Supported Housing in the UK Results for the year ended 31 December - - PowerPoint PPT Presentation
Supported Housing in the UK Results for the year ended 31 December 2018 29 March 2019 Shirebrook, Derbyshire Agenda and Presentation Team Page Section Presentation Team Highlights 3 BEN BEATON Co-Managing Operational Overview 6
Shirebrook, Derbyshire
Highlights 3 Operational Overview 6 Financial Results 16 Outlook 23 Appendix 25
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JAMES CRANMER
Co-Managing Partner
BEN BEATON
Co-Managing Partner
MAX SHENKMAN
Partner and Head
Thatto Heath, Liverpool
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272
Properties 1,893 units
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Approved Providers
£17.4m¹
Contracted rental income
27.2 years
Weighted Average Unexpired Lease Term
100%
Index-linked
Overview
UK
Portfolio
1,893 units
practical completion
Yields
valuation yield of 5.25%
Long term inflation-linked leases
portfolio fully let (or pre-let for ongoing forward funded assets)
Providers and a WAULT of 27.2 years
¹ Excluding forward funded assets that have not yet completed
Properties Contracted Rental Income (£m) Average Net Initial Yield
116 167 272 31-Dec-17 30-Jun-18 31-Dec-18 £7.8m £10.4m £17.4m 31-Dec-17 30-Jun-18 31-Dec-18 5.91% 5.91% 5.89% 31-Dec-17 30-Jun-18 31-Dec-18
5.89%
Average Net Initial Yield
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100.84p 101.61p 103.65p 31-Dec-17 30-Jun-18 31-Dec-18 £137.5m £190.0m £323.5m 31-Dec-17 30-Jun-18 31-Dec-18
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£155.7m
Equity raised
£138.5m
Debt raised
103.65p
IFRS NAV per share
5.00p³
Dividends paid or declared to date
£21.0m²
Total Invested since 31 December 2018
Financing
debt financing of £138.5 million through two separate facilities with MetLife and Lloyds
consideration of £170.8 million² and further commitments of £21.0 million
Portfolio Value
£302.6 million
– valuation uplift of £20.8 million (+6.9%) against total
invested funds
Dividend
with target
CPI inflation)
substantially covered by EPRA earnings
Post Balance Sheet
for an aggregate consideration of £21.0 million² and made further commitments of £4.5 million²
¹ Excluding forward funded assets that have not yet completed ² Including acquisition costs ³ 3.75 pence paid during 2018; 1.25 pence declared and expected to be paid on the 29 March 2019
IFRS Valuation (£m) IFRS NAV per share (p)
£323.5m
IFRS Valuation
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Boathouse, Tamworth
▪ The site was acquired and construction
commenced in March 2018
▪The scheme was funded monthly with a coupon
charged during development Total Investment: £1.9m Yield on Cost: 6.03% Blended IFRS Yield: 5.35% Units: 12 Completion Date: 11/10/2018 High quality living accommodation:
– 12 self-contained one-bed apartments – 1 Care Provider apartment
High-specification scheme comprising 12 self-contained
Purpose built dwellings to a high specification: Specialist adaptations, including;
– Wet rooms – Facilities with alarm activating pull cords – Assistive technology enabled control panels – Concierge control – Wheelchair access – Tailored living spaces
March April June September Completion October 2018
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Growing Demand Government Policy Referrals Better Outcomes
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¹ For adult of working age with learning disabilities (source: Funding Supported Housing for All, Mencap housing Report 2018)
A community setting which promotes
lead to a lessening reliance on care. Cost savings for local authorities as Supported Living is cheaper than alternatives¹:
working age has increased from 14% to 19% in the last 10 years
expected to grow to 46,771 units by 2025 2014 Care Act promotes independent living
Local authority transforming care programmes are driving demand Specific referrals are generated by:
A bespoke care package is identified and agreed by a panel made up of commissioners and social workers
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Better for Residents Referrals Government Policy Demand for Care is Growing
