the Group may acquire a portfolio consisting
predominantly of social housing assets where a small minority of such assets
are leased to third parties who are not Approved Providers. The acquisition of
such a portfolio will remain within the Investment Policy provided that at
least 90% (by value) of the assets are leased to Approved Providers and, in
aggregate, all such assets within the Group's total portfolio represent less
than 5% of the Group's gross asset value at the time of acquisition;
· at least 80% of the Group's gross asset value will be invested in
Supported Housing assets;
· the maximum exposure to any one asset (which, for the avoidance of doubt,
will include houses and/or apartment blocks located on a contiguous basis)
will not exceed 20% of the Group's gross asset value;
· the maximum exposure to any one Approved Provider will not exceed 35% of
the Group's gross asset value, however the maximum aggregate exposure to the
top two Approved Providers will not exceed 55%;
· the Group may forward fund social housing units in circumstances where
there is an agreement to lease in place and where the Group receives a coupon
(or equivalent reduction in the purchase price) on its investment (generally
slightly above or equal to the projected income return for the completed
asset) during the construction phase and before entry into the lease. Forward
funding equity commitments will be restricted to an aggregate value of not
more than 20% of the Group's net asset value, calculated at the time of
entering into any new forward funding arrangement;
· the Group will not invest in other alternative investment funds or
closed-ended investment companies (which, for the avoidance of doubt, does not
prohibit the acquisition of SPVs which own individual, or portfolios of,
social housing assets);
· the Group will not set itself up as an Approved Provider; and
· the Group will not engage in short selling.
The investment limits detailed above apply at the time of the acquisition of
the relevant asset in the portfolio. The Group will not be required to dispose
of any investment or to rebalance its portfolio as a result of a change in the
respective valuations of its assets or a merger of Approved Providers.
Investment Strategy
The Group specialises in investing in UK social housing, with a focus on
Specialised Supported Housing. The strategy is underpinned by strong local
authority demand for more social housing, which is reflected in the focus on
acquiring recently developed and refurbished properties across the United
Kingdom. The assets within the portfolio have typically been developed for
pre-identified residents and in response to demand specified by local
authorities or NHS commissioners. The existing portfolio comprises investments
made into properties already subject to a fully repairing and insuring lease
with specialist Approved Providers in receipt of direct payment from local
government (usually Registered Providers regulated by the Regulator of Social
Housing), as well as forward funding of pre-let developments. The portfolio
will not include any direct development or speculative development
investments. Following the amendments to the Company's investment policy in
May 2022, the Group can accommodate more flexible lease structures. This
flexibility may include leases with shorter terms and, in certain cases, the
Group may selectively take on the cost of funding planned maintenance on some
properties.
In addition, we are continuing to progress the roll out of our risk-sharing
clause in the Group's existing Registered Provider leases. The aim of this
clause is to protect Registered Providers if factors beyond their control,
such as a change in government policy in relation to Specialised Supported
Housing rents, reduce the amount of rent they are able to generate from a
property or properties that they lease from the Group. In some such
circumstances the clause allows for the Registered Provider to agree a new
rent level which is reflective of the revised circumstances. Should the new
rent level not be acceptable to the Group, the Group has the ability to
re-assign or terminate the lease.
Business Model
The Group owns and manages social housing properties that are leased to
Approved Providers, being experienced housing managers (typically Registered
Providers, which are often referred to as housing associations). The vast
majority of the portfolio is made up of Specialised Supported Housing homes
which are residential properties that have been adapted or built such that
care and support can easily be provided to vulnerable residents who may have
mental health issues, learning difficulties, physical disabilities or a
combination of diagnosis. Whilst we have acquired operational properties, we
focus on acquiring recently developed or adapted properties in order to help
local authorities meet increasing demand for suitable accommodation for
vulnerable residents. Local authorities are responsible for housing these
residents and for the provision of all care and support services that are
required.
The Specialised Supported Housing properties owned by the Group are leased to
Approved Providers which are usually not-for-profit organisations focused on
developing, tenanting and maintaining housing assets in the public and private
sometimes, selectively, sectors. Approved Providers are approved and regulated
by the Government with the majority through the Regulator of Social Housing
(or in some instances, where the Group contracts with care providers and
charitable entities, the Care Quality Commission and the Charity Commission,
respectively). All of the Group's existing leases are linked to inflation, are
long-term and are fully repairing and insuring - meaning that the obligations
for management, repair and maintenance of the property rest with the Approved
Provider.
The Group may take responsibility for funding the cost of planned maintenance
and improvements to the property in order to improve the property's energy
efficiency and performance. Typically, the Government funds both the rent of
the individuals housed in Specialised Supported Housing and the maintenance
costs associated with managing the property. In addition, because of the
vulnerable nature of the residents, the rent and maintenance costs are
typically paid directly by the local authority to the Approved Provider. The
rent paid by the Local Authority to the Approved Provider on behalf of the
residents is then paid to the Group via the lease. Ultimate funding for the
rent typically comes from the Department for Work and Pensions in the form of
Housing Benefits.
The majority of residents housed in Specialised Supported Housing properties
require support and/ or care. Care and support provision sits outside of the
Group, being provided to the residents by a separate care provider regulated
by the Care Quality Commission. The agreement for the provision of care for
the residents is between the Local Authority and the care provider. The care
provider is paid directly by the Local Authority with funding ultimately
coming from the Department of Health and Social Care. The Group has no direct
financial or legal relationship with the care provider and the Group never has
any responsibility for the provision of care to the residents in the
properties the Group owns. The care provider will often be responsible for
nominating residents into the properties and, as a result, will normally
provide some voids cover to the Approved Provider should they not be able to
fill the asset (i.e. if occupancy is not 100%, it is often the care provider
rather than the Approved Provider that will cover the cost of the rent due on
void units). Under the terms of the lease, the Group is owed full rent
regardless of underlying occupancy, but monitors occupancy levels and the
payment of voids cover by care providers, to ensure that Approved Providers
are appropriately protected.
Assets that the Investment Manager sources for the Group to maintain an
investment pipeline have been recently developed and are either specifically
designed new build properties or renovated existing houses or apartment blocks
that have been adapted for Specialised Supported Housing. The benefit of
buying recently developed or adapted stock is that it has been planned in
response to Local Authority demand and is designed to meet the specific
requirements of the residents. In addition, it enables the Group to work with
a number of high-quality developers on pipelines of deals rather than being
reliant on acquiring portfolios of already-built assets on the open market.
This has two advantages: firstly, it enables the Group to source the majority
of its deals off-market through trusted developer partners and, secondly, it
ensures the Group has greater certainty over its pipeline with visibility over
the long-term deal flow.
As well as acquiring recently developed properties, the Group can provide
forward funding to developers of new Specialised Supported Housing properties.
Being able to provide forward funding gives the Group a competitive advantage
over other purchasers as it enables the Group to offer developers a single
funding partner for both construction and the acquisition of the completed
property. This is often more appealing to developers than having to work with
two separate funders during the build of a new property as it reduces
practical and relationship complexity. As well as strengthening developer
relationships, forward funding enables the Group to have a greater portion of
new build properties in its portfolio which typically attract higher
valuations, are modern and have been custom-built to meet the needs of the
residents they house, helping to achieve higher occupancy levels. The Group
benefits from the Investment Manager's significant experience forward funding
residential properties and other social infrastructure assets. The Group will
only provide forward funding when the property has been pre-let to an Approved
Provider and other protections, such as fixed-priced build contracts and
deferred developer profits, have been put in place to mitigate construction
risk.
Since the Company's IPO, the Group has built a diversified, nationwide
portfolio of assets leased to a variety of Approved Providers, serviced by
over 100 care providers.
1 Approved by Shareholders on 10 February 2025.
RISK MANAGEMENT
The Board recognises that effective risk management is key to the Group's
success and that a proactive approach is critical to ensuring the sustainable
growth and resilience of the Group.
By way of background, the Group focuses on a single sub-sector of the UK real
estate market with the aim of delivering an attractive, growing and secure
income for shareholders. The Company has a specific investment policy which is
adhered to and for which the Board has overall responsibility. In February
2025, the Company received shareholder approval to amend its investment
policy, which will now allow for a maximum exposure of 35% to any one Approved
Provider, where it was previously restricted to 30%.
The increase provides the Company with greater flexibility in capital
deployment while maintaining prudent diversification, and the Board continues
to monitor concentration levels closely as part of its ongoing risk oversight.
Following the appointment of Atrato as the Company's new investment manager
effective from 1 January 2025, a comprehensive review of the current risk
framework was undertaken.
In the Group's 2025 Interim Report, it was reported that the principal risks
and uncertainties remained unchanged during the period. Following the
comprehensive review undertaken by the Investment Manager, two existing
principal risks were re-classified as non-material and two risks that were
previously deemed non-material were elevated to principal risks. More
information on the changes can be found in the Principal Risks and
Uncertainties table.
As an externally managed investment company, the Company outsources key
services to the Investment Manager and other service providers and relies on
their systems and controls. The Board undertakes a formal review of the risks
identified by the Investment Manager, with the assistance of the audit
committee, twice a year to assess and challenge the effectiveness of the
Company's risk management and internal control systems. The Board, supported
by the Audit Committee, reviews control reports from key service providers and
considers any internal control observations raised by the external auditor as
part of its assessment.
The Investment Manager has responsibility for identifying potential risks at
an early stage, escalating risks or changes to risk, and relevant
considerations and implementing appropriate mitigations which are recorded in
the Group's risk register. Where relevant the financial model is stress tested
to assess the potential impact of certain risks against the likelihood of
occurrence. The Board regularly reviews the risk register to ensure gradings
and mitigating actions remain appropriate.
The Group's risk management process is designed to identify, evaluate and
mitigate (rather than eliminate) the significant and emerging risks the Group
faces and continues to evolve to reflect changes in the Group's business and
operating environment. The process provides reasonable, though not absolute,
assurance and supports a disciplined approach to risk‑informed
decision‑making aligned with the objective of long‑term value creation for
shareholders.
During the year, the Board has not identified or been advised of any failings
or weaknesses in the Group's risk management and internal control systems.
Principal Risks heat map
The Board considers the principal risks to be those shown in the chart in the
FY25 Annual Report. The principal risks are categorised by their 12 month
outlook.
Risks with a negative outlook over the next year
4 Volatile Trading Market
5 Inflationary Pressures
9 Poor or Inadequate Housing Management
Risks with a stable outlook over the next year
2 Non-payment of Voids by Care Providers
6 Regulatory Changes Impacting the Sector
8 Property Valuation Volatility
10 Debt Covenant Breaches
11 Health and Safety Non-compliance
Risks with a positive outlook over the next year
1 Approved Provider Default
3 Potential Impact of Climate Change
7 Non-compliance with Regulatory Standards
Principal Risks and Uncertainties
The table below sets out what we, the Board, believe to be the principal risks
and uncertainties facing the Group. The table does not cover all of the risks
that the Group may face. Additional risks and uncertainties not presently
known to management or deemed to be less material at the date of this report
may also have an adverse effect on the Group.
Having conducted a full review of the Group's existing risk register, the
Investment Manager has assessed that the previous non-material risk of
"Inflationary Pressures" should be captured within the Group's Principal
Risks.
Risk Category: Credit
Approved Provider Default
Risk Description Mitigating Actions
The default of one or more of the Group's Approved Provider lessees could Under the terms of the Group's Investment Policy and restrictions, no more
impact the rental income received from the relevant assets. If the Approved than 35% of the Group's Gross Asset Value may be exposed to one lessee, with
Provider cannot remedy the default, the Group may have to forfeit, assign or no two lessees representing more than 55% of exposure. This restriction is in
regear the relevant lease. This could lead to a temporary or sustained place to mitigate against the risk of significant rent loss in the event of an
reduction in rental income. Approved Provider default.
When a lessee defaults or when the Group believes it likely that a lessee
would default on its lease obligations, the Group will look to move the
impacted properties to another Approved Provider. The intention is to ensure
both ongoing provision of services to residents, and, as much as possible, to
preserve the income stream associated with the relevant properties.
The Group is currently looking to restructure the agreements it has with
Approved Providers to improve the security of the income it receives from
them, subject to agreement with the relevant Approved Provider and the
consideration of the Regulator of Social Housing.
Risk Category: Credit
Non-payment of Voids by Care Providers.
Risk Description Mitigating Actions
The Group has leases with Approved Providers under which they are responsible Whilst the Group does not have a contractual relationship with Care Providers,
for paying rent irrespective of resident occupancy of the underlying property. it monitors and engages with them to ensure, as far as reasonably possible,
that they are financially viable and operationally robust. Should a Care
The Approved Provider will usually mitigate this risk by entering into a Provider experience a deterioration in financial performance, the Group works
Service Level Agreement ("SLA") with a Care Provider under which the Care with a wide range of alternative Care Providers who would be invited to step
Provider agrees to cover the rent in relation to any voids in the property in to provide care services and maintain void cover arrangements.
(the Approved Provider being unable to claim Housing Benefit for void units).
Resident occupancy is also closely monitored by the Group, who proactively
If a Care Provider enters financial difficulty and is unable to meet the terms engages with Approved Providers and Care Providers to optimise occupancy
of the SLA (specifically paying the contracted voids cover to an Approved throughout the portfolio.
Provider), this could have a negative impact on the financial performance of
the Approved Provider, impinging its ability to pay the Group its rent. This
risk is compounded if there is low occupancy or persistent voids in a
property.
Risk Category: ESG
Potential Impact of Climate Change.
Risk Description Mitigating Actions
Changing weather patterns under projected climate change scenarios could The Investment Manager's sustainability team has been working with the
physically damage the properties owned by the Group, reducing their value and operations team to assess the risk that climate change poses to the Group's
impacting their operational viability. properties and ensuring that protections (or plans to implement protections)
are put in place for any properties that are deemed to be at high risk of
New regulatory standards (e.g. minimum EPC standards) could require capital material adverse impacts resulting from climate change.
expenditure works to improve efficiency or result in a reduction in the
economic utility of properties and their valuations if not undertaken. The key transition risks to the portfolio have been identified and
qualitatively assessed. Physical risks to the portfolio have been assessed
The impact of the most prominent climate-related risks to the portfolio is using analytical software and the out-puts of this analysis are demonstrated
assessed in detail in the Group's Task Force on Climate-related Financial in the Group's TCFD reporting.
Disclosures ("TCFD") reporting.
The Group believes that its reporting on climate change meets regulatory
requirements and is reviewed on an ongoing basis to ensure continued
compliance, in conjunction with the Sustainability Committee.
The Group is actively working to upgrade the portfolio so that all properties
meet the current legislative target (for England and Wales) of having an EPC
rating of C or above from 2030.
Risk Category: Economic
Volatile Trading Market.
Risk Description Mitigating Actions
A volatile trading market for the Group's shares could inhibit its growth. The Investment Manager and the Board review share performance on an ongoing
Shareholders may also not be able to realise their shares at a price above or basis. Normal share market pricing management may be utilised by the Board,
the same as they paid for the shares or at all. The Company's shares have including share buybacks, enhanced reporting and investor engagement, within
continued to be traded at a discount to Net Tangible Assets ("NTA"), which is the regulated framework.
limiting the ability to raise additional capital and thereby grow the fund.
Risk Category: Economic
Inflationary Pressures.
Risk Description Mitigating Actions
Inflation-linked rent reviews greater than those supported by the current Rent The Group's portfolio benefits from annual inflation-linked leases with
Settlement could impact the ability of Approved Providers to pay rent due Approved Providers who claim Housing Benefit which is similarly
under the leases of properties owned by the Group, since they would not be inflation-linked (the current rent settlement from 2026 to 2036 permits
matched by increases submitted to Housing Benefit. increases of CPI + 1% annually). There is therefore alignment between the
Group's contractual rental income and underlying Housing Benefit claims.
To mitigate the risk of any future misalignment between contractual rent due
and Housing Benefit claims, the Group has rolled out a risk-sharing clause
that will link rental increases to the lower of CPI or prevailing government
policy in relation to SSH rent increases.
Risk Category: Legal, Tax & Regulatory
Regulatory Changes Impacting the Sector.
Risk Description Mitigating Actions
Risk of changes to the social housing regulatory regime and changes to It is important that the Group works with its Approved Provider lessees to
government policy in relation to social housing and Housing Benefit policy. ensure that they engage with the Regulator and respond proactively to any
changes in regulation or policy. It is also important that the Group
understands what, if any, impact it will have on their organisation and the
properties leased to them.
The Group frequently engages directly with the Regulator of Social Housing
("RSH") to gain insight into any proposed regulatory changes reasonably
expected to be implemented. The social housing regulatory regime, in which
most of the Group's lessees operate, provides a high degree of accountability
and transparency.
