Impact Healthcare targeting 9% returns – Impact Healthcare REIT has published results for the year ended 31 December 2018. The company is reporting modest increases in its NAV and share price (up 2.5% and 1.1% respectively), a 6p dividend (in-line with its target) and enough earnings to cover the dividend 1.08x. The NAV total return was 8.5% but they have decided to target 9% per annum going forward.
For next year, the company is seeking to grow the dividend in line with the inflation-linked rental uplifts received in the prior financial year. The target for 2019 is 6.17p per share, an increase of 2.83%.
Rupert Barclay, chairman of Impact Healthcare REIT, commented “This was a year of considerable growth, in line with the strategy we set out at IPO, and we remain well placed to deliver value in the short and longer term. The placing programme will give us the capacity to acquire further high-quality homes, increasing our diversification and reducing risk. We have strong relationships with a growing number of capable tenants, who offer an essential regulated service and provide high quality care and underpin our new progressive dividend policy and total return target, which reflect our confidence in the group’s prospects. This in turn ensures the group has a secure income stream. This stands us in good stead in an uncertain economic and political environment.”
The portfolio was independently valued at GBP223.8 million at 31 December 2018 (31 December 2017: GBP156.2 million). The 43% increase was primarily due to the acquisitions. The valuation uplift was GBP7.6 million, or 3.94p per share, driven largely by rent increases and asset management activities.
During the year, they added 15 care homes with 830 beds to the portfolio. At the year end, the board had approved capital improvements totalling GBP15.4 million since IPO. This will add 188 beds to existing homes (96 beds across four homes were already completed and in operation by 31 December 2018). On 24 October 2018, Impact announced that it was in advanced negotiations to buy a portfolio with more than 2,500 beds. Ultimately, they decided not to exchange contracts during 2018, although it remains in discussions with the vendors. This resulted in the group having to write off deal-related costs of GBP0.74 million.
EPRA earnings of 6.47p include some non-cash items, Impact says its cash earnings for the period were 5.07p per share.
IHR : Impact Healthcare targeting 9% returns