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Due to a lack of grant funding there is an opportunity for the Company to meet commissioner demand by working with developers to create purpose built Supported Housing homes
Understanding the genesis of the development and counterparties involved Commence works on:
Asset Quality:
Local Authority support:
care package Investment Committee and Board approval Acquisition
Due Diligence on Approved Provider and Care Provider
Relationships are Key:
Care Provider
tenants
Developers
strong track record
housing
– Local authority support – High quality product – Sustainable rents Housing Associations
Housing assets
and Local Authorities
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£26.3m
Allocated to forward funding commitments
9.8%¹
Deployment into forward funding deals in 2018
Typically 6%
Yield on Cost
Off Market Transactions Coupon Earned During Construction Agreement for Lease in Place
property and infrastructure assets over the last decade
price contract with developer profit deferred
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¹ Excludes ongoing forward funding commitments at 31 December 2018
£17.9m £131.8m £180.5m £302.6m £51.5m £21.0m Total Invested Funds Total Committed Funds Assets
Annual Results (Dec-18)
Seed Portfolio
IPO (Aug-17) Interim Results (Jun-18) Annual Results (Dec-17)
Pipeline of new social housing properties
# of Assets: 116
WAULT: 30.6yrs # of Assets: 167
WAULT: 29.0yrs # of Assets: 272
WAULT: 27.2yrs
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24.5% 16.0% 14.6% 13.6% 8.7% 7.4% 6.0% North West East Midlands West Midlands North East London South East Yorkshire South South West East South Wales
North East
Properties: 38 % of funds invested: 13.4%
Yorkshire
Properties: 16 % of funds invested: 5.8%
East Midlands
Properties: 39 % of funds invested: 16.1%
London
Properties: 16 % of funds invested: 8.8%
South East
Properties: 23 % of funds invested: 7.5%
North West
Properties: 76 % of funds invested: 25.1%
West Midlands
Properties: 35 % of funds invested: 14.1%
South
Properties: 15 % of funds invested: 5.0%
South West
Properties: 10 % of funds invested: 2.9%
East
Properties: 3 % of funds invested: 1.0%
South Wales
Properties: 1 % of funds invested: 0.3%
Market Value by Region Assets by Region
76 39 38 35 23 16 16 15 10 North West East Midlands North East West Midlands South East London Yorkshire South South West East South Wales
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20.3% 15.6% 13.5% 10.5% 10.1% 9.3% 6.8% 5.5% Inclusion Falcon My Space 28 A Supported Living Hilldale AHS Chrysalis Westmoreland BeST Wings Care Care Housing Association Sunnyvale Encircle Housing IKE Lifeways Partners Foundation 60 53 33 30 25 17 17 16 6 Inclusion Falcon My Space AHS 28 A Supported Living Hilldale Chrysalis Westmoreland Care Housing Association BeST Sunnyvale Encircle Housing Wings Care IKE Lifeways Partners Foundation 21.6% 14.9% 13.4% 10.0% 10.0% 8.9% 6.8% 6.0% Inclusion Falcon My Space Hilldale 28 A Supported Living AHS Chrysalis Westmoreland Care Housing Association BeST Wings Care Sunnyvale Encircle Housing IKE Lifeways Partners Foundation 337 302 302 228 179 155 120 97 Inclusion Falcon My Space AHS 28 A Supported Living Hilldale Chrysalis Westmoreland Care Housing Association BeST Sunnyvale Encircle Housing Wings Care IKE Lifeways Partners Foundation
Market Value by Approved Provider Assets by Approved Provider Rental Income by Approved Provider Units by Approved Provider
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under management barrier and are therefore subject to an In Depth Assessment (IDA)
– The Regulator has three years within which to undertake an IDA
they are being properly managed and has engaged with these Registered Providers where they have found failings
efficient way
Housing accommodation
areas of focus
“RSH regulates private Registered Providers
promote a viable, efficient and well- governed social housing sector able to deliver homes that meet a range of needs”
250 500 750 1000 1250 1500 1750 2000
RP Total Units Under Management¹
¹ As at 31 December 2018 14
varies depending on size and circumstance and so it is crucial that we undertake our own consistent due diligence on all Approved Providers with whom the Company has leases