The Group has rolled out a risk sharing clause with 66% of its Approved
Providers to re-balance the apportionment of risk between the parties,
including mitigating changes in central government policy relating to
Specialised Supported Housing ("SSH").
Risk Category: Legal, Tax & Regulatory
Non-compliance with Regulatory Standards.
Risk Description Mitigating Actions
Should an Approved Provider lessee of the Group be deemed non-compliant by the The Investment Manager has established relationships with the Approved
RSH, in particular in relation to financial viability, depending on the Providers with whom it works. The Approved Providers keep the Investment
further actions of the RSH it is possible that there may be a negative impact Manager informed of developments surrounding regulatory notices and
on the market value of the relevant leased properties. interactions with the RSH.
Depending on the exposure of the Group to such an Approved Provider(s), this Where Approved Providers have been deemed non-compliant, the Group seeks to
in turn may have a material adverse effect on the Group's NTA unless the work with them to help address issues identified by the RSH. The Group has
matter is resolved through an improvement in the relevant Approved Provider's leases in place with 10 Registered Providers that have been deemed
rating or the transfer of leases to an alternative Approved Provider. non-compliant by the Regulator and is working with them in the manner set out
above.
Risk Category: Economic
Property Valuation Volatility.
Risk Description Mitigating Actions
Property valuations are inherently subjective and uncertain, particularly when All of the Group's property assets are independently valued on a quarterly
market liquidity and transactional evidence is low. Market conditions, which basis by a third-party valuer (currently Jones Lang LaSalle, a specialist
may impact the creditworthiness of Approved Provider lessees, may adversely property valuation firm), who are provided with regular updates on portfolio
affect valuations. activity by the Investment Manager. The valuer inspects a proportion of the
portfolio annually to ensure that desktop based valuations are appropriate.
The Group portfolio is valued on a Market Value (investment) basis, which
takes into account the expected rental income to be received under the leases The Investment Manager and Audit Committee meet with the external valuers to
in the future. This valuation methodology provides a significantly higher discuss the basis of their valuations and their quality control processes.
valuation than the vacant possession value of a property. In the event of an
unremedied default of an Approved Provider lessee, the value of those assets Default risk of Approved Providers is mitigated in accordance with the
in the portfolio may be negatively affected. "Approved Provider default" principal risk explanation provided above.
Any changes could affect the Group's NTA and the share price of the Group. In order to protect against loss in value, the Investment Manager's
operational team seeks routinely to visit each property in the portfolio, and
works closely with the Group's lessees to ensure, to the extent reasonably
possible, their ongoing financial strength viability and that governance
procedures remain robust through the duration of the relevant lease.
Risk Category: Service Provider
Poor or Inadequate Housing Management.
Risk Description Mitigating Actions
Approved Providers and care providers may face a number of operational The Investment Manager undertakes proactive property inspections to review the
challenges (e.g. rising costs and labour shortages) heightening the risk of physical condition of the Group's properties, ensure lessee compliance with
poor or inadequate housing management of the Group's properties. lease obligations and to observe the quality of services being provided to the
Group's residents. In addition, there is frequent engagement with the Group's
Poor property management services being provided to the individuals in the Approved Providers and Care Providers, along with quarterly operational and
Group's properties could undermine the benefits of SSH and cause reputational compliance surveys, to collect data on the performance of the Group's lessees
damage to the Group which could negatively impact the Group's performance and properties.
and/or the price of the Company's shares. Individual cases of poor housing
management at a property or Approved Provider portfolio level may also reduce A key part of the Investment Manager's due diligence pre-acquisition is to
the referral demand for those properties, impacting the ability of Approved ensure that - whilst the Group has no contractual relationship with them and
Provider to pay rent to the Group. is not responsible for the care they provide - the Care Provider attached to a
project is capable to deliver the quality of care provided and financially
robust to meet its void obligations.
Most Care Providers are regulated by the Care Quality Commission ("CQC"),
offering an additional layer of regulation and oversight. The Investment
Manager operations team monitor the Care Providers on an ongoing basis. The
team engage with Care Provider staff when carrying out property inspections,
hold regular calls with Care Providers to which the Group has the largest
exposure, monitor CQC ratings for those Care Providers relevant to the Group
and track these ratings using an internal CQC register that the team updates
on an ongoing basis.
Risk Category: Financial Performance
Debt Covenant Breaches.
Risk Description Mitigating Actions
The borrowings the Group currently has and which the Group uses in the future The Investment Manager monitors relevant debt covenants on an ongoing basis.
may contain loan to value and interest covenants ratios, alongside In the unlikely event that an event of default occurs under these covenants,
sustainability targets. If property valuations and rental income significantly the Group has a remedy period during which it can potentially cure the
decrease, such covenants could be breached. The impact of such an event could covenant breach by either injecting cash collateral or utilising unencumbered
result in an increase in borrowing costs, a requirement for additional cash or property assets in order to restore covenant compliance.
property collateral, payment of a fee to the lender, a sale of an asset or
assets and/or the forfeiture of an asset(s) to a lender.
Any of the above could result in a material decrease to the Group's NTA.
Risk Category: Legal, Tax & Regulatory
Health and Safety Non-compliance.
Risk Description Mitigating Actions
Any non-compliance with Health and Safety ("H&S") standards by an Approved The contractual responsibility for making sure that the property is compliant
Provider(s) of the Group could lead to H&S issues for the individuals sits with the Approved Provider and not the Group. However, to mitigate the
living in the properties owned by the Group. This could have serious moral, risk of non-compliance, the Investment Manager's operations team assess Health
reputational and financial implications for the Group. and Safety compliance by conducting property visits, issuing bi-annual
compliance surveys sent to all Approved Providers and by engaging regularly
with the senior teams at each Approved Provider. Compliance of the Group's
properties is also tracked on the internal REIT Risk Register, managed by the
Investment Manager's operations team.
Stakeholder Engagement
This section describes how the Board engages with its key stakeholders, how it
considers their interests and the outcome of engagement when making its
decisions, the likely consequences of any decision in the long term, and how
the Board further ensures that it maintains a reputation for high standards of
business conduct. The Group is committed to continual stakeholder engagement
and implements a cycle of constant engagement at all stages of the Group's
investment lifecycle.
Section 172 (1) Statement
Stakeholder Why is it important to engage? How have the Investment Manager / Directors engaged? What were the key topics of engagement? What was the feedback obtained and the outcome of the engagement?
Shareholders Investment from our shareholders plays an important role, providing capital to The way in which we engage with our shareholders is set out in our Corporate Financial and operational performance. The Board and the Investment Manager continue to evaluate the benefits of
ensure we can deliver additional housing into the Specialised Supported Governance Report.
deploying available capital or pursuing share buybacks in the context of
Housing sector. shareholder feedback, market conditions and the Company's ambition for growth.
Through the investment of private capital into an under-funded sector, we can Share price discount to NAV and potential rectification action.
achieve a positive social impact whilst ensuring our shareholders receive a
long-term inflation-linked return. The Board and Investment Manager consider shareholder concerns when speaking
to the Regulator of Social Housing and agreed to keep shareholders updated of
The share price, potential share buybacks and potential sales from the any developments. We understand the importance of, and are committed to,
portfolio. working with Approved Providers to address the concerns of the Regulator.
The regulatory environment of the Specialised Supported Housing sector. The Investment Manager has enhanced environmental, social and governance
considerations within its investment process, and within its own business in
discussion with the Board's Sustainability and Impact Committee. Refer to
Sustainability Report for more information.
Environmental, social and governance considerations.
During FY25, the Board consulted with a number of the Company's shareholders
Understanding the underlying concerns of shareholders that resulted in votes in accordance with Provision 5.2.4 of the AIC Code of Corporate Governance in
against resolutions 3, 4, 5 and 13, at the Company's 2025 Annual General relation to the resolutions regarding Director re-elections at the 2025 AGM.
Meeting. As disclosed within the Interim results to 30 June 2025, the feedback from the
shareholder consultation has informed the Board's subsequent actions and
adjustments were made to the Company's governance and strategic approach.
The Company's key service provider appointments, including the Investment
Manager and broker arrangements.
Atrato was appointed as the Company's new Investment Manager from 1 January
2025.
Residents Our strategy is centred on leasing Specialised Supported Housing to Approved The Investment Manager monitors resident welfare through engagement with We provide oversight of resident welfare by reviewing the Investment Manager's Resident issues raised as a result of engagement through care providers are
Provider lessees to house vulnerable adults. We remain focused on providing Approved Providers to assess the quality of the service they are delivering to due diligence on new acquisitions or developments prior to occupation. We then addressed with the relevant Approved Provider.
homes which offer the vulnerable adult residents greater independence than residents. The Investment Manager receives quarterly reports from Approved monitor information provided by the Investment Manager on our Approved
institutional accommodation. Providers to ensure compliance with health and safety standards. This Provider lessees' compliance with health and safety standards to ensure that
information is considered in the context of qualitative information from residents are looked after by the Group's counterparties; we request updates
discussions with Care Providers operating in each Approved Providers' on any health and safety issues every quarter. Any compliance issues are remedied with any associated works undertaken.
properties, market intelligence and feedback from the Investment Manager's
inspections. The Investment Manager does not generally engage with residents
directly. Instead, day-to-day engagement is done by care providers and, to a
lesser extent, Approved Providers. The Group's investment decisions are informed by the long-term needs of the
Approved Provider lessees and their residents.
The Group has commenced a portfolio-wide EPC Upgrade Programme, which will
deliver more efficient homes for our Approved Providers to house vulnerable
adults safely and efficiently ahead of the anticipated regulatory deadline.
Investment Manager The Investment Manager is responsible for executing the Investment Objective The Board maintains regular and open dialogue with the Investment Manager at In addition to all matters related to the execution of the Company's The Investment Manager produces quarterly reports for the Board, detailing
within the Investment Policy of the Company. Board meetings, supplemented by regular contact on operational and investment Investment Objective, the Board engages with the Investment Manager on various governance and operational matters at the Board's request. Capital
matters outside of meetings. developments in the market and updates from the Regulator of Social Housing. allocation is also considered with regard to the views of the Board.
The Board appointed a new Investment Manager, Atrato, from 1 January 2025. The Board closely monitored the transition process to the new Investment
Manager, Atrato, to ensure that it was effective and minimised disruption to
the Group's stakeholders.
The collaboration between the Board, the former investment manager and Atrato
ensured that the welfare of the residents of the Group's properties was
prioritised, operational performance was preserved and that progress continued
with corporate initiatives whilst the transfer was affected.
Approved Providers Our relationship with Approved Providers is integral to ensuring rent is paid The Investment Manager looks to maintain strong relationships with Approved The Investment Manager discussed a number of topics with Approved Providers Refer to the Fund Manager's Report.
to the Group and that properties are managed appropriately. Providers, having formal meetings with senior management at least every six including that properties are managed in accordance with their leases;
months as well as engaging more frequently on an ad hoc basis on a variety of financial reporting and governance; and specific property-related issues such Further detail on the progress of the stabilisation following the assignment
The Group's leases with Approved Providers are on fully repairing and insuring matters. Periodic operational surveys and biannual compliance surveys are as occupancy, health and safety issues, rent levels, management accounts and of leases from Parasol to Portus (formerly Westmoreland), the ongoing
terms - meaning that Approved Providers are responsible for management, repair provided to the Investment Manager. governance. assignment away from My Space and the successfully completed assignment from
and maintenance, in addition to tenanting the properties and claiming rents on
Pivotal to IHL is set out in the Investment Manger's Report.
behalf of the residents via Housing Benefit from the relevant local authority. During the year, the Investment Manager had significant engagement with a
number of Approved Providers in relation to lease assignments.
Care Our Approved Providers house residents who receive care and support from care The Investment Manager meets periodically with the largest ten care providers, The Investment Manager engages with care providers on the performance of the The Investment Manager will not consider deals where care providers do not
Providers providers. It is important to ensure that these vulnerable residents receive who supporting approximately half of residents across the portfolio, as part Approved Provider lessees including health and safety compliance, property meet the care or governance standards expected or where care providers are
the best possible care. In addition, the care providers often cover the rental of its due diligence processes. In addition, the Investment Manager regularly management by Approved Providers, their financial and operational capacity for unable to demonstrate the financial strength to meet their obligations under a
cost of void units so we engage with care providers to ensure our Approved meets and engages with care provider representatives when inspecting the new schemes, occupancy levels and financial performance. service level agreement.
Providers are able to pay our rent in the event of persistent empty units. Group's portfolio, when reviewing quarterly data and on an ad hoc basis when
matters arise. Following engagement, scopes of work have been updated with input from care
Therefore, whilst the Company has no contractual relationship with the care providers to ensure future properties acquired or developed meet the specific
providers operating in the portfolio, they play an essential role in the care needs of residents.
occupancy levels of our properties and strong engagement with the Group
ensures the best possible outcomes for our Approved Provider lessees and their Whilst done at the relevant Local Authorities' discretion, care providers have
residents. been changed where expectations around the standard of care were not met or
where engagement identified care providers in financial difficulties.
Local Local Authorities are responsible for identifying appropriate housing and care When looking at a new acquisition, the Investment Manager engages with, or The aim of engagement with Local Authorities is, as much as possible, to The Investment Manager will listen to feedback from Local Authorities and,
authorities for the individuals who live in the Group's properties. receives feedback from, various departments within Local Authorities including ensure that the properties acquired by the Group are consistent with the where possible, will work with Approved Providers to improve and upgrade
Commissioners and Housing Benefit officers. The Investment Manager will look requirements of the relevant Local Authority. properties to ensure that they meet ongoing commissioning requirements.
New acquisitions are assessed to ensure that they meet the expectations of the to engage with a Local Authority in relation to an existing scheme if required
relevant Local Authority in order to ensure that schemes are supported and (for example, if a new care provider is needed). Where necessary, Local Authorities will be engaged with directly
that referrals are made as efficiently and considerately as possible.
post-acquisition of a property to access ongoing demand levels and to
determine any changes in commissioning strategy. The Group completed the pilot phase of its building efficiency upgrade
programme across 11 properties. Refer to the Fund Manager's Report for more
detail.
The The Regulator of Social Housing ("RSH") regulates Registered Providers of The Investment Manager has periodic contact with the RSH to understand the key Discussions with the RSH are focused on ensuring the market evolves in line The Investment Manager continues to work with the Boards of its lessees to
Regulator social housing to ensure providers are financially viable, properly governed concerns and priorities for the Specialised Supported Housing Sector. with its observations, and Registered Providers can best focus on addressing understand how best we can help them meet the standards of the RSH.
and are delivering on consumer standards. It is important to ensure that, as the RSH's observations.
much as possible, the Group reflects observations made by the RSH in its
investment structures and its engagement with its lessees.
Lenders The Group's investments in social housing assets are partly funded by debt. The Investment Manager engages with its lenders mainly via the reporting of The Group engaged on the following topics: financial and information covenant The Group is fully compliant with its debt covenants.
Prudent debt financing is required to achieve the Group's return targets. financial and information covenants under the existing loan agreements on a reporting and active asset management activities undertaken by the Group e.g.
quarterly basis. any other asset management activity that requires lenders' consent. The Investment Manager's pro-active engagement with the Group's lenders is
All secured debt is long-term and it is important for the Group and the
welcomed by them and, to date, no concerns in relation to the performance of
Investment Manager to form a good relationship with our debt provider partners In addition, there are regular ad-hoc engagements in relation to general its loans have been raised by the lenders.
and provide them with all information and commentary required. topics relating to the social housing sector as well as specific topics
arising from the financial and operational performance of the Group's The Board continues to monitor compliance with debt covenants and keeps
activities and future opportunities, and any other general matters affecting liquidity under constant review to make certain the Group has sufficient
the relationship between the Group and the lenders. headroom in its debt facilities.
In June 2025, Fitch Ratings Limited reaffirmed the Group's existing Investment
Grade, long-term Issuer Default Rating (IDR) of 'A-' and a senior secured
rating of 'A' for the Group's existing loan notes.
Principal Decisions
Principal decisions have been defined as those that have a material impact on
the Group and its key stakeholders. In taking these decisions, the Directors
considered their duties under section 172 of the Act.
My Space Housing Solutions
During the year, the Board announced that that an option agreement had been
agreed with My Space Housing Solutions ahead of the approval of its company
voluntary arrangement ("CVA") proposal. The option arrangement allowed the
Company to transfer all My Space leases within a 12-month period following
completion of the CVA challenge period.
Asset Disposals
The Board decided to sell two non-performing properties at Oxford Grove to
North Devon Council in line with book value.
