Impact Healthcare REIT (IHR) has provided a trading update in light of covid-19. The company has also signed a new revolving credit facility worth £50m with HSBC
IHR said that as at 3 April 2020, it had received 100% of the rent due in respect of the forthcoming period from its tenants who operate care homes, which represents 98.3% of the group’s total rent roll. The rent due from NHS Cumbria, which represents the remaining 1.7% of the group’s total rent roll, is expected to be paid later in the month as usual.
Of the total rent due this month, 90.5% is rent paid quarterly in advance and 9.5% is rent paid monthly in advance. The group’s total annualised rent roll as at 1 April 2020 is £24.9 million.
New bank facility
The £50m facility is for an initial term of three years with an option to extend, subject to lender approval, for up to a further two years. The facility has a margin of 195 basis points per annum over three-month LIBOR. £34.5m can be immediately drawn down under the facility, and £15.5m is conditional on security registration of Scottish assets and the completion of transactions which have exchanged.
IHR noted the following:
- “The facility takes the group’s total committed facilities to £125m, of which £26m is currently drawn.
- This facility will help to ensure that the group continues to be well capitalised and increases balance sheet resilience:
- As at 6 April 2020 the group has cash of £27 million and headroom on its undrawn debt facilities of £98.9 million, of which £84.4 million is available immediately.
- The group has £54.6m of outstanding commitments to acquisitions and asset management initiatives, and a further £7.2 million contingent commitment to deferred payments based on future financial performance, all of which are expected to deliver incremental rental returns.
- The group has no debt refinancing requirements before 2023.
- Debt drawn at 6 April 2020 is £26 million, giving an LTV of 7.0%, based on net asset values at 31 December 2019.
- Once facilities have been drawn to finance the outstanding commitments outlined above, drawn debt will be circa £75 million and the Group’s LTV will be circa 18%, below the group’s maximum permitted LTV of 35%.
- Once £75m has been drawn, the company’s asset values would need to fall by more than 50% from its most recent valuations before there would be any potential breaches of its banking LTV covenants.”
“The facility will help the group to continue to manage its capital structure in line with its investment policy in a flexible manner and will support the Group with its future growth plans. However, the group has no plans to drawdown more debt than is required to finance the existing outstanding commitments outlined above until the impact of the covid-19 pandemic is clearer.”
About IHR
Impact Healthcare REIT plc is a real estate investment trust providing exposure to a diversified portfolio of UK healthcare real estate opportunities, in particular care homes for the elderly. The group’s investment policy is to acquire, renovate, extend and redevelop high quality healthcare real estate assets in the UK and lease those assets primarily to healthcare operators providing residential healthcare services under full repairing and insuring leases.
The company has a progressive dividend policy with a target to grow its annual aggregate dividend in line with the inflation-linked rental uplifts received by the group under the terms of the rent review provisions contained in the group’s leases in the prior financial year.
IHR: An update from Impact Healthcare REIT