Impact Healthcare Reit Share Discussion Threads

[williamcooper104] 31/3/2024 11:37

They have been a disaster but that was mainly setting the rents too high - eg pretending that operating income was rent and getting a higher valuation on it Like the viability on occupier rent cover

[catch007] 31/3/2024 11:26

I have added to PHP recently as well as IHR. Both will benefit as interest rates move lower (though I think it will be gradual small cuts to find a new baseline around the historic averages)

WilliamCooper104: IHR also carrying additional costs in this year after reorganising tenant portfolio following one poorly performing tenant being exited. Rent collection is good (though capped at 4% maximum annual inflation rate). Quality of homes is continuing to rise and now we are well post Covid occupancy rates are starting to rise again despite the cost - aging population will provide a tailwind. Care homes in the past have been an absolute minefield however I believe IHR and THRL are well positioned at present.

[williamcooper104] 29/3/2024 09:15

Indeed - I bought a big chunk of BBGI at the peak of QE - and while I'm down a fair bit in capital I'm up 17% on income Had to put the money somewhere at the time

[paulboz] 29/3/2024 08:22

BBGI have increased their dividend 10 years in a row so that looks like one to add to the list. Thanks

[williamcooper104] 29/3/2024 00:24

There's potentially more competition from redundant offices for PHP, that's much less of a risk for care homes I wouldn't worry too much about PHP; but always good to get diversification Debt and interest rate risk I think higher for PHP too - hence the short interest - which is high for a boring reit but not alarming

[williamcooper104] 29/3/2024 00:19

It is tempting I've an aversion to care homes owing to their woeful history of blowing upBut the tenant rent coverage doesn't look alarming The relatively high cost of debt is a positive as means there's less of a jump when debts are refinanced EPC B rated still quite low, but improving - that's about the only negative I'm seeing so far

[catch007] 28/3/2024 21:15

PaulBoz: For safe and reliable pension income you may wish to consider BBGI always under the radar but announced 6% target increase in dividends - current yield circa 6%.

[paulboz] 28/3/2024 17:29

mpage: yes I mean Greencoat UK Wind. I'll add International Public Partnerships and Sequoia Infrastructure Fund to the list and hold off on LGEN, which I already have in an ISA.

As ever, thanks for your input.

[mpage] 28/3/2024 13:01

PaulBoz: I don't see any howlers.

Am assuming that Greencoat is Greencoat UK Wind and not the smaller, euro version Greencoat Renewables which has a much less stringent dividend policy that only 'increases progressively' and pays out in euros.

ITV has repeatedly committed to an annual dividend of at least 5p - but it's a deeply unloved cyclical - cheap for a reason. Dividends are only as secure as the board decides.

POLR - runs a dividend on a ratchet basis - currently uncovered but probably safe for another year (or possibly two). Like any asset manager it ultimately relies on net inflows and rising markets - supported in this instance with some performance fees.

Hollywood Bowl is very well run and highly cash generative. It has often paid special divs. Personally, I wouldn't add at current levels. Its weaker peer (Ten Entertainment) was recently subject to a bid.

Recent results: PHNX - v encouraging as it confirmed mid single digit div growth over the next few years. M&G nothing scary, ditto Impact Healthcare and Chesnara this morning. Aviva still returning lots of cash one way or another. We'll have to keep an eye on L&G - the div is pencilled in for another 5% rise for FY24 but after that the capital return policy might change to the more vague 'progressive'. The new CEO reveals his new strategy in a capital markets event day on 12 June.

You can also get high and stable dividends from infrastructure funds like:

1: International Public Partnerships - reported this morning and announced dividend targets for FY24 8.37p + FY25 8.58p.

2: Sequoia Infrastructure Fund (private debt).

There's no stamp duty payable on purchase of these latter two shares, the spreads aren't wide and the boards are committed to narrowing the discounts.

[paulboz] 27/3/2024 12:46

mpage: thanks again and I wasn't aware of the CEO obligations.

My provisional list of dividend yielding shares within my SIPP is listed below. Comments on any howlers or major omissions would greatly be appreciated.

NB the primary object of the exercise is not to grow my pension pot but to supplement my state pension with dividends.

Assura
Aviva
BATS
Chesnara
Greencoat
HSBC
Impact Healthcare
Legal and Gen
PHP
PHNX
National Grid
M&G
SUPR

[mpage] 26/3/2024 23:30

PaulBoz: Yes, I hold them all, several for many years. I don't expect SUPR (or IHR, THRL, INPP) to be able to grow their divs by much - perhaps in the region of 2%pa (as with REITs there is usually a rent cap of 4% and, with higher debt costs, div gth must surely be below this). However they do offer a degree of inflation proofing and some have tenants on very long leases.