Change to Valuation Frequency
In May 2025 the Board announced the change from a quarterly to bi-annual
valuation of the Company's portfolio, bringing the Company in line with the
wider listed UK Real Estate sector. The Board believes this change is in the
best interests of its shareholders as results in a reduction of ongoing costs
to drive further efficiency savings.
Increased Annual Target Dividend
In May 2025, the Board increased the annual target dividend for the year ended
31 December 2025 to 5.622 pence per Ordinary share representing a 3.0%
increase on the annual dividend paid in the previous financial year.
The decision, which the Board believes was in the best interests of the
Company's shareholders, was driven by the successful progress made, at that
time, on the transfer of the 38 properties from Parasol to Westmoreland; the
cost reductions achieved following the appointment of Atrato Partners Limited;
and the improvements in the Company's earnings.
Appointment of New Non-Executive Directors
As part of the ongoing succession planning, during the year, the Company
undertook a formal recruitment process led by the Nomination Committee, with
the support of an independent search consultancy, for the appointment of new
Board members. This process actively encouraged a diverse pool of candidates
who could contribute specific skills and experience identified by the Board.
The Board were pleased to announce the appointment of Bryan Sherriff as an
Independent Non-Executive Director with effect from 1 January 2025, Fionnuala
Hogan with effect from 10 November 2025 and Jos Short with effect from 1 March
2026.
It was also announced that, as part of the Succession Plan for the Board, Ian
Reeves would step down from his role as an Independent Non-Executive Director
at the 2025 Annual General Meeting following an orderly handover.
Board Approval of the Strategic Report
The Strategic Report has been approved by the Board of Directors and signed on
its behalf by:
Chris Phillips
Chair
25 March 2026
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the annual report and the
financial statements in accordance with UK adopted international accounting
standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors are required to prepare the Group
financial statements in accordance with UK adopted international accounting
standards and have elected to prepare the Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). Under company law the
directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Group and
Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· for the Group financial statements, state whether they have been prepared
in accordance with UK adopted international accounting standards, subject to
any material departures disclosed and explained in the financial statements;
· for the Company financial statements, state whether applicable UK
Accounting Standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue in
business; and
· prepare a Directors' report, a strategic report and Directors'
remuneration report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring that the
annual report and accounts, taken as a whole, are fair, balanced, and
understandable and provide the information necessary for shareholders to
assess the Group's performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors. The
Directors' responsibility also extends to the ongoing integrity of the
financial statements contained therein.
Directors' Responsibilities Pursuant to DTR4
The Directors confirm to the best of their knowledge:
· The financial statements have been prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position of the Group and the Company and
profit and loss of the Group.
· The Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group and
Company, together with a description of the principal risks and uncertainties
that they face.
Approval
This Directors' responsibilities statement was approved by the Board of
Directors and signed on its behalf by:
Chris Phillips
Chair
25 March 2026
Sustainability Strategy
Our Sustainability Strategy is structured by three key pillars; each aligned
to the UN Sustainable Development Goals ("SDGs") most material to the Company.
ESG Pillar
PILLAR 1 | Thriving People PILLAR 2 | Sustainable Homes PILLAR 3 | Engaged Governance
Aim Putting resident welfare first and delivering on our impact objectives to Taking actions to improve the quality and sustainability of our homes and Making responsible choices, managing risks and partnering with stakeholders to
create long-lasting positive social outcomes create a more energy efficient, climate-resilient portfolio create long-term stakeholder value
Aligned UN SDGs 3, 10, 11 11, 12, 13 8, 17
Impact Goal Increase the provision of Specialised Supported Housing, delivering positive
outcomes for vulnerable individuals and value for money for the public sector
Impact Objectives Deliver socially needed accommodation Fund & manage sustainable developments Enable the provision of quality services
KEY Number of homes and potential residents % homes EPC C or above Number of inspections per 100 properties
METRICS
Occupancy rate Number of EPCs improved via EPC Upgrade Programme % of lessees met with annually
% of homes defined as 'new' to the SSH sector % assets climate risk screened Resident satisfaction (tenant satisfaction measures)
Outcomes Improved resident wellbeing Net Zero by 2050 Sector growth and maturity
Transparent Reporting
Sustainability Report
The Company is committed to reporting its sustainability performance,
methodology and data every year in a comprehensive and transparent way.
The Company is pleased to have prepared its first standalone Sustainability
Report which details the Company's performance against our Sustainability
Strategy and contains our sustainability disclosures aligned with best
practice frameworks including EPRA's Sustainability Best Practices
Recommendations ("sBPR").
Taskforce On Climate-Related Financial Disclosures ("TCFD") Report
The TCFD recommendations provide a framework for organisations to more
effectively take account of and disclose climate-related risks and
opportunities. The TCFD Report for the Company, included below, contains
voluntary climate-related financial disclosures for the reporting period 1
January 2025 - 31 December 2025 in relation to governance, strategy, risk
management and metrics and targets.(1) It addresses all four core elements and
11 TCFD Recommended Disclosures as detailed in "Recommendations of the Task
Force on Climate-Related Financial Disclosures".(2)
Recommendation Recommended Disclosures
Governance a. Describe the Board's oversight of climate-related risks and opportunities.
Disclose the organisation's governance around climate-related risks and
opportunities.
b. Describe management's role in assessing and managing climate-related risks
and opportunities.
Strategy a. Describe the climate-related risks and opportunities the organisation has
identified over the short, medium, and long term.
Disclose the actual and potential impacts of climate-related risks and
opportunities on the organisation's businesses, strategy, and financial
planning where such information is material.
b. Describe the impact of climate-related risks and opportunities on the
organisation's businesses, strategy, and financial planning.
c. Describe the resilience of the organisation's strategy, taking into
consideration different climate-related scenarios, including a 2°C or lower
scenario.
Risk Management a. Describe the organisation's processes for identifying and assessing
climate-related risks.
Disclose how the organisation identifies, assesses, and manages
climate-related risks.
b. Describe the organisation's processes for managing climate-related risks.
c. Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation's overall risk
management.
Metrics and Targets a. Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management process.
Disclose the metrics and targets used to assess and manage relevant
climate-related risks and opportunities where such information is material.
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas
("GHG") emissions and the related risks.
c. Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets.
1 The Company is not in scope of the UK's Companies (Strategic Report)
(Climate-related Financial Disclosure) Regulations 2022 or the FCA listing
rules TCFD reporting requirements (ESG 2.1) as yet, but the Company has
decided to produce this TCFD report ahead of FCA expectations to demonstrate
its support for the disclosures.
2 Task Force on Climate-related Financial Disclosures, "Final Report:
Recommendations of the Task Force on Climate-related Financial Disclosures"
(June 2017).
Governance
Describe the Board's oversight of climate-related risks and opportunities.
The Board is responsible for setting the Company's sustainability strategy and
overseeing the Company's approach to climate-related risks and opportunities
affecting its business.
The Board established its 'Sustainability & Impact Committee' in May 2023,
ensuring that sustainability issues, including climate change, are discussed
in sufficient detail and given appropriate focus. The Sustainability &
Impact Committee, chaired by Bryan Sherriff, meets not less than once a year
(and more frequently as required) and has responsibility for overseeing the
delivery of the Company's Sustainability Strategy, including identification
and management of climate-related risks. The Board is primarily informed of
climate-related risks and opportunities by the Investment Manager through the
meetings of the Sustainability & Impact Committee.
Climate-related risks are assessed as part of the standard due diligence
process when acquiring or funding the development of new properties.
Identified climate risks are presented in the materials provided to the
Investment Committee and, where relevant, will be discussed during committee
meetings to assess the potential impact of these risks on the property and/or
development and to determine (a) the time frame over which they might
materialise and (b) the potential impacts they may have both operationally and
in terms of asset value.
The Board is committed to enhancing the Company's understanding of climate
risks and opportunities and, as part of this, has approved budget allocation
for ongoing climate-related activities for the next reporting year. This
facilitates forward planning and preparation of sustainability priorities for
the next reporting year.
Describe management's role in assessing and managing climate-related risks and
opportunities.
The Investment Manager is responsible for the day-to-day delivery of the
sustainability strategy as approved by the Board on behalf of the Company,
including the assessment, management and reporting of climate-related risks
and opportunities.
At the Investment Manager level, assessment and management of climate-related
risks and opportunities is shared across the Social Housing Team and the wider
business of the Investment Manager.
The Investment Manager has a dedicated Head of Sustainability who is
responsible for the operational delivery of climate-related risks and
opportunities measures within the Investment Manager's operations and leads
the provision of climate risk advice to the Company. The Head of
Sustainability chairs an internal ESG Working Group, whose members include
representatives from fund management, asset management and property and data
management.
Climate risk and TCFD is a standing agenda item for this Working Group, to
ensure appropriate oversight, discussion and review of climate-related issues,
as well as to facilitate and enhance understanding of climate impacts across
the social housing team.
The Working Group is responsible for oversight, monitoring and management of
the Company's sustainability risks and opportunities including those related
to climate change. This includes the review, monitoring and management of
climate-related risks relevant to current and future assets in the portfolio.
The Working Group aims to meet at least fortnightly to discuss ESG issues
impacting the Company, and climate risk is a standing agenda item as part of
these meetings. Other members of the social housing team are invited on an
ad-hoc basis to meetings with climate-related agenda items. Meeting minutes
are circulated to the full Working Group following every meeting. The Working
Group also has responsibility for overseeing relevant climate-related targets
and the preparation of the Company's climate-related reporting and
co-ordination of third-party service providers who provide input into this,
including overseeing preparation of the Company's GHG inventory.
During the reporting period, the Investment Manager's Head of Sustainability
delivered training to the social housing team on the topic GHG accounting
fundamentals, in order to support the management of GHG related issues in the
Company's activities.
Strategy
Describe the climate-related risks and opportunities the organisation has
identified over the short, medium and long term.
Investing in real assets exposes the Company to both physical and transition
risks associated with climate change. The Company's properties may require
additional work to bolster their resiliency against increasingly extreme
weather events or require efficiency upgrades to meet evolving regulation on
minimum efficiency standards, as the Government seeks to mitigate emissions
from the building sector, one of the largest sources of emissions in the UK.
The following climate-related risk categories related to the transition to
lower-carbon economy categories were considered as part of the Company's
broader assessment of material sustainability risks and opportunities:
· Policy and legal
· Technology
· Market
· Reputation
From this review, the following material climate-related risks and
opportunities were identified:
1. Energy Management Risk
2. Energy Management Opportunity
3. Product Design and Lifecycle Management Risk
4. Physical Impacts of Climate Change Risk
See Table 1 for a description of these risks and their potential impact.
The Company has utilised Munich RE's Location Risk Intelligence software
platform ("Munich RE platform"), to analyse and assess the physical impact
risks to its property resulting from natural hazards and climate change. The
Munich RE platform combines historical event data with future climate
projections (under different climate scenarios) to assess current and future
risks. The Company's entire address list was inputted into the Munich RE
platform to assess the portfolio's exposure to acute and chronic natural
hazards and climate risk.
Climate hazards assessed by the Munich RE platform
Tropical Cyclone Heat Stress Index Precipitation Stress Index Permafrost Extent
River Flood (Defended) Heat-Humidity Stress Index Drought Stress Index Water Scarcity
Storm Surge (Defended) Cold Stress Index Sea Level Rise Fire Weather Stress Index
Subsidence
The following selection of acute and chronic climate-related physical risks
were chosen for further analysis using the Munich RE platform:
1. Acute Climate Hazards
· Storm surge
· River flood risk
2. Chronic Climate Hazards
· Sea level rise
· Water scarcity
The results of this analysis, including details of the climate scenarios and
time horizons applied, are disclosed further below in this report.
Describe the impact of climate-related risks and opportunities on the
organisation's businesses, strategy and financial planning.
A high-level summary of the potential impact of material climate-related risks
and opportunities on the Company's businesses, strategy and financial planning
is provided in the table below:
Table 1: Material climate-related risks and opportunities
Material Topic Risk/ Opp Description Magnitude Likelihood Potential Financial Impacts
Energy Management and GHG emissions* Risk Risk arising from the ongoing energy transition and evolving regulatory 4 4 23% of the portfolio currently holds an EPC rating of D or below. Although
landscape increasing expectations around housing energy efficiency, coupled these ratings are not presently a significant determinant of occupier demand,
with the potential introduction of legislation mandating minimum energy they are gaining prominence among investors and valuers. The EPC Upgrade
performance standards. SOHO may also need to adapt to future energy related Programme is intended to mitigate this risk. While expenditure will be phased
regulation as the UK progresses toward net zero by 2050. over the next five years, the likelihood of failing to meet minimum EPC
standards may increase during this time.
Opp Opportunity to partner with stakeholders and leverage experience to improve 4 2 The EPC Upgrade Programme offers potential benefits such as increasing asset
energy efficiency, and install on-site renewable infrastructure, reducing values and improving tenant affordability by enhancing building energy
energy bills for tenants and increasing comfort for residents, while also performance. This is considered a medium‑term opportunity, coinciding with
ensuring the portfolio retains its long-term value and liquidity. the expected implementation of minimum EPC rating standards, when
non‑compliant properties may be subject to a 'brown' discount.
Product Design and Lifecycle Management Risk Risk that forward-funded developments or purchased buildings are not built 3 3 As the Company does not currently engage in significant development activity
with circularity principles such as resource efficiency, durability and these risks relate to existing buildings where they are not fit for purpose.
recyclable materials and/or do not meet regulatory requirements or market See above for discussion on the Company's strategy for dealing with minimum
expectations. EPC rating risks. Further unmatched costs may also arise at lease expiry.
Physical Risk Risk that properties within SOHO's portfolio will face increasing exposure to 2 3 Although the risk magnitude could be high for individual properties, the
Impacts of Climate climate related physical impacts. More frequent and severe climate events dispersed nature of SOHO's portfolio means the overall risk to the Company is
Change* could place pressure on existing infrastructure and heighten operational and considered low. Any financial impacts from damage -which could reduce revenue
tenant related risks over time. In extreme cases, physical damage could limit or impair the value of certain properties - - would be mitigated by insurance
residents' ability to remain in their homes. These risks are particularly coverage. However, the increasing likelihood of such risks may lead to higher
significant given the vulnerability of many of the Group's residents. insurance costs in future.
* The period over which each risk first becomes material is defined as:
Short-term: 0-2 years; Medium-term: 2-5 years; and Long-term: over 5 years.
These time scales are aligned to the Company's overall risk management
framework, considering the nature of the Company's assets and liabilities. GHG
Emissions and the Physical Impacts of Climate Change were not specifically
determined as having any material near-term risks and opportunities, through
the Company's materiality assessment. However, it was deemed appropriate to
continue reporting on these issues with a long-term risk and opportunity
perspective and due to their importance from a broader sector focus and
sustainability reporting best practice.
See the Company's standalone Sustainability Report for further details on the
Company's broader list of material sustainability topics.
Over the next reporting period the Company plans to review its risk mitigation
opportunities with the aim to improve the Company's resiliency to these
identified risks moving forward.
Describe the resilience of the organisation's strategy, taking into
consideration different climate-related scenarios, including a 2°C or lower
scenario.
The Company has performed a quantitative scenario analysis assessment using
the Munich RE platform. The aim of this assessment was to understand the
impact of relevant climate risks to the Company's portfolio under different
climate scenarios and timeframes.
The available scenarios in Munich RE's platform are:
Scenario Description
SSP1-2.6 Sustainability In this most optimistic scenario, all countries (with the strong supporting
the weak) move gradually but consistently towards a more sustainable economic
system. Inequality within and between countries is reduced and consumption is
orientated towards lower material growth and lower resource and energy
consumption. This moderate scenario leads to an expected warming at the end of
the 21st century of around 1.0-2.4°C relative to the pre-industrial period
(1850-1900). The SSP1-2.6 scenario is comparable to the RCP2.6 scenario.
SSP2-4.5 Middle of the road In this scenario, global and national institutions work towards sustainable
development but make slow progress. Development and income growth proceed
unevenly, with some countries making relatively good progress while others
fall short of expectations. The environment experiences degradation but the
overall intensity of resource and energy use declines. This scenario would be
expected to lead to a warming by the end of the 21st century of between 2.1
and 3.5°C relative to the pre-industrial period (1850-1900). The SSP2-4.5
scenario is comparable to the RCP4.5 scenario.
SSP3-7.0 Regional rivalry Under this scenario a resurgence in nationalism, concerns about
competitiveness and security, and regional conflicts push countries to
increasingly focus on domestic or, at most, regional issues. Achievement of
national and regional food, energy, and security goals are prioritised above
international cooperation to tackle shared goals. Economic development remains
material-intensive and environmental degradation worsens. Under this scenario
warming by the end of the 21st century is expected to be between 2.8 and 4.
°C. The SSP3-7.0 scenario is comparable to the RCP7.0 scenario.
