Social Housing Reit Plc · LSE:SOHO
Social Housing Reit — Triple Point Social Housing REIT — FY2023 Earnings Presentation
36 slides from Social Housing Reit's earnings presentation, March 2024
Slide 1: 2023 Annual Results Presentation
2023 Annual Results Presentation March 2024
Slide 2: Agenda
AGENDA Triple Point Social Housing REIT plc – Board1 Highlights Max Shenkman Financial Overview Isobel Gunn-Brown Operational Overview Chris Phillips Chairman Tracey Fletcher-Ray Senior Independent Director Ian Reeves CBE Non-Executive Director Cecily Davis Non-Executive Director Peter Coward Non-Ex
Slide 3: Overview
OVERVIEW Strong rental growth Excess demand for Specialised Central Government support Supported Housing for residents Partnership approach, Valuation resilience 100% long-term and majority of lessees performing fixed-priced debt in line with expectations 3
Slide 4: Delivering on Strategic Initiatives
DELIVERING ON STRATEGIC INITIATIVES April 2023 July 2023 September 2023 Sale of £7.9m portfolio of Initiated £5m share Eco-Retrofit pilot properties principally in buyback programme1 programme commenced line with book value January 2023 May 2023 August 2023 January 2024 2023 annual rent increases Su
Slide 5: Resilient Performance
RESILIENT PERFORMANCE 113.76p £678.4m 5.46p 37.0% EPRA NTA Portfolio Value FY23 Dividend Target LTV per Share (Dec-22: £669.1m) (FY22: 5.46p) (Dec-22: 37.4%) (Dec-22: 109.06p) 24.3 years 90.2% 0.85x 5.59% WAULT Rent Collection Dividend Cover EPRA Net (Dec-22: 25.3 years) (Dec-22: 91.8%) (Dec-22: 0.8
Slide 6: Inflation Correlated Income and Advantageous Capital Structure
INFLATION CORRELATED INCOME AND ADVANTAGEOUS CAPITAL STRUCTURE 100% 6.9% 64.6% 2.74% and 9.6 years Leases linked to inflation or Weighted average rent increase in 2024 annual rent uplifts now All debt is fixed-price with a Government policy1 2023; 6.7% in 2022 linked to the September 2023 CPI long w
Slide 7: Historical Strong Track Record of Rent Collection
HISTORICAL STRONG TRACK RECORD OF RENT COLLECTION 90.2% of rent due collected Historical Rent Collection during the period, rent collection improved during 100% H2 2023 80% 25 out of 27 lessees with 60% no material rent arrears 100% 100% 100% 100% 100% 91.8% 90.2% 40% 20% Creditor’s agreements now i
Slide 8: Valuation Resilience Underpinned by Growing Demand and Rental Growth
VALUATION RESILIENCE UNDERPINNED BY GROWING DEMAND AND RENTAL GROWTH Portfolio Value (£m) Blended IFRS Valuation NIY £800m 5.69% 5.71% 6.00% 5.49% 5.25% 5.00% Blended IFRS Valuation NIY £600m 4.00% Portfolio Value £400m 3.00% £642.0m £669.1m £675.1m £678.4m 2.00% £200m 1.00% £0m 0.00% 31-Dec-21 31-D
Slide 9: Delivering New Best in Class Projects with Leading Registered Providers
DELIVERING NEW BEST IN CLASS PROJECTS WITH LEADING REGISTERED PROVIDERS £2.8 million forward funding development, due to exchange in May 2024 First scheme following SOHO’s partnership with Golden Lane Housing, a leading G1 V2 rated RP SOHO’s first project to target a 10% biodiversity net gain 9
