Impact Healthcare Reit Share Discussion Threads

[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.

[neilyb675] 19/2/2024 15:04

80.90 - 81.30 (GBX) at 14:53:19
on Market (LSE)

[2sporrans] 30/1/2024 11:06

Muted share price response to a solid update, resulting in:

"2.7% increase in dividend target to 6.95p for the 2024 year" from 6.77p 2023, confirmed. next XD date 8th Feb, 1.6925p divi.

The sub inflation cap on the rent increases of ~4%, while it has checked back earnings and dividend growth, has had the benefit of strengthening tenant finances and even the few problem homes, now under Melrose admin., are into +ve net cashflow.

"2.2x tenant rent cover in Q3, up from 1.9x in the same quarter the previous year. This is the strongest quarterly tenant performance since the Company's inception in 2017."

While their rents may have gone up 4%pa, tenants care fees have risen at triple this rate:
"The average weekly fees the Group's tenants charge for the care they provide grew by c.12% in the 12 months to 31Dec23"

While that's tough on the clients, occupancy rates continue to rise and are now over 88%.

£185mn drawn debt, av. cost 4.56%, 95% hedged......loan to value under 28%, does not look that onerous to me.

Isn't this a good situation heading forward, along with, hopefully, inflation falling further to below the ~4% rent increase cap and increases in cost of debt financing reining in during 24-25?

[2sporrans] 13/12/2023 12:53

121SPA

Having looked at various timeframe charts v THRL + LXI,BBOX,WHR
I have to concur that the underperformance persists.
Yes, the recent bounce was muted here.

THRL, the close comparator, was badly underperforming, from when the general sell-off commenced until March 2023; then it became an outperformer, most notably since the summer.
Pretty much averaged out v IHR over the bear market timeframe.

The other REITs above, all more sensitive to the business cycle, lost a lot more earlier....
Perhaps IHR has simply 'caught up', in the sense it has reverted to some kind of mean valuation for the REIT basket?

Whatever, it's on ~25% discount to a NAV that continues to notch higher, setting a new all time high in October.
As long as the rents roll in OK + inflation upflifts, divi remains covered, debt stable/hedged, and the EPS and NAV continue to creep up, i'm happy to hold.
When rates come back down, that big discount is going to reduce in concert; well that's my expectation fwliw.

[121spa] 22/11/2023 19:50

Thanks. I still think it's underperformed though.Take a look on the chart versus other UK REITs over say the last 3 months and it seems to have mostly missed the bounce.I'm just checking I'm not missing something with the fundamentals?

[2sporrans] 20/10/2023 08:19

Good news on the rent uplift and [dividend] cover.

"......the increased rent from the 12 rent reviews completed in the quarter at an average uplift of 4.69%"


" Rent cover across our Investment portfolio remains strong at 1.8x(1) for the 12 months to 30 June 2023 . Tenants' detailed operational performance reporting for the full quarter to September will be received at the end of October 2023. Based on reporting from the tenants who report monthly (as opposed to quarterly), which covers over 80% of the Group's portfolio, we expect rent cover for the third quarter to improve on the first half of the year."

Noting the optimistic Q3 forecast.


Also, the debt is at least well hedged; does not look hugely burdensome:

"The Group purchased a further GBP50 million interest rate cap in the quarter at a cost of GBP1.76 million, which caps SONIA at 4.0% for two years. The Group has now hedged the interest rates on 98 % (GBP175 million) of drawn debt. The current average cost of drawn debt, including hedging and fixed rate borrowings, is 4.47 %. "

[gbcol] 20/10/2023 07:23

Quarterly update to 30 Sept out.

Increase in NAV to 115.08p.
Dividend declared of 1.6925p payable in Nov.

[2sporrans] 19/10/2023 15:50

121SPA

Fwiw, the underperformance seems to have levelled out the past fortnight.

Whatever, all the REITS will remain under pressure while rates notch up further; the Gilt yields may rise a bit more right along the curve, even if the BOE is done.
More expensive debt [renewals] and an alternative income stream that some will perceive as lower risk.

[121spa] 27/9/2023 14:44

Any idea why this REIT seems to be performing weaker than some others of late? Thanks.

[cwa1] 25/9/2023 09:08

RBC cuts Impact Healthcare REIT price target to 115 (120) pence - 'outperform'