SSP5-8.5 Fossil-fuelled development In this scenario faith is placed in competitive markets and innovation. Fossil
fuels are increasingly exploited and social and economic development drives
the adaptation of resources and energy intensive lifestyles around the world.
Local environmental problems like air pollution are managed, but high
greenhouse gas releases drive excessive global warming and related increases
in natural catastrophe exposure. Under this scenario warming by the end of the
21st century is expected to be between 3.3 and 5.7°C. The SSP5-8.5 scenario
is comparable to the RCP8.5 scenario.
The findings from the Munich RE platform assessment showed the Company's
assets have a current low overall vulnerability to natural hazards and
physical climate risks, specifically:
· 98% of properties have a current very low risk from river flooding.
· 97% of properties have a current very low risk from storm surge.
· 90% of properties have a current very low or low risk from water
scarcity.
· Note: sea level rise risk is only modelled from 2030 onwards.
These risks were also assessed using the Munich RE platform under the
different climate scenarios offered on the platform and across both 2030 and
2050 time horizons.
The Company has chosen to disclose the SSP5 8.5 scenario results below, as a
robust stress test of the portfolio's potential exposure to severe climate
conditions:
River flooding: The percentage of properties at very low risk changed from 98%
to 88% in 2030, remaining at 88% at 2050.
Storm surge: The percentage of properties at very low risk did not change at
2030 or 2050.
Water Scarcity: The percentage of properties at very low to low risk did not
change at 2030 or 2050.
Sea level: 100% of properties are at very low risk from sea level rise at
2030, changing to 99% at 2050.
Over the next reporting cycle, the Company plans to further validate the
outputs from the Munich RE platform, including specific review into the assets
identified from this assessment as having an above 'low' or 'very low' risk
exposure to various climate-related risks. Through this ongoing work, where
necessary, the Company will determine appropriate strategic responses to
validate asset-level risk, for example, the development of site-specific risk
management plans or engagement of further environmental surveys.
Risk Management
Describe the organisation's processes for identifying and assessing
climate-related risks.
Describe the organisation's processes for managing climate-related risks.
Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation's overall risk
management.
The Company's approach to risk assessment is as set out in the Our Principal
Risks and Uncertainties Section.
The Investment Manager has overall responsibility for the Company's risk
management and internal controls, with the Audit and Risk Committee reviewing
the effectiveness of the Board's risk management processes on its behalf. The
Sustainability & Impact Committee is responsible under the delegated
authority of the Board for the monitoring of climate-related risks which are
incorporated into the risk management process.
The Sustainability & Impact Committee considers both physical and
transition climate-related risks, including existing and emerging regulatory
requirements related to climate change.
The method used to evaluate the importance of each climate risk that the
Company is exposed to is aligned to the Company's general risk management
structure. It involves a matrix with a 5-point rating system for both the
likelihood and magnitude of each risk.
· Likelihood: low, moderate, high; and
· Magnitude: low, moderate, high.
The alignment to the Company's general risk management structure allows for
the climate-related risks to be incorporated into broader risk management and
mitigation procedures. These risks are included in the risk register of the
strategy, which is reviewed regularly with the Board of the Company. The risk
register is approved by the Board and evaluated and approved by the Risk
Committee.
Metrics and Targets
Disclose the metrics used by the organisation to assess climate-related risks
and opportunities in line with its strategy and risk management process.
The Company recognises the need for continuous improvement of data collection
and monitoring to accurately assess climate risks and opportunities in line
with its strategy and risk management process.
The Company measures and monitors the following key climate-related metrics:
1) EPC ratings: see breakdown below;
2) Energy consumption: see details of energy consumption data provider
below; and
3) GHG Emissions: see GHG Inventory below
EPC Ratings
The EPC ratings of each property are monitored on an ongoing basis. Currently,
77% of the properties within the portfolio are rated at C or above. The chart
below shows the EPC breakdown of properties as at 31 December 2025.
Energy Consumption Data
The Company has engaged the data provider, Perse, to enable access to actual
energy consumption through direct APIs to every property's meter. This data is
utilised in the preparation of the Company's GHG Inventory.
The energy consumption data from Perse not only improves the completeness and
accuracy of the Company's GHG Inventory but also supported the emissions
reductions modelling used to identify available decarbonisation levers for
SOHO's emissions reductions targets.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks.
GHG Inventory
The Company engaged external consultants, Anthesis, to prepare its GHG
Inventory for FY25 in line with the GHG Protocol methodology. The Company does
not have any Scope 1 and 2 emissions but has reported all relevant categories
of Scope 3 emissions.(3)
The Company's GHG Inventory is disclosed below in Table A (see Appendix for
further details of the GHG Inventory methodology).
SOHO FY25 GHG Emissions Inventory
Emissions FY23 FY24 FY24 restated(4) FY25
Location-based Location-based Market-based Market- Location-based Market-based
based
Scope 1 and 2(5) N/A N/A N/A N/A N/A N/A
1. Not measured 1,216 1,216 1,216 967 967
Purchased Goods and
in FY23
Services (PG&S)
2. N/A N/A N/A 0 770 770
Capital
Goods
6. Not measured 3 3 3 3 3
Business
in FY23
Travel
13. 4,763 6,044 7,570 5,878 5,859 6,133
Downstream Leased Assets (DLA)(6)
Scope 3 Total 4,763(7) 7,263 8,789 7,096 7,600 7,874
In FY25, the largest source of emissions for the Company was again Scope 3 DLA
at 78% of FY25 emissions, followed by PG&S at 12% and Capital Goods at
10%. The Company's FY25 GHG Inventory indicates an overall slight increase in
GHG emissions (location-based) on prior year, largely attributable to the
development of the Chorley site.
3 The Company is an externally managed business and does not have any
employees or office space. Note: sub-scope categories may not equal the Scope
totals due to rounding.
4 FY24 figure restatement due to availability of actual data on renewable
electricity purchased across SOHO's portfolio (also utilised in FY25).
5 Scope 1 and 2 emissions are not applicable for the Company as it is an
externally managed business and does not have any employees or office space.
6 FERA emissions associated with tenant activities under Scope 3 DLA are
not included in the figures reported.
7 FY23 emissions data incorporated over 90% of the Company's electricity
and gas meters with the remaining portfolio meters unable to be matched within
the reporting period and excluded. The emission data calculated in FY23 used
property gas and electricity consumption only and therefore was not a complete
Scope 3 figure. From FY24 onwards, all applicable categories of Scope 3
emissions have been calculated and reported and any gaps in actual data have
been filled with either Perse or Anthesis estimated data.
Sustainability Strategy
Describe the targets used by the organisation to manage climate-related risks
and opportunities and performance against targets.
Climate-related Targets
During FY25, the Investment Manager completed a review of the Company's
emissions reduction target to evaluate the target baseline, scope and
coverage. The Investment Manager found that given the enhancements made to the
Company's emissions data and calculation processes within the Company's first
full GHG Inventory published in the FY24 Annual Report, the FY24 full year
baseline is a more accurate and complete baseline for determining an emissions
reduction target.
A workstream was subsequently established to enhance the Company's emissions
reduction ambitions by developing targets in line with the Science Based
Target initiative's ("SBTi") Building Guidance (near-term and building Net
Zero target) and Corporate Guidance (other Scope 3 emissions):
Net-zero
· SOHO commits to achieve net-zero greenhouse gas emissions across the
value chain by 2050.
Near-term
· SOHO commits to reduce Scope 3 in-use operational GHG emissions of owned
and leased buildings, covering downstream leased assets, 48.5% per m2
(equivalent to a 48.3% absolute reduction) by 2030 from a 2024 base year.(*)
Long-term
· SOHO commits to reduce Scope 3 in-use operational GHG emissions of owned
and leased buildings, covering downstream leased assets, 98.3% per m2 by 2040
from a 2024 base year. SOHO also commits to reduce absolute Scope 3 GHG
emissions from purchased goods and services 90.0% by 2050 from a 2024 base
year.
The Company submitted refreshed emissions reductions targets (both near term
and Net Zero) to SBTi for validation in November 2025, reflecting its
commitment to reducing its value chain emissions in line with 1.5°C. The
Company's near term and Net Zero targets were approved by the SBTi post-year
end, in February 2026.
EPC Upgrade Programme
The Company and its Investment Manager intend to asset manage the portfolio to
ensure all properties have an EPC rating of C or above by 2030 to ensure
compliance with current legislative targets. For further details on the
Company's EPC Upgrade Programme see page 16 of the Sustainability and Impact
Committee Report.
*SOHO does not own or financially control any fossil fuel equipment in its
buildings portfolio.
Appendix: GHG Inventory Methodology
Emissions were calculated using the Anthesis 'Route Zero' software tool, in
alignment with the GHG Protocol.
Scope Category Methodology Emission Factors Source
3 1. Purchased Goods & Services The Environmentally Extended Input Output (EEIO) method, which estimates DEFRA EEIO factors
emissions from expenditure, was used to calculate the emissions from this
category. The SOHO team provided spend for the reporting year split by
supplier. The suppliers were mapped against the DEFRA Input/Output (IO)
categories, which are based on SIC codes and have an associated emission
factor. The DEFRA IO emission factors were multiplied by the spend to
calculate the emissions. Exclusions include service charge costs and costs
that are recharged to tenant in full.
3 2. Capital Goods The Environmentally Extended Input Output (EEIO) method, which estimates DEFRA EEIO factors
emissions from expenditure, was used to calculate the emissions from this
category. The SOHO team provided spend for the reporting year split by
supplier. The suppliers were mapped against the DEFRA Input/Output (IO)
categories, which are based on SIC codes and have an associated emission
factor. The DEFRA IO emission factors were multiplied by the spend to
calculate the emissions. Exclusions include service charge costs and costs
that are recharged to tenant in full.
3 6. Business This includes the upstream well-to-tank emissions of business travel UK Government GHG Conversion Factors for Company Reporting, DESNZ
Travel activities.
3 13. Downstream leased assets Where actual fuel and electricity consumption data was provided, this was UK Government GHG Conversion Factors for Company Reporting, DESNZ
used. For any gap filling and estimations, methodology notes are included
below:
Electricity estimates:
Electricity consumption is estimated using actual data from sites with
recorded usage. First, electricity consumption and floor area data are
collected from sites with available records. This helps calculate electricity
intensity, which serves as a benchmark.
The benchmark intensity is calculated by dividing electricity consumption by
floor area (kWh/m²).
This value represents typical electricity usage per square metre.
For sites without actual data, the benchmark intensity is multiplied by their
floor area to estimate electricity consumption.
Natural Gas estimates:
Natural gas consumption is estimated using actual data from sites with
recorded usage. Natural gas consumption and floor area data are collected from
sites with available records. This helps calculate electricity intensity,
which serves as a benchmark.
The benchmark intensity is calculated by dividing natural gas consumption by
floor area (kWh/m²).
This value represents typical electricity usage per square metre.
For sites without actual data, the benchmark intensity is multiplied by their
floor area to estimate natural gas consumption.
Waste estimates:
Waste consumption is estimated using UK Government data on household waste,
number of UK households and average floor area of dwellings. This data was
used to create a benchmark, estimating average tonnes of waste per m2. This
benchmark was multiplied by property floor area, estimating total waste per
lessee.
Water estimates:
Water consumption is estimated using GRESB benchmarks. The benchmarks consider
cubic metre of water per metre squared of floor area (m3/m²). The benchmarks
were multiplied by property floor area, to estimate total water usage per
lessee.
Group Statement of Comprehensive Income
For the year ended 31 December 2025
Note Year ended Year ended
31 December 31 December
2025 2024
£'000 £'000
Income
Rental income 5 40,743 39,072
Expected credit loss 5 (743) (3,329)
Insurance charge income 5 656 713
Insurance charge expense 5 (656) (713)
Other income 5 30 106
Total income 40,030 35,849
Expenses
Directors' remuneration 6 (340) (307)
General and administrative expenses 9 (4,006) (3,556)
Management fees 8 (3,265) (7,814)
Total expenses (7,611) (11,677)
Loss from fair value adjustment on investment properties 13 (22,053) (53,030)
Operating profit/(loss) 10,366 (28,858)
Finance income 297 148
Finance costs 11 (7,670) (7,679)
Profit/(loss) for the year before tax 2,993 (36,389)
Taxation 12 - -
Profit/(loss) and total comprehensive income for the year 2,993 (36,389)
IFRS earnings/(loss) per share - basic and diluted 35 0.76p (9.25)p
The accompanying notes form an integral part of these Group Financial
Statements.
Group Statement of Financial Position
As at 31 December 2025
Note
31 December 31 December
2025
2024
£'000
£'000
Assets
Non-current assets
Investment properties 13 602,813 624,695
Trade and other receivables 14 3,038 3,306
Total non-current assets 605,851 628,001
Current assets
Assets held for sale 1,947 -
Trade and other receivables 15 3,562 3,315
Cash, cash equivalents and restricted cash 16 25,414 27,492
Total current assets 30,923 30,807
Total assets 636,774 658,808
Liabilities
Current liabilities
Trade and other payables 17 2,748 6,095
Total current liabilities 2,748 6,095
Non-current liabilities
Other payables 18 1,532 1,528
Bank and other borrowings 19 261,718 261,441
Total non-current liabilities 263,250 262,969
Total liabilities 265,998 269,064
Total net assets 370,776 389,744
Equity
Share capital 21 3,940 3,940
Share premium reserve 22 203,753 203,753
Treasury shares reserve 23 (378) (378)
Capital redemption reserve 24 93 93
Capital reduction reserve 24 155,359 155,359
Retained earnings 25 8,009 26,977
Total equity 370,776 389,744
IFRS net asset value per share - basic and diluted 36 94.23p 99.05p
The Group Financial Statements were approved and authorised for issue by the
Board on 25 March 2026 and signed on its behalf by:
Chris Phillips
Chair
25 March 2026
Group Statement of Changes in Equity
For the year ended 31 December 2025
Year ended Note Share Share Treasury Capital redemption reserve Capital Retained earnings Total
31 December 2025 capital premium shares £'000 reduction £'000 equity
£'000 reserve reserve reserve £'000
£'000 £'000 £'000
Balance at 3,940 203,753 (378) 93 155,359 26,977 389,744
1 January 2025
Profit and total comprehensive income for the year - - - - - 2,993 2,993
Transactions with owners
Dividends paid 26 - - - - - (21,961) (21,961)
Balance at 3,940 203,753 (378) 93 155,359 8,009 370,776
31 December 2025
Year ended Note Share Share Treasury Capital redemption reserve Capital Retained earnings Total
31 December 2024 capital premium shares £'000 reduction £'000 equity
£'000 reserve reserve reserve £'000
£'000 £'000 £'000
Balance at 3,940 203,753 (378) 93 155,359 84,850 447,617
1 January 2024
Loss and total comprehensive income for the year - - - - - (36,389) (36,389)
Transactions with owners
Dividends paid 26 - - - - - (21,484) (21,484)
Balance at 3,940 203,753 (378) 93 155,359 26,977 389,744
31 December 2024
The accompanying notes form an integral part of these Group Financial
Statements.
Group Statement of Cash Flows
For the year ended 31 December 2025
Note Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Cash flows from operating activities
Profit/(loss) before tax 2,993 (36,389)
Adjustments for:
Expected credit loss 743 3,329
Loss from fair value adjustment on investment properties 22,053 53,030
Finance income (297) (148)
Finance costs 7,670 7,679
Operating results before working capital changes 33,162 27,501
Increase in trade and other receivables (986) (1,853)
(Decrease)/increase in trade and other payables (3,241) 3,421
Net cash generated from operating activities 28,935 29,069
Cash flows from investing activities
Capital expenditure on investment properties (2,306) (2,271)
Proceeds from sale of assets 350 -
Restricted cash movement 166 (155)
Interest received 253 103
Net cash used in investing activities (1,537) (2,323)
Cash flows from financing activities
Interest paid (7,349) (7,348)
Loan arrangement fees paid 19 - (29)
Dividends paid 26 (21,961) (21,484)
Net cash used in financing activities (29,310) (28,861)
Net decrease in cash and cash equivalents (1,912) (2,115)
Cash and cash equivalents at the beginning of the year 23,289 25,404
Cash and cash equivalents at the end of the year 16 21,377 23,289
The accompanying notes form an integral part of these Group Financial
Statements.