– There can often be a number of years between in depth
Regulatory reviews of Registered Providers and publicly available information is limited
to date information and considers the following:
– Management accounts – Units under management – Headcount – Occupancy – Rent levels
quarterly office and site visits. We also talk to care providers for their feedback on Approved Provider performance
increasing the number of units they have under management and so they need to make sure that their governance and procedures keep pace with growth
Providers we manage our relative exposure and assist in resolving any issues before they escalate
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Moor House, Hereford
EPRA EARNINGS PER SHARE 2.27 pence (2017: 0.02 pence)
EPRA Earnings per Share excludes the fair value gain on properties
IFRS VALUATION £323.5 million (2017: £137.5 million)
Portfolio independently valued at £323.5 million on an IFRS basis, an uplift
£302.6 million¹
CONTRACTED RENTAL INCOME £17.4 million (2017: £7.8 million)
Contracted Rental Income excludes ongoing forward funding schemes that are under an Agreement for Lease
DIVIDEND PER SHARE 5.00 pence (2017: 1.00 pence)
3.75 pence paid during 2018; 1.25 pence declared and to be paid on 29 March 2019
EARNINGS PER SHARE 8.37 pence (2017: 3.94 pence)
Earnings per Share includes the fair value gain
average number of shares
IFRS/EPRA NAV PER SHARE 103.65 pence (2017: 100.84 pence)
The IFRS NAV and EPRA NAV per Share was 103.65 pence, an increase of 2.79% since 31 December 2017
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¹ Including acquisition costs
£1.0m £11.5m £7.8m £17.4m 31-Dec-17 31-Dec-18
Actual Income versus Contracted Rental Income (£m)
Year ended 31 December 2018 (audited) £’000 Period ended 31 December 2017¹ (audited) £’000 Variance Revenue 11,490 1,027 Total expenses (4,483) (1,065) Gross profit 7,007 (38) Changes in fair value of investment properties 14,497 5,639 Operating profit 21,504 5,601 ↑ 283.9% Net finance (cost) / income (1,607) 71 Profit before taxation 19,897 5,672 ↑ 250.8% Earnings per share – basic 8.37p 3.94p ↑ 112.4% EPRA Earnings per share – basic 2.27p 0.02p
¹ Period is from IPO on 14 August 2017 to 31 December 2017 ² Increase largely due to the fact cash was deployed which increased the management fee charged (management fees are not charged on cash)
ONGOING CHARGE RATIO 1.58%² (2017: 1.34%)
Ongoing Charge is a ratio of annualised ongoing charges expressed as a percentage of average net asset value throughout the period
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£137.5m £323.5m 31-Dec-17 31-Dec-18 100.84p 103.65p 31-Dec-17 31-Dec-18
Year ended 31 December 2018 (audited) £’000 Period ended 31 December 2017 (audited) £’000 Variance Investment property (IFRS valuation) 324,069 138,512 ↑ 134.0% Trade and other receivables 3,392 12,002 Cash and cash equivalents 114,624 58,185 Total assets 442,085 208,699 ↑ 111.8% Current liabilities 8,998 5,876 Non-current liabilities 68,926 1,151 Total liabilities 77,924 7,027 Net assets 364,161 201,672 ↑ 80.6% IFRS Net asset value per share 103.65p 100.84p ↑ 2.8% EPRA Net asset value per share 103.65p 100.84p ↑ 2.8%
IFRS Valuation (£m) IFRS NAV per share (p)
TOTAL RETURN 7.5%
Total 12-month NAV Return including dividends paid of 4.75p during 2018
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100.84p 103.65p
+2.27p +6.10p
96 98 100 102 104 106 108 110 Opening NAV EPRA EPS Fair Value Adjustment on Investment Property Dividends Paid Adjustment for New Equity Issues Closing NAV
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1 January 2018 31 December 2018
As a result of two share issues during the year the NAV Bridge shows a minor adjustment of 0.81p per share representing the different number of shares in issue throughout the year ¹
£302.6m £323.5m £343.7m £280m £290m £300m £310m £320m £330m £340m £350m Total Invested IFRS Valuation Portfolio Premium Valuation
Acquisitions in the portfolio to date of £302.6 million¹ which have been valued by JLL for the period to 31 December 2018:
IFRS valuation. The portfolio valuation assumes a single sale of the SPVs to a third-party on an arm’s length basis.