Also, at the moment, we are at the top of the rate cycle so running yields are quite good. I'd be looking for 3%-4% above whatever the yield on 10-yr gilts is (around 4%). I have added to UKW earlier this year -best prospects for div gth and think SUPR looks quite attractive at its current yield - they expect the div to be covered by the end of the current financial year. The net initial yield on a recent acquisition looks fine to me. The debt of Sains+ Tesco is investment grade, so they're unlikely to struggle to pay the rent.

I've not looked at PHP in detail but you may well be aware that when a new CEO (like Mark Davis) takes over, they are obliged to start building up a reasonable holding in their company's shares. He may well be doing it largely for regulatory reasons.

[paulboz] 26/3/2024 17:20

mpage:thanks for your reply. There are quite a few options there that I will explore. At first glance, Greencoat and SUPR look particularly interesting due to their progressive dividend history. Have you invested in all of those companies you mentioned?I do have a few shares in Chesnara and M&G but I was listing from memory and forgot about them.As for PHP, I note their CEO has been buying their shares this month, which I hope is a good omen. However, I will probably invest in another REIT as well. Cheers!

[paulboz] 26/3/2024 13:36

Hi Una, thanks for your reply. It is all about dividends for me. I'm looking to supplement my state pension with divis from my Sipp. So far I have Aviva, HSBC, LGEN, Lloyds bank, Phoenix and Php. I'm looking for other companies that are likely to pay steady divis.IHR and Assura look like possible candidates.

[alotto] 26/3/2024 10:08

Assura is also a good option. I have Assura. I would diversify buying IHR

[unastubbs] 26/3/2024 09:13

Paul #136 - I'm still undecided. It's my sort of thing, lock up and leave but i can't decide whether to buy more L&G right now. I really should go with this to add some diversity. btw what is the main attraction of this over PHP and THRL, is it just the higher yield?

[stemis] 25/3/2024 20:18

Considering the change in the interest rate environment, I don't think that's unreasonable.

[mpage] 25/3/2024 19:02

Nevertheless they have decided to give themselves extra wriggle room by changing the dividend policy:

"In 2018, the board adopted a policy of increasing the target dividend each year in line with the inflation-linked rental growth in the previous year. The board reviewed this policy in 2023.

While the policy gave shareholders certainty about dividend growth, the directors concluded that it was in shareholders' interests for the policy to be more flexible and forward looking."

The board therefore agreed an updated policy, to seek to maintain a progressive dividend that's covered by adjusted earnings. The directors continue to see adjusted earnings as the best yardstick for dividend payments, as they more closely reflect the Company's cash earnings than the IFRS or EPRA measures.

[stemis] 25/3/2024 11:29

Debt is £184.8m @ average 4.56%. £75m is fixed interest loan notes due 2035, so we can ignore them. Every 1% increase in rate therefore costs £1.1m.

Rental income is £49.7m, admin costs £7.1m. A 4% increase in both would yield a net £1.7m.

Dividends for this year of 6.77p cost £28.1m. Adjusted earnings (on which they calculate dividend cover) was £30.2m. So there is £2.1m of headroom.

So next year I reckon they could absorb a 345 bps increase in interest rates and still cover this years dividend.

That doesn't take account of their interest rate caps; £50m capped against a rise above 5% until Jan 2025 and £50m capped against a rise above 6% until August 2025.

Don't think dividend cover is going to be a problem.

[push n run] 25/3/2024 11:23

"We have £250 million of committed debt facilities and a weighted average term of 6.3 years. Drawn debt was £184.8 million at a 4.56% average cost, and 95% of our drawn debt facilities are fixed or hedged against interest rate rises. At the year-end our EPRA (net) LTV was 27.8%"

"To manage our interest rate costs, we took out two interest rate caps in the year. These each hedge the cost of £50 million of debt, with the first capping SONIA at 3.0% until January 2025 and the second capping SONIA at 4.0% until August 2025. In June, a hedge which capped the interest rate on £25 million of debt expired. At the year end, we therefore had either fixed rates or caps on £175 million of debt or 95% of our drawn debt, in line with our policy."

[alotto] 25/3/2024 09:11

What's the current average interest on debt? Debt maturity is in a few years and rates will definitely be higher than rates at the last refinancing.
Rent increases are capped to 4%, which won't offset in full (I reckon) higeher inflation driven managing costs.
Will adjusted yield be sustainable for the long run?

[paulboz] 25/3/2024 08:38

Una: are you now tempted? At the current price of 82.8 the yield is now 8.17%, which certainly tempts me. The results look reassuringly dull but steady to me.

[panshanger1] 25/3/2024 08:26

Nothing to scare the horses I would have thought

[alotto] 23/3/2024 17:55

Same here unastubbs. I was waiting for Monday but I don't expect fireworks, just steady keeping up with inflation and hopefully rates.

[alotto] 11/3/2024 10:02

How come this REIT is trading at a large NAV discount?
What are the concerns? Interest rates? Debt seems well covered by earnings.