NOTES TO THE GROUP FINANCIAL STATEMENTS
For the year ended 31 December 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, 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 and its subsidiaries (the "Group") is 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
The financial information contained in this results announcement has been
prepared on the basis of the accounting policies set out in the statutory
financial statements for the year ended 31 December 2025 which are consistent
with policies those adopted in the year ended 31 December 2024. Whilst the
financial information included in this announcement has been computed in
accordance with UK adopted international accounting standards, this
announcement does not itself contain sufficient disclosures to comply with
IFRS. The financial information does not constitute the Group's statutory
financial statements for the years ended 31 December 2025 or 31 December 2024,
but is derived from those financial statements. Financial statements for the
year ended 31 December 2024 have been delivered to the Registrar of Companies
and those for the year ended 31 December 2025 will be delivered following the
Company's Annual General Meeting. The auditors' reports on both the 31
December 2025 and 31 December 2024 financial statements were unqualified; did
not draw attention to any matters by way of emphasis; and did not contain
statements under section 498 (2) or (3) of the Companies Act 2006.
The financial statements of the Group have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
All accounting policies have been applied consistently.
The Group's 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 preparation of financial statements in compliance with UK-adopted
International Accounting Standards requires the use of certain critical
accounting estimates. It also requires management to exercise judgement in
applying the Group's accounting policies. The areas where significant
judgments and estimates have been made in preparing these financial statements
and their effect are disclosed in note 3.
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 and financing costs of
the Group. 91.5% of rental income due and payable for the year ended 31
December 2025 has been collected, rent arrears are predominantly attributable
to two Approved Providers, My Space Housing Solutions and Portus Supported
Housing Limited (formerly 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.
The Directors have performed an assessment of the ability of the Group to
continue as a going concern, for the period up to 30 June 2027. The Directors
have considered the expected obligations of the Group during this period 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. The Group has adhered to all these covenants throughout the year
and is also expected to comfortably meet these covenants over the next 12
months.
Norland TP REIT
Estates Limited Propco 2 Limited
Asset Cover (ACR)
Asset Cover Ratio Covenant x2.00 x1.67
Asset Cover Ratio 31 December 2025 x2.39 x1.96
Blended Net initial yield 7.03% 6.40%
Headroom (yield movement) 128bps 104bps
Interest Cover (ICR)
Interest Cover Ratio Covenant 1.75x 1.75x
Interest Cover Ratio 31 December 2025 4.89x 4.82x
Headroom (rental income movement) 64% 61%
Under the downside model the forecasts have been stressed to show the effect
of some lessees ceasing to pay their voids liability, and as a result this
causes Approved Providers to default under some of the Group leases. The
assumptions for the amount of rent paid by two Approved Providers have been
sensitised. Under the downside model the Group will be able to settle its
liabilities for the period to 30 June 2027. As a result of the above, the
Directors are of the opinion that the going concern basis adopted in the
preparation of the financial statements is appropriate.
The Group has no short or medium-term refinancing risk given the 7.6-year
weighted 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%.
Having reviewed and considered the forecasts prepared, the Directors consider
that the Group has adequate resources in place and will be able to settle its
liabilities for a period of at least 12 months from the date of signing these
financial statements and have therefore adopted the going concern basis of
accounting in preparing these financial statements.
2.2. Currency
The Group financial information is presented in Sterling which is also the
Group's functional currency.
3. Significant Accounting Judgements, Estimates and Assumptions
In the application of the Group's accounting policies, which are described in
note 4, 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. The estimates and associated assumptions
that have a significant risk of causing a material adjustment to the carrying
amounts of related assets and liabilities within the next financial year are
outlined below:
Estimates:
3.1. Investment properties
The Group uses the valuation carried out by its independent valuers as the
fair value of its property portfolio. The valuation is based upon assumptions
including future rental income and the appropriate discount rate. The valuers
also refer to market evidence of transaction prices for similar properties.
Further information is provided in note 13.
The Group's properties have been independently valued by Jones Lang LaSalle
Limited ("JLL" or the "Valuer") in accordance with the definitions published
by the Royal Institute of Chartered Surveyors' ("RICS") Valuation - Global
Standards (commonly known as the "Red Book"). JLL is one of the most
recognised professional firms within social housing valuation and has
sufficient current local and national knowledge of both social housing in
general and Specialist Supported Housing and has the skills and understanding
to undertake the valuations competently.
With respect to the Group's Financial Statements, investment properties are
valued at their fair value at each Statement of Financial Position date in
accordance with IFRS 13 which recognises a variety of fair value inputs
depending upon the nature of the investment. Given the bespoke nature of
each of the Group's investments, all of the Group's investment properties are
included in Level 3 with the inputs included in note 13.
Level 1 - Unadjusted, quoted prices for identical assets and liabilities in
active (typically quoted) markets;
Level 2 - Quoted prices for similar assets and liabilities in active markets;
and
Level 3 - External inputs are "unobservable". Value is the Director's best
estimate, based on advice from relevant knowledgeable experts, use of
recognised valuation techniques and a determination of which assumptions
should be applied in valuing such assets and with particular focus on the
specific attributes of the investments themselves.
3.2. Expected Credit Losses (ECL)
The Group recognised an additional ECL provision of £743,000 in the current
year (2024: £3,329,000). The prior year 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 31 December 2025 (31 December 2024:
£8,021,000). A default probability for each of the Approved Providers,
representing the estimated percentage likelihood of them paying outstanding
rent due at year end, was determined based on their latest known financial
position and any repayment plans that had been agreed or discussed. For each
provider the estimated probability percentage of receiving unpaid rent has
been multiplied by the rental and recharge arrears as at the statement of
financial position date. The figure has been aggregated to arrive at the ECL
provision.
Judgements:
3.3. Leases 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, although the credit risk is considered in the determination of the fair
value of the related property. As such, the requirements of IFRS 9 (including
the expected credit loss method) are not applied to these balances. The credit
risk associated with each tenant is considered in the determination of the
fair value of the related property. In the current year, the expense
recognised in respect of such rent smoothing amounted to £108,000 (2024:
£1,018,000 income, before the impact of the £1,984,000 written off in
respect of the Parasol leases which were reassigned during 2024) which is
primarily driven by the lower number of properties in current rent-free
periods compared with the prior year.
4. Summary of Material Accounting Policies
4.1. Investment property
Investment property, which is property held to earn rentals and/or for capital
appreciation, is initially measured at cost, being the fair value of the
consideration given, including expenditure that is directly attributable to
the acquisition of the investment property. The Group recognises asset
acquisitions on legal completion. After initial recognition, investment
property is stated at its fair value at the Statement of Financial Position
date. Gains and losses arising from changes in the fair value of investment
property are included in profit or loss for the period in which they arise in
the Statement of Comprehensive Income. Subsequent expenditure is capitalised
only when it is probable that future economic benefits are associated with the
expenditure.
An investment property is derecognised upon disposal or when the investment
property is permanently withdrawn from use and no future economic benefits are
expected to be obtained from the disposal. Any gain or loss arising on
de-recognition of the property (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is recorded in profit
or loss in the period in which the property is derecognised.
Significant accounting judgements, estimates and assumptions made for the
valuation of investment properties are discussed in note 3.
4.2. Leases
Lessor
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
The Group has determined that it retains all the significant risks and rewards
of ownership of the properties it has acquired to date and accounts for the
contracts as operating leases.
Properties leased out under operating leases are included in investment
properties in the Statement of Financial Position. Rental income from
operating leases is recognised on a straight-line basis over the term of the
relevant leases. Tenant lease incentives are not subject to expected credit
loss provision under IFRS 9 as the Group does not have unconditional right to
collect cash flows relating to these assets but do impact the carrying amounts
of the related investment properties as at the statement of financial position
date. Therefore, a lease incentive debtor is recognised based on the smoothing
of rent-free periods granted such that the rental income from operating leases
is recognised on a straight-line basis over the lease term.
Lessee
As a lessee the Group recognises a right-of-use asset within investment
properties and a lease liability for all leases, which is included within
other payables (notes 17 and 18). The lease liabilities are measured at the
present value of the remaining lease payments, discounted using an appropriate
discount rate at inception of the lease or on initial recognition. The
discount rate applied by the Group is the incremental borrowing rate at which
a similar borrowing could be obtained from an independent creditor under
comparable terms and conditions. Subsequent to initial measurement lease
liabilities increase as a result of interest charged at a constant rate on the
balance outstanding and are reduced for lease payments made.
As leasehold properties meet the definition of investment property, the
right-of-use assets are presented within investment properties (note 13), and
after initial recognition are subsequently measured at fair value.
Sub-leases
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership of the
underlying property asset to the lessee. Sub-leases of leasehold properties
are classified with reference to the right-of-use asset arising from the head
lease. All other leases are classified as operating leases.
4.3. Rent and other receivables
Rent and other receivables are amounts due in the ordinary course of business.
If collection is expected in one year or less, they are classified as current
assets.
Rent receivables are initially recognised at fair value plus transaction costs
and are subsequently carried at amortised cost, less provision for impairment.
Impairment provisions for current and non-current rent receivables are
recognised based on the simplified approach within IFRS 9 using a provision
matrix in the determination of the lifetime expected credit losses. During
this process the probability of the non-payment of the rent receivables is
assessed. This probability is then multiplied by the amount of the expected
loss arising from default to determine the lifetime expected credit loss for
the rent receivables. Rent receivables are reported net of the ECL provision
and the movement in the provision is recognised in the Group statement of
comprehensive income. On confirmation that the rent receivable will not be
collectable, the gross carrying value of the asset is written off against the
associated provision.
Impairment provisions for all other receivables are recognised based on a
forward-looking expected credit loss model using the general approach. The
methodology used to determine the amount of the provision is based on whether
there has been a significant increase in credit risk since initial recognition
of the financial asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset, 12 month
expected credit losses along with gross interest income are recognised. For
those which credit risk has increased significantly, lifetime expected credit
losses along with the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses along with
interest income on a net basis are recognised.
Under pass-through arrangements, rental income is collected by an Approved
Provider ("AP") on behalf of the Group. The AP deducts agreed management fees
and property-related costs and remits the remaining balance to the Group. The
Group recognises rental income as the amount received from the RP, being the
RP gross rental income less the costs deducted under the arrangement.
When My Space entered into a Company Voluntary Arrangement (CVA), all
outstanding receivable balances had already been fully provided for within the
expected credit loss (ECL) provision as at February 2025, with the exception
of a small balance arising due to timing differences. Accordingly, all
amounts, including this residual balance, were written off against the
existing provision, resulting in the customer debtor balance and any
outstanding arrears being reduced to nil.
4.4. Bank and other borrowings
Bank borrowings and the Group's loan notes are initially recognised at fair
value net of any transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensure that any
interest expense over the period to repayment is at a constant rate on the
balance of the liability carried in the Group Statement of Financial Position.
For the purposes of each financial liability, interest expense includes
initial transaction costs and any premium payable on redemption, as well as
any interest or coupon payment while the liability is outstanding.
4.5. Taxation
Taxation on the element of the profit or loss for the period that is not
exempt under UK REIT regulations would be comprised of current and deferred
tax. Tax is recognised in the Statement of Comprehensive Income except to the
extent that it relates to items recognised as direct movement in equity, in
which case it is recognised as a direct movement in equity. Current tax is the
expected tax payable on any non-REIT taxable income for the period, using tax
rates enacted or substantively enacted at the Statement of Financial Position
date, and any adjustment to tax payable in respect of previous periods.
4.6. Dividends payable to shareholders
Dividends are recognised when they become legally payable. Interim dividends
are recognised when paid. In the case of final dividends, this is when
approved by the shareholders at the Annual General Meeting.
4.7. Rental income
Rental income from investment property is recognised on a straight-line basis
over the term of ongoing leases and is shown gross of any UK income tax.
Tenant lease incentives are recognised as a reduction of rental revenue on a
straight-line basis over the term of the lease and are not subjected to an
expected credit loss provision under IFRS 9. These are recognised within trade
and other receivables on the Statement of Financial Position.
Lease modifications are accounted for as a new lease from the effective date
of modification. On entering into a lease modification any initial direct
costs associated with the original lease are derecognised through profit or
loss in the year.
Rent reviews are recognised from the date when such reviews have been agreed
and finalised with tenants. For rent reviews with rental uplifts linked to the
inflation index, the rental increases are recognised as income in the period
to which they relate, as they are deemed to be variable lease payments
intended to compensate for inflationary cost increases.
When the Group enters into a forward funded transaction, the future tenant
signs an agreement for lease. No rental income is recognised under the
agreement for lease, but once the practical completion has taken place the
formal lease is signed at which point rental income commences to be recognised
in the Statement of Comprehensive Income.
Under IFRS 15, the Group's revenue from contracts with customers includes
insurance charge income which is recognised over the period the respective
services are provided.
4.8. Finance income and finance costs
Finance income is recognised as interest accrues on cash balances held by the
Group. Finance costs consist of interest and other costs that the Group incurs
in connection with bank and other borrowings. These costs are expensed in the
period in which they occur. Borrowing costs are capitalised, net of interest
received on cash drawn down yet to be expended when they are directly
attributable to the acquisition, contribution or production of an asset that
necessarily takes a substantial period of time to get ready for its intended
use.
4.9. Investment management fees
Investment management fees are recognised in the Statement of Comprehensive
Income on an accrual basis.
4.10. Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is
recognised directly in equity. The cost of treasury shares held is presented
as a separate reserve (the "treasury share reserve"). Any excess of the
consideration received on the sale of treasury shares over the weighted
average cost of the shares sold is credited to share premium.
5. Rental and other Income
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Rental income - freehold assets 38,498 36,709
Rental income - leasehold assets 2,245 2,363
40,743 39,072
Expected credit loss (743) (3,329)
Insurance charge income 656 713
Insurance charge expense (656) (713)
Other income 30 106
40,030 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.
All rental income arose within the United Kingdom.
The expected loss rates are based on the Group's credit losses which started
to occur during the year ended 31 December 2022 for the first time since IPO
expected loss rates are then adjusted for current and forward-looking
information affecting the Group's tenants. The expected credit loss for the
current year relates mostly to one tenant (2024: one tenant). Following
the filing of the CVA in March 2025, no further expected credit loss has been
recognised as the rent becomes variable in nature.
The movement in the expected credit loss provision during the year has been
set out below:
An Approved Provider (AP) is a housing association, Local Authority or other
regulated organisation in receipt of direct payment from local government
including a care provider.
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Opening expected credit loss provision (8,021) (6,666)
Increase in provision for My Space Housing (705) (3,329)
Increase in provision for all other APs (38) -
Write off of Parasol debtor - 1,974
Write off of My Space Housing debtor on CVA 8,726 -
Write off of other AP's debtor 38 -
Closing expected credit loss provision - (8,021)
6. Directors' Remuneration
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Directors' fees 301 275
Employer's National Insurance Contributions 39 32
340 307
The 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 (2024: £75,000), and the other Directors of the Board
receive a fee of £50,000 per annum (2024: £50,000). The Directors are also
entitled to an additional fee of £7,500 in connection with the production of
every prospectus by the Company. No additional fees were paid during 2025 or
2024. A summary of the Directors' emoluments, including the disclosures
required by the Companies Act 2006, is set out in the Directors' Remuneration
Report within the Corporate Governance Report. None of the Directors received
any advances or credits from any Group entity during the year.
7. Particulars of Employees
The Group and Company had no employees during the year other than the
Directors (2024: none).
8. Management Fees
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Management fees 3,265 4,651
Termination fees - 3,163
3,265 7,814
On 1 January 2025 Atrato Partners Limited ("Atrato") was appointed as the
Investment Manager of the Company.
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 capitalisation threshold Relevant fee rate (per annum)
Up to and including £150 million 1.25% (equivalent to 0.3125% per quarter)
Above £150 million, up to and including £300 million 1.00% (equivalent to 0.25% per quarter)
Above £300 million 0.70% (equivalent to 0.175% per quarter)
The management fee relating to 2024 was paid while the fund was managed by
Triple Point Investment Management LLP (TPIM), the previous Investment
Manager, and was calculated quarterly in arrears based upon a percentage of
the last published Net Asset Value of the Group (not taking into account
uncommitted cash balances after deducting borrowings) as at 31 March, 30 June,
30 September and 31 December in each year on the following basis with effect
from Admission:
· on that part of the Net Asset Value up to and including £250 million, an
amount equal to 1.0% of such part of the Net Asset
Value;
· on that part of the Net Asset Value over £250 million and up to and
including £500 million, an amount equal to 0.9% of such part of the Net Asset
Value;
· on that part of the Net Asset Value over £500 million and up to and
including £1 billion, an amount equal to 0.8% of such part of the Net Asset
Value;
and
· on that part of the Net Asset Value over £1 billion, an amount equal to
0.7% of such part of the Net Asset Value.
Management fees of £3,265,000 (2024: £4,651,000 chargeable by TPIM) were
chargeable by Atrato during the year. At the year-end £835,972 was due to
Atrato (2024: £1,151,000 was due to TPIM), the amount was settled in early
January 2026.