Slide 10: Financial Overview
FINANCIAL OVERVIEW
Slide 11: Statement of Comprehensive Income
STATEMENT OF COMPREHENSIVE INCOME Year ended Year ended % change £’000 31 December 2023 31 December 2022 Dec 23 v Dec 22 6.8% Rental Income Expected Credit Loss (“ECL”) 39,839 (4,593) 37,300 (2,073) 7% 122% Increase in Rental Income Other Income - 110 - Total expenses (8,208) (7,866) 4% 20.6% Gross
Slide 12: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Year ended Year ended % change £’000 31 December 2023 31 December 2022 Jun 23 v Dec 22 4.3% Investment property (IFRS valuation) Trade and other receivables 675,497 8,097 667,713 7,161 1% 13% EPRA NTA Growth per Share Cash and cash equivalents 29,452 30,139 (2)% Total
Slide 13: EPRA NTA Reflecting Valuation Resilience
EPRA NTA REFLECTING VALUATION RESILIENCE EPRA NTA per share bridge 13
Slide 14: Total Accounting Return
TOTAL ACCOUNTING RETURN 9.3% 5.46p 47.7% Total Return for 2023 FY23 Target Dividend Cumulative Total paid1 Accounting Return Since IPO Total Accounting Return since IPO EPRA NTA plus Cumulative Dividends Cumulative Total Accounting Return 55% 155 47.7% 45% 145 paid per Share 35% 135 31.03p 25% 125 2
Slide 15: Strong Credit Position with Investment Grade Credit Rating
STRONG CREDIT POSITION WITH INVESTMENT GRADE CREDIT RATING Interest Cover Significant covenant headroom maintained; Headroom gearing levels in line Facility Actual Covenant (rental income movement) with targets MetLife 4.26x 1.75x 62% Additional liquidity from MetLife & Barings 4.63x 1.75x 53% £29.5
Slide 16: Operational Overview
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Slide 17: Positive Evolution of the Sector
POSITIVE EVOLUTION OF THE SECTOR Adjusted balance of risk-sharing between Supportive regulatory oversight, promoting landlords and Registered Providers in order greater accountability and transparency to promote regulatory compliance Registered Providers have worked to Track record of resilient valu
Slide 18: Private Capital Required to Meet Sector's Systemic Excess Demand
PRIVATE CAPITAL REQUIRED TO MEET SECTOR’S SYSTEMIC EXCESS DEMAND Demand Drivers Number of residents in Supported Living setting in the UK Forecast Registered Providers focused on ∼240K investing into existing housing stock +125k CAGR 9% Longer lifespans and better diagnosis leading to increased prev
Slide 19: Case Study: Ragan's Story
CASE STUDY Ragan’s Story Kirkdale House, Stockton-On-Tees Ragan benefits from the high quality support in her own home, allowing her to live independently. “ There’s a lot of outdoor space and we can do whatever we want with it - the cats love climbing the trees! Living here has made me feel safe an
Slide 20: Diversified and Granular Portfolio Spread Throughout the UK
DIVERSIFIED AND GRANULAR PORTFOLIO SPREAD THROUGHOUT THE UK Diversified Lessee Base (by rent roll) Inclusion, 29.3% Parasol Homes, 9.7% Hilldale, 8.5% Falcon, 8.5% My Space, 8.1% Chrysalis, 5.4% BeST, 5.2% AHS, 4.7% 29.3% Blue Square, 3.9% Care Housing Association, 3.6% Highstone, 3.5% Sunnyvale, 1.