¹ Including acquisition costs ² Blended IFRS yield of 5.25% including assumed purchasers costs of 6.12% ³ Portfolio yield of 5.12% including assumed purchaser’s costs of 2.30%
Valuation used for NAV calculation
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– MetLife: £68.5 million long-dated, fixed rate loan facility – Lloyds: £70 million floating rate revolving credit facility
Loan Notes RCF Lender MetLife (Tranche A) MetLife (Tranche B) Lloyds Security Secured against a portfolio of assets approximately worth £177 million² Secured against a portfolio of assets in the region of £175 million¹ Facility Size £41.5 million £27.0 million £70.0 million Drawn Fully drawn Fully drawn Undrawn Term 10 years 15 years 4 years Cost 2.924% all-in 3.215% all-in LIBOR + 1.85%
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¹ When fully drawn and revalued in line with the provisions of the facility agreement ² As per the JLL valuation on an IFRS basis at 31 December 2018
Cornmill House, Leeds
Demand continues to outweigh supply The pipeline for 2019 remains strong with an aggregate value of over £400m Increased regulatory scrutiny to continue to strengthen as the sector grows and matures Demand continues to outweigh supply Continued opportunity in forward funded developments Strong identified pipeline of assets that meet our investment criteria Target dividend of 5.095p per share for 2019 We expect to dividends to be substantially covered by earnings by the end of 2019
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Shirebrook, Derbyshire
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Approved Providers
62
Care Providers
109
Local Authorities
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ISOBEL GUNN-BROWN JUSTIN HUBBLE MICHAEL BAYER MAX SHENKMAN
COMPLIANCE LEGAL FUND MANAGEMENT SERVICES INVESTMENT
JAMES CRANMER
Co-Managing Partner
BEN BEATON
Co-Managing Partner
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BEN BEATON
Managing Partner
JAMES CRANMER
Managing Partner
MAX SHENKMAN
Partner & Head of Investment
ISOBEL GUNN- BROWN
Partner & REIT CFO
JUSTIN HUBBLE
Partner & General Counsel
MIKE BAYER
Partner & Head of Compliance
RALPH WEICHELT
Investment Director
FREDDIE COWPER- COLES
Investment Manager
ALI PRECIOUS
Investment Manager
GREGORY BANNER
Senior Analyst
VANESSA TYLER
Senior Analyst
EMMA BUCKLEY
Analyst
ALEXANDER EMSLIE
Analyst
MARTIN LETRILLIART
Analyst
THOMAS PARISH
Data Room Administrator
LUKE CHESHIRE
Company Secretary
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ANDY COMBER
Fund Management Services
JACINTA KELLY
Fund Management Services
NICK SHAVE
Fund Management Services
ZAINAB FAGGE
Fund Management Services
RENITA KAMYA
Fund Management Services
GEORGINA PYM
Fund Management Services
JODY SCHOFIELD
Fund Management Services
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Chris Phillips, Chairman (68)
Skills and experience Extensive experience of real estate and listed companies. Of note, Chris’ role at Colliers where, after heading its residential consultancy business, he became the first Managing Director of Colliers Capital UK Limited (Colliers commercial real estate property fund), from 1998 to 2005.
Ian Reeves CBE, Senior Independent Director (73)
Skills and experience Ian is senior partner and co-founder of Synaps Partners LLP. He is visiting Professor
School, chairman of GCP Infrastructure Investments Limited and Chairman of The Estates and Infrastructure Exchange (EIX). Ian was founder and Chairman of High-Point Rendel Group a pioneering management and engineering consultancy company with a global network of
Group, Chairman of Constructing Excellence and Chairman of the London regional council of the CBI. Ian was awarded his CBE in 2003 for services to business and charity.
Paul Oliver, Non-executive Director (63)
Skills and experience Paul has over 35 years’ experience in real estate development and investment management, and has been at the forefront of the establishment of property funds since 1991 launching Teesland plc on the LSE and building funds under management to €6.5 billion in 2007.
Peter Coward, Non-executive Director (62)
Skills and experience Peter is a chartered accountant with international commercial and corporate finance experience. He has over 25 years’ experience as a Senior Tax Partner at PricewaterhouseCoopers specialising in property, and has worked with a wide range of firms to develop a knowledge and understanding of tax regimes worldwide and of organisational and project structuring to optimise the tax position.
Tracey Fletcher-Ray, Non-executive Director (54)
Skills and experience Considerable expertise as an executive and non-executive in the care and support
where she was in charge of developing the company’s healthcare business, strategy and growth and eight years at Bupa UK, holding Managing Director roles in the Care Home business which involved contracting with and providing services on behalf of local authorities and the NHS, and Bupa Health Clinics, operating as a member of the Bupa UK Board. Left to Right: Paul Oliver, Peter Coward, Tracey Fletcher-Ray, Chris Phillips and Ian Reeves CBE
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