The terms of both the Investment Management Agreement and the AIFM Agreement
between the Company and TPIM provided for a termination period of 12 months.
An agreement was reached to terminate both the contracts with effect from 31
December 2024 and to pay early termination fees. These fees totalled
£3,343,000 (£3,163,000 in respect of Investment Management and £180,000 in
respect of the AIFM) and was structured in two tranches. This was in addition
to the regular quarterly fees.
The AIFM termination fee of nil (2024: £180,000) is included within General
and Administrative expenses as set out in note 9.
9. General and Administrative Expenses
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Property costs 1,391 148
Legal and professional fees 1,076 1,356
Audit fees 472 429
Marketing costs 437 471
Administration and secretarial fees 413 319
Other administrative expenses 177 149
Lease transfer costs 40 271
AIFM fees - 233
AIFM termination fees - 180
4,006 3,556
On 1 October 2019 Hanway Advisory Limited were appointed to provide
Administration and Company Secretarial Services to the Group. On 23 September
2025, Hanway Advisory Limited ceased to act as administrator and was replaced
by Atrato. Administration and company secretarial fees of £413,000 (2024:
£319,000) were incurred during the year, comprising fees payable to Hanway
Advisory Limited for both Administration and company secretarial fees up to 23
September 2025. After this date Atrato replaced Hanway as the Administrator,
while Hanway Advisory Limited, continued to provide company secretarial
services.
The audit fees in the table above are inclusive of VAT, and differ to the fees
in note 10 which are reported net
of VAT.
On 30 June 2020, TPIM was appointed as the Group's Alternative Investment Fund
Manager ("AIFM") to perform certain functions for the Group. As described in
note 8, following the change in investment manager and the appointment of
Atrato as the Group's new investment manager, TPIM ceased to act as AIFM.
Accordingly, no AIFM fees were incurred in the current year.
10. Audit Fees
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Group audit fees - current year 309 280
Subsidiary audit fees 38 34
347 314
Non-audit fees paid to BDO LLP amounted to £45,500 (2024: £42,500) for the
half-year interim review.
The audit fee for all subsidiaries have been borne by the Company (see note
31).
11. Finance Costs
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Interest payable on bank borrowings 7,217 7,217
Amortisation of loan arrangement fees 277 287
Lender valuation fees 121 121
Head lease interest expense 44 44
Bank charges 11 10
7,670 7,679
Total finance cost for financial liabilities not measured at fair value 7,659 7,669
through profit or loss
Under the terms of the debt facilities the lenders require an annual
independent valuation to be undertaken at the Company's expense. The cost of
these valuations is set out above.
12. 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 year ended 31
December 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.
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Current tax
Corporation tax charge for the year - -
Total current income tax charge in the profit or loss - -
The tax charge for the year is less than the standard rate of corporation tax
in the UK of 25% (2024: 25%). The differences are explained below.
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Profit/(loss) for the year before tax 2,993 (36,389)
Tax at UK corporation tax standard rate of 25% 748 (9,098)
Change in value of investment properties 5,447 13,258
Disposal of investment property 66 -
Exempt REIT income (6,704) (5,194)
Amounts not deductible for tax purposes 27 35
Unutilised residual current year tax losses 416 999
- -
UK REIT exempt income includes property rental income that is exempt from UK
Corporation Tax in accordance with Part 12 of CTA 2010.
13. Investment Property
Operational assets
£'000
As at 1 January 2025 624,695
Acquisitions and additions* 2,200
Fair value adjustment*** (21,789)
Disposals (350)
Transferred to Assets Held for Sale** (1,947)
Movement in head lease ground rent liability 4
As at 31 December 2025 602,813
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 624,695
* Additions in the table above differs to the total capital
expenditure amount in the Group statement of cash flows due to retentions no
longer payable which were credited to Investment Property additions.
** 3 assets with fair value of £1,947,000 were reclassified to assets
held for sale during the year ended 31 December 2025.
*** 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 13 is £264,000. This relates to the
lease incentive balances associated with
36 Oxford Grove and 38 Oxford Grove, which were sold during the period.
Reconciliation to the Group Statement of Comprehensive Income ("SOCI"):
31 December 2025 31 December 2024
£'000 £'000
Fair value adjustment in note 13 (21,789) (53,027)
Loss from fair value adjustments on assets held for sale - (3)
Loss on disposal of investment properties (264) -
Loss from fair value adjustments in SOCI (22,053) (53,030)
The £264,000 loss on disposal of investment properties relates to the
write-off of a lease incentive debtor associated with properties disposed of
during the year.
Reconciliation to independent valuation:
31 December 2025 31 December 2024
£'000 £'000
Investment property valuation 606,275 626,351
Fair value adjustment - headlease ground rent 1,472 1,468
Fair value adjustment - lease incentive debtor (2,987) (3,124)
Transferred to Assets Held for Sale (1,947) -
602,813 624,695
The carrying value of leasehold properties at 31 December 2025 was
£34,342,000 (2024: £35,934,000).
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. The independent valuers provide their fair value
of the Group's investment property portfolio on a semi-annual basis.
JLL were appointed as external valuers by the Board on 11 December 2017. JLL
has provided valuations services to the Group. 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 Statistic
The metrics below are in relation to the total investment property portfolio
held as at 31 December 2025.
Portfolio metrics 31 December 2025 31 December 2024
Capital Deployed (£'000)* 577,402 576,804
Number of Properties 492 494
Number of Tenancies*** 389 391
Number of Registered Providers*** 27 28
Number of Local Authorities*** 151 148
Number of Care Providers*** 115 109
Valuation Net Initial Yield (NIY)** 6.42% 6.22%
* calculated excluding acquisition costs.
** calculated using IAS 40 valuations (excluding forward funding
acquisitions).
*** calculated excluding forward funding acquisitions.
31 December 2025 31 December 2024
Region *Cost £'000 % of funds invested *Cost £'000 % of funds invested
North West 112,689 19.5 111,206 19.3
West Midlands 93,221 16.1 93,006 16.1
Yorkshire 81,839 14.2 87,103 15.1
East Midlands 69,323 12.0 63,979 11.1
North East 56,913 9.9 56,653 9.8
South East 54,889 9.5 54,366 9.4
London 49,717 8.6 49,626 8.6
South West 26,548 4.6 28,099 4.9
East 23,703 4.1 24,206 4.2
Scotland 5,900 1.0 5,900 1.0
Wales 2,660 0.5 2,660 0.5
Total 577,402 100.00 576,804 100.0
* excluding acquisition costs
Fair value hierarchy
Date of valuation Total Quoted prices in active markets Significant observable Significant unobservable inputs
(Level 1)
£'000
inputs (Level 3)
£'000
(Level 2) £'000
£'000
Assets measured at fair value:
Investment properties 31 December 2025 602,813 - - 602,813
Investment properties 31 December 2024 624,695 - - 624,695
There have been no transfers between Level 1 and Level 2 during the year, nor
have there been any transfers between Level 2 and Level 3 during the year.
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 an investment
property 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 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 flow model considers the present value of net cash flows
to be generated from the property, 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 property:
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 passing rent or estimated rental value ("ERV") as applicable
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 Specialised 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.
A decrease in passing rent or 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
As set out within the significant accounting estimates and judgements in note
3, the Group's property portfolio valuation is open to judgements and is
inherently subjective by nature.
As a result, the following sensitivity analysis has been prepared:
Average discount rate, rental values and range:
2025 2024
Range of discount rates 6.3%-10.7% 6.4%-10.4%
Average discount rate 7.7% 7.6%
Range of Rental values (passing rents or ERV as relevant) of Group's £0.008m - £0.56m £0.007m - £0.55m
Investment Properties
Average of Rental values (passing rents or ERV as relevant) of Group's £0.1m £0.1m
Investment Properties
CPI/RPI increase over the term of the relevant leases 2.0%/2.5% 2.0%/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.
-1.0% change in +1.0% change in +0.5% change in CPI -0.5% change +3% change -3% change
Discount Rate Discount Rate £'000 in CPI in ERV in ERV
£'000 £'000 £'000 £'000 £'000
Changes in the IFRS fair value of investment properties
As at 31 December 2025 64,308 (54,751) 33,264 (30,968) 17,922 (17,392)
-0.5% change in +0.5% change in +0.5% change in CPI -0.5% change in CPI +3% change in ERV -3% change in ERV
Discount Rate Discount Rate £'000 £'000 £'000 £'000
£'000 £'000
Changes in the IFRS fair value of investment properties
As at 31 December 2024 70,645 (59,690) 36,318 (33,639) 18,653 (18,106)
The valuations have not been influenced by climate related factors due to
there being little measurable impact on inputs at present.
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. A softening of valuation assumptions relating to properties with
challenging lessee situations within the portfolio, reflecting updated
expectations on rent collection and longer-term achievable rent levels.
3. Adjustment of expectations regarding a number of assets, moving
towards vacant possession value.
14. Trade and other Receivables (non-current)
31 December 2025 31 December 2024
£'000 £'000
Lease incentive debtor 2,743 3,156
Other receivables 295 150
3,038 3,306
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.
15. Trade and other Receivables (current)
31 December 2025 31 December 2024
£'000 £'000
Rent receivable 2,837 2,667
Lease incentive debtor 244 202
Prepayments 175 164
Other receivables 306 282
3,562 3,315
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.
The Group applies the general approach to 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 £743,000 (31 December 2024:
£3,329,000) were charged to the Statement of Comprehensive Income in the
period. The expected credit loss in the period relates mostly to the unpaid
rent from My Space up to the date of the CVA.
16. Cash, Cash Equivalents and Restricted Cash
31 December 2025 31 December 2024
£'000 £'000
Cash at bank 13,356 23,289
Restricted cash 4,037 4,203
Cash Held by Lawyers 21 -
Liquidity Funds 8,000 -
25,414 27,492
Restricted cash represents monies held in escrow in relation to the transfer
of leases to be used for future costs. Liquidity funds consist of surplus cash
deposited with Treasury Spring in multiple accounts, all of which have
maturities of up to one month. This arrangement was implemented to achieve
improved interest returns on available cash.
A prior year adjustment has been made to reclassify the Debt Service Reserve
Accounts ("DSRA") from "Cash at bank" to "Restricted cash". This
reclassification reflects the fact that the DSRA balances are not available
for general operational use. The adjustment has no impact on total cash
balances previously reported, nor on the Statement of Comprehensive Income,
but results in a revised presentation within the note to more appropriately
reflect the nature of these funds.
31 December 2025 31 December 2024
£'000 £'000
Total Cash, cash equivalents and restricted cash 25,414 27,492
Restricted cash (4,037) (4,203)
Cash reported on Group Statement of Cash Flows 21,377 23,289
17. Trade and Other Payables
Current liabilities
31 December 2025 31 December 2024
£'000 £'000
Trade payables 1,179 139
Accruals 986 5,522
Head lease ground rent (note 27) 40 40
Other creditors 543 394
2,748 6,095
The Other Creditors balance consists of retentions due on completion of
outstanding works and outstanding accrued acquisition costs. 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.
18. Other Payables
Non-current liabilities
31 December 2025 31 December 2024
£'000 £'000
Head lease ground rent (note 27) 1,432 1,428
Rent deposit 100 100
1,532 1,528
19. Bank and other Borrowings
Non-current liabilities
31 December 2025 31 December 2024
£'000 £'000
Bank and other borrowings drawn at year end 263,500 263,500
Unamortised costs at beginning of the year (2,059) (2,317)
Less: loan issue costs incurred - (29)
Add: loan issue costs amortised 277 287
Unamortised costs at end of the year (1,782) (2,059)
Balance at year end 261,718 261,441
At 31 December 2025 there were undrawn bank facilities of £NIL (2024: £NIL).
As at 31 December 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 £68,500,000 with
MetLife Investment Management (and affiliated funds); and
· £195,000,000 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 £68,500,000 are secured against a portfolio of Specialised
Supported Housing assets throughout the UK, worth approximately £163,823,000
(2024: £170,468,000). The details of the notes are set out in the table
below. At 31 December 2025, the Loan Notes have been independently valued at
£61,713,000 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 3.760% 2028 Gilt (Tranche A) and Treasury 4.020% 2033
Gilt (Tranche B), with an implied margin that is unchanged since the date of
fixing.
Loan Note Principal Term Repayment date All in rate Independent Valuation
Tranche A £41.5 million 10 years 30 June 2028 2.924% £39.0 million
Tranche B £27.0 million 15 years 30 June 2033 3.215% £22.7 million
Blended Tranche A & B £68.5 million 12 years 3.039% £61.7 million
In August 2021, the Group put in place Loan Notes of £195,000,000 which
enabled the Group to refinance the full £130,000,000 previously drawn under
its £160,000,000 RCF with Lloyds and NatWest. The Loan Notes are secured
against a portfolio of Specialised Supported Housing assets throughout the UK,
worth approximately £382,576,000 (2024: £392,206,000). The details of these
notes is set out in the table below. At 31 December 2025, the Loan Notes have
been independently valued at £151,279,000 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 3.900% 2031 Gilt (Tranche
A) and Treasury 4.460% 2036 Gilt (Tranche B), with an implied margin that is
unchanged since the date of fixing.
Loan Note Principal Term Repayment date All in rate Independent Valuation
Tranche A £77.5 million 10 years 26 August 2031 2.403% £65.3 million
Tranche B £117.5 million 15 years 26 August 2036 2.786% £86.0 million
Blended Tranche A & B £195.0 million 13 years 2.634% £151.3 million
The Group's loan to value at the year-end was 41.4% (2024: 40.0%).
The loans are considered a Level 2 fair value measurement.
The Group has met all compliance with its financial covenants on the above
loans throughout the year.
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 31 December 2025, the Group complied with all the
covenants that were required to be met on or before 31 December 2025. The
covenants that are required to be complied with after the current reporting
date 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.
20. Notes Supporting Statement of Cash Flows
Reconciliation of liabilities to cash flows from financing activities:
Bank borrowings Head lease Total
£'000 £'000 £'000
(note 19) (note 17,18)
At 1 January 2025 261,441 1,468 262,909
Cashflows:
Loan arrangement fees paid - - -
Non-cash flows:
- Amortisation of principal on head lease liabilities - (40) (40)
- Amortisation of loan arrangement fees 277 - 277
- Accrued interest on head lease liabilities - 44 44
At 31 December 2025 261,718 1,472 263,190
Bank borrowings Head lease Total
£'000 £'000 £'000
(note 19) (note 17,18)
At 1 January 2024 261,183 1,464 262,647
Cashflows:
Loan arrangement fees paid (29) - (29)
Non-cash flows:
- Amortisation of principal on head lease liabilities - (40) (40)
- Amortisation of loan arrangement fees 287 - 287
- Accrued interest on head lease liabilities - 44 44
At 31 December 2024 261,441 1,468 262,909
21. Share Capital
Issued and fully paid Issued and fully paid
Number £'000
At 1 January 2025 393,916,490 3,940
At 31 December 2025 393,916,490 3,940
Issued and fully paid Issued and fully paid
Number £'000
At 1 January 2024 393,916,490 3,940
At 31 December 2024 393,916,490 3,940
The Company achieved admission to the specialist fund segment of the main
market of the London Stock Exchange on 8 August 2017, raising £200,000,000.
As a result of the IPO, at 8 August 2017, 200,000,000 shares at one pence each
were issued and fully paid. The Company was admitted to the premium segment of
the Official List of the Financial Conduct Authority and migrated to trading
on the premium segment of the Main Market on 27 March 2018.
Since then, there were three public offers up to 21 October 2020 with a
further 193,916,490 Ordinary Shares of one pence each being issued and fully
paid.
Rights, preferences and restrictions on shares: All Ordinary Shares carry
equal rights, and no privileges are attached to any shares in the Company. All
the shares are freely transferable, except as otherwise provided by law. The
holders of Ordinary Shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regards to the Company's residual
assets.
The table above includes 450,000 treasury shares (note 23). Treasury shares do
not hold any voting rights.
22. Share Premium Reserve
The share premium reserve relates to amounts subscribed for share capital in
excess of nominal value.
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 203,753 203,753
Balance at end of year 203,753 203,753
23. Treasury Shares Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year (378) (378)
Balance at end of year (378) (378)
The treasury shares reserve relates to the value of shares purchased by the
Company in excess of nominal value. No treasury shares were purchased during
the current or prior year. As at 31 December 2025 and 31 December 2024,
450,000 1p Ordinary Shares were held by the Company.
24. Capital Reduction Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 155,359 155,359
Balance at end of year 155,359 155,359
The capital reduction reserve is a distributable reserve that was created on
the cancellation of share premium.
Capital Redemption Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 93 93
Balance at end of year 93 93
The Capital Redemption Reserve is the nominal value of the shares cancelled
from the share buybacks.