Slide 21: Comprehensive Asset Management Framework
COMPREHENSIVE ASSET MANAGEMENT FRAMEWORK Key Highlights Lessee Monitoring – a proactive, involved approach • Internal review of Lessee compliance and performance 493 Properties 27 Lessees 116 Care Providers Weekly • Ongoing follow up regarding any identified issues • Monitoring and engagement regard
Slide 22: Continuous and Proactive Approach to Lessee Monitoring
CONTINUOUS AND PROACTIVE APPROACH TO LESSEE MONITORING Source Key inputs / Factors Quarterly Occupancy Quarterly reporting Occupancy data RP portfolio Property condition External condition Internal condition RP property management Property Inspections Recent inspection reports R&M performance H&S ob
Slide 23: Progress Made in Addressing Rental Arrears
PROGRESS MADE IN ADDRESSING RENTAL ARREARS • High quality new CEO and COO in place • Significant strengthening of senior management team has driven material operational improvements • Creditor agreement expected to be agreed with Landlords in the first half of 2024 • Rental payments expected to cont
Slide 24: Regulatory Landscape and Roll Out of New Risk Sharing Clause
REGULATORY LANDSCAPE AND ROLL OUT OF NEW RISK SHARING CLAUSE Regulator Remains Active Constructive Engagement 28.3% of lessees have the new clause already Two Enforcement Notices issued by Most RPs continue to engage the Regulator in the first half constructively with the Regulator to included of 20
Slide 25: Sustainability Overview
SUSTAINABILITY OVERVIEW
Slide 26: The Good Economy Impact Report
THE GOOD ECONOMY IMPACT REPORT 26
Slide 27: Successful Start to Eco-Retrofit Pilot Programme
SUCCESSFUL START TO ECO-RETROFIT PILOT PROGRAMME Retrofit upgrades completed 4 out of 11 properties already upgraded from an EPC rating PV Panel installation of D to either a B or a C Loft insulation All works have so far been Upgraded heating completed on time and controls within budget Replacement
Slide 28: Strong Starting Position to Improve Energy Efficiency in the Portfolio
STRONG STARTING POSITION TO IMPROVE ENERGY EFFICIENCY IN THE PORTFOLIO Property EPC Ratings 71.0% of property EPCs 0.1% 0.4% rated between A-C 6.8% 30.8% 22.0% Update on the cost and timings of the wider retrofit project at 2024 interim results Minimum EPC rating requirements at acquisition; 39.8% a
Slide 29: Adopting a Near-Term Science Aligned Net Zero Target
ADOPTING A NEAR-TERM SCIENCE ALIGNED NET ZERO TARGET Net zero target follows a specific science-aligned The Group commits to reduce its social housing portfolio pathway with guidance emissions by 75% per m2 by 2035 from a baseline year of 2021 from The Carbon Trust Actual energy consumption ENERGY C
Slide 30: TCFD Disclosures
TCFD DISCLOSURES TCFD Risk Matrix Reporting fully aligned with Physical Financial impact if risk happens TCFD recommendations 1 Water Stress 2 Increased frequency of heatwaves 1 2 Identified most prominent Increased surface flooding during Likelihood of risk happening 3 more frequent storms physical
Slide 31: Outlook
OUTLOOK Strong rental growth to continue into 2024 coupled with increased rent collection from My Space and Parasol Dividend is covered on a run-rate basis; sustainable long-term dividend cover Ongoing resilient valuation and compelling debt package Focus on strategic projects: new lease clause, Eco
Slide 32: Appendix
APPENDIX
Slide 33: Long-Term and Fixed-Price Debt Portfolio
LONG-TERM AND FIXED-PRICE DEBT PORTFOLIO 11.6 years Loan Lender Facility Cost Weighted average Maturity Commitment Amount Drawn Fitch Rating MetLife Loan Notes I Fixed debt 2028 maturity £41.5m £41.5m A Tranche A 2.924% Loan Notes II Fixed MetLife & Barings 2031 £77.5m £77.5m A Tranche A 2.403% Loan
Slide 34: Key Terms
KEY TERMS UK listed REIT The Company London Stock Exchange Main Market, Premium Segment Management Triple Point Investment Management LLP as Investment Manager • the Group will only invest in social housing assets located in the United Kingdom • the Group will only invest in social housing asset
Slide 35: Glossary
GLOSSARY Approved Provider a housing association, local authority or other regulated organisation in receipt of direct payment from local government including a care provider; Board the Directors of the Company from time to time; Company Triple Point Social Housing REIT plc (company number 10814022)
Slide 36: Disclaimer
DISCLAIMER This presentation, including any oral presentation, any question or answer session and any written or persons to whom it may be lawful to communicate it (each such person in (A) to (E) above being a made in relation to, and no responsibility or liability is or will be accepted by Triple P
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