Social Housing REIT (SOHO) has published its audited results for the year ended 31 December 2024, marking a year of operational resilience amidst challenges with certain tenants, as well as a major strategic transition with the appointment of Atrato Partners as its new investment manager from 1 January 2025.
Resilient performance despite headwinds
Despite issues with two approved providers – Parasol and My Space – the group achieved a 0.99x dividend cover, underpinned by a 3.9% increase in annualised contracted rent to £42.6m. The dividend for the year totalled 5.46p per share, in line with the target.
Rent collection for 2024 stood at 92.6%, with My Space accounting for all arrears. Occupancy was reported at 86%, with the bulk of voids concentrated in properties leased to Parasol and My Space. Outside of these, SOHO says that its operational performance remained strong, with full rent collection across the rest of the portfolio.
Portfolio valuation adjusts to market conditions
The portfolio was valued at £626.4m at year-end (2023: £678.4m), reflecting market-wide valuation pressures and adjustments for the assets leased to My Space. EPRA NTA per share declined to 99.05p from 113.76p.
SOHO’s financial position looks solid with no obvious near-term refinancing risk and £263.5m of fixed-rate debt in place, at an attractive average coupon of 2.74% and an average maturity of 8.6 years.
Strategic reset under Atrato
A major development in the year was the outcome of the Board’s strategic review of investment management arrangements. Following an extensive selection process, Atrato Partners was appointed to replace Triple Point, with the transition completed as of 1 January 2025.
Atrato’s appointment is expected to deliver £1.9m in annual management fee savings through a shift to a market capitalisation-based fee structure. SOHO says that a full cost base review is also underway.
Addressing legacy issues
Atrato has already taken steps to resolve the legacy issues impacting My Space. On 7 March 2025, My Space entered a company voluntary arrangement, and SOHO has negotiated an option agreement allowing for the assignment of all 34 affected properties to a new nationwide approved provider. Heads of terms have been agreed, and rent collection is expected to resume in the coming months.
Additionally, the transfer of Parasol-leased properties to Westmoreland was completed successfully during the year, with pass-through rent collection rising to 72% on those assets.
Investment policy amended
Post year-end, shareholders overwhelmingly approved a change in SOHO’s investment policy to allow greater concentration within its list of approved providers – raising the single-provider exposure cap to 35% (from 30%) and introducing a new 55% cap on combined exposure to the top two providers. The increased flexibility is designed to support the lease assignment from My Space and future portfolio management.
Outlook
Looking ahead, the company expects its improving rent collection, cost efficiencies, and proactive asset management to support earnings growth and help narrow the discount to NAV. Atrato is also preparing to dispose of a small number of non-core or substandard units and is overseeing the completion of a 12-home development in Chorley later this year.
Chris Phillips, chair of Atrato comments “We are excited to take SOHO forwards with Atrato, building on our track record of providing much-needed homes for vulnerable residents, allowing them to live independent and happy lives whilst delivering long-term, growing income for shareholders.”