25. Retained Earnings
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 26,977 84,850
Total comprehensive income for the year 2,993 (36,389)
Dividends paid (21,961) (21,484)
Balance at end of year 8,009 26,977
26. Dividends
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
1.3650p for the 3 months to 31 December 2023 paid on 28 March 2024 - 5,371
1.3650p for the 3 months to 31 March 2024 paid on 28 June 2024 - 5,371
1.3650p for the 3 months to 30 June 2024 paid on 4 October 2024 - 5,371
1.3650p for the 3 months to 30 September 2024 paid on 13 December 2024 - 5,371
1.3650p 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 -
1.4055p for the 3 months to 30 June 2025 paid on 3 October 2025 5,530 -
1.4055p for the 3 months to 30 September 2025 paid on 19 December 2025 5,530 -
21,961 21,484
On 20 March 2026, the Company declared an interim dividend of 1.4055 pence per
Ordinary share for the period 1 October 2025 to 31 December 2025. The total
dividend of £5,530,172 will be paid on or around 21 April 2026 to Ordinary
shareholders on the register on 7 April 2026.
The Company intends to pay dividends to shareholders on a quarterly basis and
in accordance with the
REIT regime.
Dividends are not payable in respect of the Treasury shares held by the
Company.
27. Leases
A. Leases as lessee
The following table sets out a maturity analysis of lease payments, showing
the undiscounted lease payments to be paid after the reporting date:
< 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Lease payables
31 December 2025 40 40 40 40 40 7,117 7,317
31 December 2024 40 40 40 40 40 7,158 7,358
31 December 2025 31 December 2024
£'000 £'000
Current liabilities (note 17) 40 40
Non-current liabilities (note 18) 1,432 1,428
Balance at end of year 1,472 1,468
The above is in respect of properties held by the Group under leasehold. There
are 23 properties (2024: 23) held under leasehold with lease terms which range
from 125 years to 999 years. The Group's leasing arrangements with lessors are
headlease arrangements on land and buildings that have been sub-let under the
Group's normal leasing arrangements (see above) to tenants. The Group carries
its interest in these headlease arrangements as long leasehold investment
property (note 13).
B. Leases as lessor
The Group leases out its investment properties (see note 13).
The undiscounted future minimum lease payments receivable by the Group under
non-cancellable operating leases are as follows:
< 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Lease receivables
31 December 2025 43,667 43,667 43,667 43,667 43,667 436,373 654,708
31 December 2024 42,689 42,689 42,689 42,689 42,689 469,767 683,212
Leases are direct-let agreements with Registered Providers for a term of at
least 15 years and usually between 20 to 25 years with rental uplifts linked
to CPI or RPI. All leases are full repairing and insuring (FRI) leases, the
tenants are therefore obliged to repair, maintain and renew the properties
back to the original conditions.
The following table gives details of the percentage of annual rental income
per Registered Provider with 10% or more than 10% share in any year presented.
The increase in Portus' share reflects the merger of Best and Westmoreland
during the year, with the combined entity now reported under the Portus name.
As a result, rental income previously attributed to two separate providers is
now consolidated, creating the apparent step‑change in Portus' proportion of
annual rental income.
Registered Provider 31 December 2025 31 December 2024
% of total annual rent % of total annual rent
Inclusion Housing CIC 30 30
Portus Supported Housing Limited 14 N/A*
* Portus Supported Housing Limited was formed in 2025 following the merger
of Westmoreland Supported Housing Ltd and Bespoke Supportive Tenancies Ltd.
Other disclosures about leases are provided in notes 5, 13, 15, 17, 18 and
32.
28. Controlling Parties
As at 31 December 2025 there is no ultimate controlling party of the Company.
29. Segmental Information
IFRS 8 Operating Segments requires operating segments to be identified based
on internal financial reports about components of the Group that are regularly
reviewed by the Chief Operating Decision Maker (which in the Group's case is
delegated to the Delegated Investment Adviser Atrato for the year covered by
these financial statements).
The internal financial reports received by Atrato contain financial
information at a Group level as a whole and there are no reconciling items
between the results contained in these reports and the amounts reported in the
financial statements.
The Group's property portfolio comprised 492 Social Housing properties as of
31 December 2025 (2024: 494) in England, Wales and Scotland. The Directors
consider that these properties represent a coherent and diversified portfolio
with similar economic characteristics and, as a result, these individual
properties have been aggregated into a single operating segment. In the view
of the Directors there is accordingly one reportable segment under the
provisions of IFRS 8. All the Group's properties are engaged in a single
segment business with all revenue, assets and liabilities arising in the UK,
therefore, no geographical segmental analysis is required by IFRS 8.
30. 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 (2024: £75,000),
and the other directors of the Board receive a fee of £50,000 per annum
(2024: £50,000). The Directors are also entitled to an additional fee of
£7,500 in connection with the production of every prospectus by the Company
(including the Issue). No additional fee was received by the Directors in the
current year as no prospectus was produced.
The Directors had the following beneficial interests in the issued ordinary
share capital of the Company as of 31 December 2024 and at the date of this
report:
Director 31 December 2025 31 December 2024
Peter Coward 80,076 80,076
Christopher Phillips 54,854 54,854
Tracey Fletcher-Ray 37,735 37,735
No shares were held by Ian Reeves, Cecily Davis, Bryan Sherriff and Fionnuala
Hogan as of 31 December 2025 (31 December 2024: nil) or the date of
resignation as applicable.
Investment Manager
With effect from 1 January 2025 Atrato Partners Limited has been appointed as
the Company's Investment Manager.
31. Consolidated Entities
The Group consists of a parent Company, Social Housing REIT plc, incorporated
in the UK and a number of subsidiaries held directly by the Company, which
operate and are incorporated in the UK. The principal place of business of
each subsidiary is the same as their place of incorporation.
The Group owns 100% of the equity shares of all subsidiaries listed below and
has the power to appoint and remove the majority of the Board of those
subsidiaries. The relevant activities of the below subsidiaries are determined
by the Board based on simple majority votes. Therefore, the Directors of the
Company concluded that the Company has control over all these entities and all
these entities have been consolidated within these financial statements. The
principal activity of all the subsidiaries relates to property investment.
The subsidiaries listed below were held as at 31 December 2025:
Name of Entity Registered Office Country of Incorporation Ownership %
TP REIT Super Holdco Limited* The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Holdco 1 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Holdco 2 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Holdco 3 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Holdco 4 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Holdco 5 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Propco 2 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Propco 3 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Propco 4 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
TP REIT Propco 5 Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
Norland Estates Limited The Scalpel 18th Floor, 52 Lime Street, London, EC3M 7AF UK 100%
* indicates entity is a direct subsidiary of Social Housing REIT plc.
32. Financial Risk Management
The Group is exposed to market risk, interest rate risk, credit risk and
liquidity risk in the current and future periods. The Board oversees the
management of these risks. The Board's policies for managing each of these
risks are summarised below.
32.1. Market risk
The Group's activities will expose it primarily to the market risks associated
with changes in property values.
Risk relating to investment in property
Investment in property is subject to varying degrees of risk. Some factors
that affect the value of the investment in property include:
· changes in the general economic climate;
· competition for available properties;
· obsolescence; and
· Government regulations, including planning, environmental and tax laws.
Variations in the above factors can affect the valuation of assets held by the
Group and as a result can influence the financial performance of the Group.
The factors mentioned above have not had a material impact on the valuations
of the investment properties as at 31 December 2025, and are not expected to
in the immediate future, but will continue to be monitored closely.
There was no impact on the valuations in the year ended 31 December 2025 from
climate change factors, given that there is little measurable impact on inputs
at present.
32.2. Interest rate risk
The Group's debt at 31 December 2025 does not have any exposure to interest
rate risk.
32.3. Credit risk
Credit risk is the risk that a counterparty will not meet its obligations
under a financial instrument or customer contract, leading to a financial
loss. The Group is exposed to credit risk from both its leasing activities and
financing activities, including deposits with banks and other institutions as
detailed in notes 16 and 19.
Credit risk related to financial instruments and cash deposits
One of the principal credit risks the Group faces arises with the funds it
holds with banks and other institutions. At 31 December 2025 the Group has
£25,414,000 in current accounts held at banks, see note 16. The Board
believes that the credit risk on short-term deposits and current account cash
balances is limited because the counterparties are banks and institutions with
high credit ratings.
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, see note 19.
All financial assets are regularly monitored. The maximum exposure to credit
risk at the reporting date is the carrying value of financial assets disclosed
in notes 14, 15 and 16.
Credit risk related to leasing activities
In respect of property investments, in the event of a default by a tenant, the
Group will suffer a rental shortfall and additional costs concerning
re-letting the property to another Social Housing Registered Provider. Credit
risk is primarily managed by testing the strength of covenant of a tenant
prior to acquisition and on an ongoing basis. The Investment Manager also
monitors the rent collection in order to anticipate and minimise the impact of
defaults by occupational tenants. Outstanding rent receivables are regularly
monitored, the balance of outstanding rent relating to 31 December 2025 was
nil as at 28 February 2026, after a provision for the expected credit loss.
The Group has leases in place with ten Registered Providers that have been
deemed non-compliant by the Regulator of Social Housing ('RSH') as at 31
December 2025 (2024: 10). We continue to conduct ongoing due diligence on all
Registered Providers and all rents payable under these leases have been paid.
We continue to monitor and maintain a dialogue with the Registered Providers
as they work with advisers and the RSH to implement a financial and governance
improvement action plan in order to address the RSH's concerns. The Board
believes that the credit risk associated with the non-compliant rating is
limited.
Rent receivable and insurance debtor are the Group's only financial assets
that is subjected to the expected credit loss model. While the Group has other
financial assets that are also subject to the impairment requirements of IFRS
9, the identified impairment loss was immaterial.
32.4. Liquidity risk
The Group manages its liquidity and funding risks by considering cash flow
forecasts and ensuring sufficient cash balances are held within the Group to
meet future needs. Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of financing
through appropriate and adequate credit lines, and the ability of customers to
settle obligations within normal terms of credit. The Group ensures, through
forecasting of capital requirements, that adequate cash is available to fund
the Group's operating activities on a weekly basis Upcoming cash requirements
are compared to existing cash reserves available, followed by discussions
around optimal cash management opportunities in order to best manage liquidity
risk.
The following table details the Group's liquidity analysis:
31 December 2025 < 3 3-12 1-5 > 5 Total
months Months years years £'000
£'000 £'000 £'000 £'000
Headleases (note 27) 10 30 160 7,117 7,317
Trade and other payables (note 17) 2,708 - - - 2,708
Bank and other borrowings (note 19)
- Fixed interest rate - - 41,500 222,000 263,500
Interest payable on bank and other borrowings:
- Fixed interest rate 1,804 5,413 25,836 21,905 54,958
Total 4,522 5,443 67,496 251,022 328,483
32.5. Financial instruments
The Group's principal financial assets and liabilities, which are all held at
amortised cost, are those that arise directly from its operation: trade and
other receivables, trade and other payables, headleases, borrowings and cash,
cash equivalents and restricted cash.
Set out below is a comparison by class of the carrying amounts and fair value
of the Group's financial instruments that are included in the financial
statements:
Book value Fair value Book value Fair value
31 December 2025 31 December 2025 31 December 2024 31 December 2024
£'000 £'000 £'000 £'000
Financial liabilities:
Bank and other borrowings 261,718 212,992 261,441 202,836
33. Post Balance Sheet Events
Dividend
On 20 March 2026, the Company declared an interim dividend of 1.4055 pence per
Ordinary share for the period 1 October 2025 to 31 December 2025. The total
dividend of £5,530,172 will be paid on or around 21 April 2026 to Ordinary
shareholders on the register on 7 April 2026.
Property Sales
3 non-performing properties sales have completed at time of announcement,
being those assets held for sale at 31 December 2025. The properties were sold
for £1,770,000.
Assignment of Leases to Independent Housing Ltd
Following regulatory engagement, two properties were successfully assigned
from Pivotal to Independent Housing Ltd.
Westmoreland FRI Lease Reversion
20 properties previously assigned from Parasol to Portus (formerly
Westmoreland) achieved stabilisation and reverted to fully repairing and
insuring lease terms.
34. Capital Commitments
The Group does not have capital commitments in both the prior year and the
current year.
35. Earnings Per Share
Earnings per share ("EPS") amounts are calculated by dividing profit for the
year attributable to ordinary shareholders 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:
Year ended Year ended
31 December 2025 31 December 2024
Calculation of Earnings per share
Net profit/(loss) attributable to Ordinary Shareholders (£'000) 2,993 (36,389)
Weighted average number of Ordinary Shares (excluding treasury shares) 393,466,490 393,466,490
IFRS Earnings/(loss) per share - basic and diluted 0.76 (9.25)
Calculation of EPRA Earnings per share
Net profit/(loss) attributable to Ordinary Shareholders (£'000) 2,993 (36,389)
Loss from fair value adjustment on investment properties (£'000) 22,053 53,030
Termination fees (£'000) - 3,343
EPRA earnings (£'000) 25,046 19,984
Non-cash adjustments to include:
Amortisation of loan arrangement fees (£'000) 277 287
Movement in Lease Incentive Debtor (£'000) 372 965
Adjusted earnings (£'000) 25,695 21,236
Weighted average number of Ordinary Shares (excluding treasury shares) 393,466,490 393,466,490
EPRA earnings per share - basic and diluted 6.37p 5.08p
Adjusted earnings per share - basic and diluted 6.53p 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 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
£3,343,000 in respect of the change in Investment manager in 2024 are
considered to be exceptional items and have been added back in arriving at
EPRA earnings.
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. In the current year, an amount of
£263,000 (2024: £1,984,000 in respect of a lease incentive debtor relating
to Parasol when the leases were transferred to Westmoreland) was written off
in respect of a lease incentive debtor relating to two properties that were
sold in Q1 2025. 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.
36. Net Asset Value Per Share
Basic Net Asset Value ("NAV") per share is calculated by dividing net assets
in the Group Statement of Financial Position attributable to Ordinary
Shareholders 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:
31 December 2025 31 December 2024
Net assets at the end of the year (£'000) 370,776 389,744
Shares in issue at end of the year (excluding treasury shares) 393,446,490 393,466,490
Dilutive shares in issue - -
IFRS NAV per share - basic and dilutive 94.23p 99.05p
37. Capital Management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and to maintain an optimal capital structure to minimise the cost
of capital.
The Group considers proceeds from share issuance, bank and other borrowings
and retained earnings as capital.
Any surplus cash balances are invested in cash equivalents, near cash
instruments and money market instruments, in order to maximise returns pending
re-investment or distributions.
The level of borrowing will be on a prudent basis for the asset class and will
seek to achieve a low cost of funds, whilst maintaining the flexibility in the
underlying security requirements and the structure of both the investment
property portfolio and the Group.
The Directors currently intend that the Group should target a level of
aggregate borrowings over the medium term equal to approximately 40% of the
Group's Gross Asset Value. The aggregate borrowings will always be subject to
an absolute maximum, calculated at the time of drawdown, of 50% of the Gross
Asset Value.
The initial fixed rate facility with MetLife requires an asset cover ratio of
x2.00 and an interest cover ratio of x1.75. At 31 December 2025, the Group was
fully compliant with both covenants with an asset cover ratio of x2.39 (2024:
x2.49) and an interest cover ratio of x4.89 (2024: x4.78).
The subsequent facility with MetLife and Barings requires an asset cover ratio
of x1.67 and an interest cover ratio of x1.75. At 31 December 2025, the Group
was fully compliant with both covenants with an asset cover ratio of x1.96
(2024: x2.01) and an interest cover ratio of x4.82 (2024: x4.28).
Company Statement of Financial Position
As at 31 December 2025
Note Year ended Year ended
31 December 31 December
2025
2024
£'000
£'000
Assets
Non-current assets
Investment in subsidiaries 4 358,968 379,703
Total non-current assets 358,968 379,703
Current assets
Trade and other receivables 5 1,649 6,829
Cash, cash equivalents and restricted cash 6 12,132 13,988
Total current assets 13,781 20,817
Total assets 372,749 400,520
Liabilities
Current liabilities
Trade and other payables 7 1,973 10,776
Total current liabilities 1,973 10,776
Total liabilities 1,973 10,776
Total net assets 370,776 389,744
Equity
Share capital 8 3,940 3,940
Share premium reserve 9 203,753 203,753
Treasury shares reserve 10 (378) (378)
Capital reduction reserve 11 155,359 155,359
Capital redemption reserve 11 93 93
Retained earnings 13 8,009 26,977
Total equity 370,776 389,744
IFRS net asset value per share - basic and diluted 14 94.23p 99.05p
The Company has taken advantage of the exemption allowed under Section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements. The profit of the Company
for the year was £2,993,000 (2024: Loss of £36,389,000).
