Triple Point Social Housing REIT to make portfolio sales and cuts ties with troubled tenant

Triple Point Social Housing REIT is working to transfer the leases of troubled tenant Parasol to another registered social housing provider that should result in greater rent collection.

The company also said that it intends to make selective sales from its portfolio and return the proceeds back to shareholders through buy backs.

Lease transfer

As reported in the December 2023 annual results, 90.2% of rent was collected during the year, with two out of its 27 registered providers, My Space and Parasol, in material rental arrears.

The company will now look to transfer all 38 properties currently leased to Parasol (representing 8.1% of the company’s Gross Asset Value and 9.7% of the rent roll) to Westmoreland Housing Association. The transfer will involve a tenant consultation process. Subject to this, the transfer to Westmoreland is expected to be completed before September 2024.

The company currently has no properties leased to Westmoreland, however the investment manager has spent several months engaging with and undertaking due diligence on Westmoreland to determine their suitability to take on the properties. The company said that Westmoreland benefits from a strong board made up of six independent board members and the chief executive. It added that the organisation has a high-quality management team and generates a recurring annual surplus. Following the transfer of the properties to Westmoreland, the board expects rent collection to increase from its current levels.

Separately, the company continues to make progress with My Space where it is supporting the new management team in delivery of its turnaround plan and rent payments are increasing.

Portfolio sales

Following the sale of four specialised supported housing properties in August 2023 for £7.6m, principally in line with book value and representing a 9.6% uplift to the purchase price, the company intends to make further portfolio sales this year.

The investment manager is currently in the process of agreeing heads of terms in relation to the sale of a portfolio. Following the completion of any portfolio sales, the board said that it will prioritise the return of capital to shareholders through further share buybacks, with consideration also given to leverage levels and any debt repayment obligations.

NAV announcement/AGM

The company’s unaudited NAV as at 31 March 2024, dividend guidance for full year 2024 and the declaration of the first quarterly interim dividend will be announced immediately following the company’s Annual General Meeting on or around 16 May 2024.