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Impact Healthcare REIT announces capital raise

Care home provider Impact Healthcare REIT has announced its intention to issue new equity to acquire an identified pipeline of care homes.

The company proposes raising new equity through a placing under its existing placing programme and in addition an offer for subscription to raise up to the Sterling equivalent of €8m.

The size of the placing has not been revealed, but the group is in advanced negotiations to acquire six portfolios, consisting of 27 separate care homes, for a total of £169m. The group said that whilst it could use existing resources, including available debt of £70m, to acquire some of these homes it will require new equity in order to complete on all the potential opportunities.

Highlights

The new ordinary shares will be issued at 117.0p, representing a discount of 4.6% to last night’s closing price of 122.6p and a premium of 1.8% to the company’s unaudited NAV of 114.93p as at 31 March 2022.

The company said the group and the UK care homes sector are supported by several structural benefits including:

  • long-term, inflation linked, lease structures with the company benefiting from a WAULT of over 19 years and 98% of its rent roll being linked to RPI (and the remaining 2% linked to CPI), subject to caps and collars;
  • a diverse portfolio of 134 different homes with an yield of 6.7%;
  • Affordable rents, demonstrated by the company’s rolling annual average rent cover of 1.9x – demonstrating strong rent protection;
  • 100% collection rate during the pandemic with no lease variations;
  • a disciplined approach to leverage with loan-to-value (LTV) of 19.4% at 31 March 2022, with a weighted average cost of debt of 3.1% and weighted average term to maturity of 6.1 years;
  • supportive demand fundamentals across the market including increasing requirements from a rapidly ageing population for high quality care and a need to reduce pressure on high-cost, medical care providers in the NHS; and
  • a sector that is largely uncorrelated with the wider economy.

Since IPO on 7 March 2017, the company has delivered total shareholder returns of 63.3%, equating to an annualised return of 9.7%.

Rupert Barclay, chairman, said: “The portfolio continues to perform well, benefiting from the over-arching defensive characteristics of the care home market, as well our careful selection of homes and tenants with proven financial track records, sustainable rents and facilities which allow for a high quality of care.

“The Investment Manager has continued to build a pipeline of investment opportunities which are consistent with the standards of our existing portfolio and allow for more portfolio diversification with some exciting asset management opportunities. Whilst equity capital market conditions remain challenging, this fundraise will allow us to secure a number of attractive investment opportunities and grow our inflation linked long leased REIT for the benefit of all stakeholders.”

IHR : Impact Healthcare REIT announces capital raise

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