The Company Financial Statements were approved and authorised for issue by the
Board on 25 March 2026 and signed on its behalf by:
Chris Phillips
Chair
25 March 2026
The accompanying notes form an integral part of these Company Financial
Statements.
Company Statement of Changes in Equity
For the year ended 31 December 2025
Note Share Share Treasury Capital redemption reserve Capital Retained earnings Total
capital premium shares £'000 reduction £'000 equity
£'000 reserve reserve reserve £'000
£'000 £'000 £'000
Balance at 3,940 203,753 (378) 93 155,359 26,977 389,744
1 January 2025
Total comprehensive income for the year - - - - - 2,993 2,993
Transactions with owners
Dividends paid 12 - - - - - (21,961) (21,961)
Balance at 3,940 203,753 (378) 93 155,359 8,009 370,776
31 December 2025
Note Share Share Treasury Capital redemption reserve Capital Retained earnings Total
capital premium shares £'000 reduction £'000 equity
£'000 reserve reserve reserve £'000
£'000 £'000 £'000
Balance at 3,940 203,753 (378) 93 155,359 84,850 447,617
1 January 2024
Total comprehensive income for the year - - - - - (36,389) (36,389)
Transactions with owners
Dividends paid 12 - - - - - (21,484) (21,484)
Balance at 3,940 203,753 (378) 93 155,359 26,977 389,744
31 December 2024
The accompanying notes form an integral part of these Company Financial
Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2025
1. Basis of Preparation
The financial statements have been prepared in accordance with Financial
Reporting Standard 100 Application of Financial Reporting Requirements ("FRS
100") and Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101") and in accordance with the Companies Act 2006.
1.1. Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all
disclosure exemptions conferred by FRS 101. Therefore, these financial
statements do not include:
· certain disclosures regarding the Company's capital;
· a statement of cash flows;
· the effect of future accounting standards not yet adopted;
· the disclosure of the remuneration of key management personnel; and
· disclosure of related party transactions with other wholly owned members
of the Group.
In addition, and in accordance with FRS 101 further disclosure exemptions have
been adopted because equivalent disclosures are included in the Group
Financial Statements. These financial statements do not include certain
disclosures in respect of:
· financial instruments; and
· fair value measurement other than certain disclosures required as a
result of recording financial instruments at fair value.
The material accounting policy information applied in the preparation of the
financial statements are set out below.
2. Summary of Material Accounting Policies
2.1. Currency
The Company financial information is presented in Sterling which is also the
Company's functional currency.
2.2. Investment in subsidiaries
Investment in subsidiaries is included in the Company's Statement of Financial
Position at cost less provision for impairment. Investments are subject to
impairment tests whenever events or changes in circumstances indicate that
their carrying amount may not be recoverable. Where the carrying value of an
asset exceeds its recoverable amount, the asset is written down accordingly.
Impairment charges are included in profit or loss, except to the extent they
reverse gains previously recognised in other comprehensive income. Where
assets have been transferred within the Group, a capital reduction in the
originating company is performed, and a dividend is declared to Social Housing
REIT plc. This results in an impairment to investments in subsidiaries.
2.3. Trade and other receivables
Trade and other receivables are amounts due in the ordinary course of
business. If collection is expected in one year or less from the end of the
reporting period, they are classified as current assets.
Rent receivables are initially recognised at fair value plus transaction costs
and are subsequently carried at amortised cost, less provision for impairment.
Impairment provisions for amounts due from subsidiaries are recognised based
on a forward-looking expected credit loss model using the general approach.
The methodology used to determine the amount of the provision is based on
whether there has been a significant increase in credit risk since initial
recognition of the financial asset. For those where the credit risk has not
increased significantly since initial recognition of the financial asset, 12
month expected credit losses along with gross interest income are recognised.
For those for which credit risk has increased significantly, lifetime expected
credit losses along with the gross interest income are recognised. For those
that are determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are recognised.
2.4. Dividend payable to shareholders
Dividends to the Company's shareholders are recognised as a liability in the
Company's financial statements in the period in which the dividends are
approved. Interim dividends are recognised when paid. In the case of final
dividends, this is when approved by the shareholders at the Annual General
Meeting.
2.5. Investment management fees
Investment management fees are recognised in the profit or loss on an accrual
basis.
2.6. Treasury shares
Consideration paid or received for the purchase or sale of treasury shares is
recognised directly in equity. The cost of treasury shares held is presented
as a separate reserve (the "treasury share reserve"). Any excess of the
consideration received on the sale of treasury shares over the weighted
average cost of the shares sold is credited to retained earnings.
3. Significant Accounting Judgements, Estimates and Assumptions
The preparation of the Company's Financial Statements requires the Directors
to make judgements, estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities at the reporting date. However, uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future
periods. The estimate and associated assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year is as follows:
Investments
Investments held as non-current assets are stated at cost less any provision
for impairment. The Directors assess the recoverability of investments made
and economic benefit of the investments based on market conditions, economic
forecasts and cash flow estimates.
4. Investment in Subsidiaries
31 December 2025 31 December 2024
£000 £000
Balance at beginning of year 379,703 432,498
Impairment charge for the year (28,224) (53,644)
Additions 7,489 849
Balance at end of year 358,968 379,703
Investment in subsidiaries are included in the Company's Statement of
Financial Position at cost less provision for impairment.
An impairment of £28,224,000 (2024: £53,644,000) has been recognised in the
current year following the reduction in the valuations of the underlying
investment properties. Following these valuation reductions the net assets of
certain subsidiaries no longer support the carrying value of the investments
in line with the recoverable amount, which was also considered to be its value
in use. The underlying assumptions are detailed in note 13 to the Group
financial statements. There has also been a material increase in amounts due
from subsidiaries during the year, these amounts are expected to be settled in
full post period end.
Given that the underlying investments are supported by a valuation of the
properties, the Company has considered the recoverable amount by reference to
the net asset value of the Group. If the average discount rate in the
valuation of the Group's investment properties were 1% lower/higher, the
carrying value would be £64,308,000 higher/£54,751,000 lower respectively.
A list of the Company's subsidiary undertakings as at 31 December 2025 is
included in note 31 of the Group Financial Statements.
5. Trade and other Receivables
31 December 2025 31 December 2024
£000 £000
Amounts due from subsidiaries 1,492 6,696
Prepayments 143 133
Other receivables 14 -
1,649 6,829
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.
The Company applies the general approach to providing for expected credit
losses under IFRS 9 for amounts due from subsidiaries. The expected credit
loss in the current year and prior year are immaterial.
6. Cash, Cash Equivalents and Restricted Cash
31 December 2025 31 December 2024
£000 £000
Restricted cash 427 593
Cash at bank 3,684 13,391
Cash Held by Lawyers 21 4
Liquidity Funds 8,000 -
12,132 13,988
Restricted cash represents monies held in escrow in relation to the transfer
of leases to be used for future costs. 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.
7. Trade and Other Payables
Current Liabilities
31 December 2025 31 December 2024
£000 £000
Trade payables 1,179 139
Accruals 764 5,518
Amounts owed to subsidiaries 10 5,099
Other creditors 20 20
1,973 10,776
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. The
£1,179,000 of trade payables includes £836,000 owed to Atrato in relation to
Q4's management fee, this was settled in early January 2026.
8. Share Capital
Issued and fully paid Issued and fully paid
Number £'000
At 1 January 2025 393,916,490 3,940
At 31 December 2025 393,916,490 3,940
Issued and fully paid Issued and fully paid
Number £'000
At 1 January 2024 393,916,490 3,940
At 31 December 2024 393,916,490 3,940
The Company was admitted to the premium segment of the Official List of the
Financial Conduct Authority and migrated to trading on the premium segment of
the Main Market on 27 March 2018. Further details are provided in note 21 of
the Group Financial Statements.
9. Share Premium Reserve
The share premium reserve relates to amounts subscribed for share capital in
excess of nominal value.
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 203,753 203,753
Balance at end of year 203,753 203,753
10. Treasury Shares Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year (378) (378)
Balance at end of year (378) (378)
The treasury shares reserve relates to the value of shares purchased by the
Company in excess of nominal value. No treasury shares were purchased during
the current or prior year. As at 31 December 2025, 450,000 1p Ordinary Shares
are held by the Company (31 December 2024: 450,000 1p Ordinary Shares).
11. Capital Reduction Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 155,359 155,359
Balance at end of year 155,359 155,359
The capital reduction reserve relates to the distributable reserve established
on cancellation of the share premium reserve.
Capital Redemption Reserve
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 93 93
Balance at end of year 93 93
The Capital Redemption Reserve is the nominal value of the shares cancelled
from the share buybacks.
12. Dividends
Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
1.3650p for the 3 months to 31 December 2023 paid on 28 March 2024 - 5,371
1.3650p for the 3 months to 31 March 2024 paid on 28 June 2024 - 5,371
1.3650p for the 3 months to 30 June 2024 paid on 4 October 2024 - 5,371
1.3650p for the 3 months to 30 September 2024 paid on 13 December 2024 - 5,371
1.3650p 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 -
1.4055p for the 3 months to 30 June 2025 paid on 3 October 2025 5,530 -
1.4055p for the 3 months to 30 September 2025 paid on 19 December 2025 5,530 -
21,961 21,484
On 20 March 2026, the Company declared an interim dividend of 1.4055 pence per
Ordinary share for the period 1 October 2025 to 31 December 2025. The total
dividend of £5,530,172 will be paid on or around 21 April 2026 to Ordinary
shareholders on the register on 7 April 2026.
The Company intends to pay dividends to shareholders on a quarterly basis and
in accordance with the REIT regime.
Dividends are not payable in respect of the treasury shares held by the
Company.
13. Retained Earnings
31 December 2025 31 December 2024
£'000 £'000
Balance at beginning of year 26,977 84,850
Total comprehensive income for the year 2,993 (36,389)
Dividends paid (21,961) (21,484)
Balance at end of year 8,009 26,977
14. Net Asset Value Per Share
Net Asset Value per share is calculated by dividing net assets in the Company
Statement of Financial Position attributable to ordinary equity holders of the
Company by the number of Ordinary Shares outstanding at the end of the year.
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:
31 December 2025 31 December 2024
Net assets at the end of the year (£'000) 370,776 389,744
Shares in issue at end of the year (excluding treasury shares) 393,466,490 393,466,490
Dilutive shares in issue - -
NAV per share - basic and dilutive 94.23p 99.05p
15. Related Party Transactions
The Company has taken advantage of the exemption not to disclose transactions
with other members of the Group as the Company Financial Statements are
presented together with the Group Financial Statements.
Note 30 of the Notes to the Group Financial Statements includes details of
other related party transactions undertaken by the Company and its
subsidiaries.
16. Post Balance Sheet Events
Dividend
On 20 March 2026, the Company declared an interim dividend of 1.4055 pence per
Ordinary share for the period 1 October 2025 to 31 December 2025. The total
dividend of £5,530,172 will be paid on or around 21 April 2026 to Ordinary
shareholders on the register on7 April 2026.
Unaudited Performance Measures
For the year ended 31 December 2025
1. EPRA Net Reinstatement Value
31 December 2025 31 December 2024
IFRS NAV/EPRA NAV (£'000) 370,776 389,744
Include:
Real Estate Transfer Tax* (£'000) 36,700 38,594
EPRA Net Reinstatement Value (£'000) 407,476 428,338
Fully diluted number of shares 393,466,490 393,466,490
PRA Net Reinstatement value per share 103.56p 108.86p
* Purchasers' costs
2. EPRA Net Disposal Value
31 December 2025 31 December 2024
IFRS NAV/EPRA NAV (£'000) 370,776 389,744
Include:
Fair value of debt* (£'000) 48,726 58,605
EPRA Net Disposal Value (£'000) 419,502 448,349
Fully diluted number of shares 393,466,490 393,466,490
EPRA Net Disposal Value** 106.62p 113.95p
* Difference between interest-bearing loans and borrowings included in 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
31 December 2025 31 December 2024
IFRS NAV/EPRA NAV (£'000) 370,776 389,744
EPRA Net Tangible Assets (£'000) 370,776 389,744
Fully diluted number of shares 393,466,490 393,466,490
EPRA Net Tangible Assets* 94.23p 99.05p
* Equal to IFRS NAV and previous EPRA NAV metric as none of the EPRA Net
Tangible Asset adjustments are applicable as at31 December 2025 or 31 December
2024.
4. EPRA net initial yield (NIY) and EPRA "topped up" NIY
31 December 2025 31 December 2024
£'000 £'000
Investment properties - wholly-owned (excluding head lease ground rents) 603,288 623,227
Less: development properties - -
Completed property portfolio 603,288 623,227
Allowance for estimated purchasers' costs 36,700 38,594
Gross up completed property portfolio valuation 639,988 661,821
Annualised passing rental income 43,657 42,606
Property outgoings - -
Annualised net rents 43,657 42,606
Contractual increases for lease incentives 10 83
Topped up annualised net rents 43,667 42,689
EPRA NIY 6.82% 6.44%
EPRA Topped Up NIY 6.82% 6.45%
5. Ongoing Charges Ratio
31 December 2025 31 December 2024
£'000 £'000
Annualised ongoing charges 5,757 6,885
Average undiluted net assets 380,260 418,681
Ongoing charges 1.51% 1.64%
6. EPRA Vacancy Rate
31 December 2025 31 December 2024
£'000 £'000
Estimated Market Rental Value (ERV) of vacant spaces 673 138
Estimated Market Rental Value (ERV) of whole portfolio 43,805 42,826
EPRA Vacancy Rate 1.54% 0.32%
The EPRA vacancy rate is calculated as the ERV of the unrented, lettable space
as a proportion of the total rental value of the Investment Property
portfolio. This is expected to continue to be a highly immaterial percentage.
As at 31 December 2025, the portfolio comprised four vacant properties,
representing a combined ERV of £673k (31 December 2024: one vacant property
at ERV: £138k).
7. EPRA Cost Ratio
31 December 2025 31 December 2024
£'000 £'000
Administration expenses per IFRS 4,347 3,863
Service charge income - -
Service charge costs - -
Net Service charge costs - -
Management fees 3,265 7,814
Total costs (including direct vacant property costs) (A) 7,612 11,677
Vacant property costs (276) (33)
Total costs (excluding direct vacant property costs) (B) 7,336 11,644
Gross rental income per IFRS 40,743 39,072
Less: service charge components of gross rental income - -
Gross rental income (C) 40,743 39,072
EPRA Cost ratio (inc. direct vacant property costs) (A/C) 18.68% 29.89%
EPRA Cost ratio (exc. direct vacant property costs) (B/C) 18.00% 29.81%
8. EPRA Like-For-Like Rental Growth
Sector Year ended Year ended Like-for-Like
31 December 2025 31 December 2024 rental growth
£'000 £'000 %
UK 43,492 42,553 2.21%
The like-for-like rental growth is based on the changes in rental income for
those properties which have been held for the duration of both the current and
comparative reporting period. Properties acquired, disposed of or under
development during either period are excluded. This represents a portfolio
valuation, as assessed by the valuer of £606.3 million billion (31 December
2024: £626.4 million).
9. EPRA LTV
31 December 2025 31 December 2024
£'000 £'000
Group Net Debt
Borrowings from financial institutions 263,250 262,969
Net payables - -
Less: Cash and cash equivalents (25,414) (27,492)
Group Net Debt Total (A) 237,836 235,477
Group Property Value
Investment properties at fair value 602,814 624,695
Assets held for sale 1,947 -
Intangibles - -
Net receivables 3,852 526
Financial assets - -
Total Group Property Value (B) 608,613 625,221
Group LTV (A/B) 39.08% 37.66%
Share of Joint Ventures Debt
Bond loans - -
Net payables - -
JV Net Debt Total (A) - -
Group Property Value
Owner-occupied property - -
Investment properties at fair value - -
Total JV Property Value (B) - -
JV LTV (A/B) 0.00% 0.00%
Combined Net Debt (A) 237,836 235,477
Combined Property Value (B) 608,613 625,221
Combined LTV (A/B) 39.08% 37.66%
10. EPRA Property Related Capital Expenditure
Group Year ended Year ended
31 December 2025 31 December 2024
£'000 £'000
Acquisitions - -
Development 1,531 1,499
Investment Properties 669 722
Group Total CapEx 2,200 2,221
Joint Venture
Acquisitions - -
Development - -
Investment Properties - -
Joint Venture CapEx - -
Total CapEx 2,200 2,221
Acquisitions relate to purchase of investment properties in the year and
includes capitalised acquisition costs. Development relates to capitalised
costs in relation to development expenditure on the property portfolio.
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