Impact Healthcare REIT

LN: IHR

£331.7m market cap

104p last close

Impact Healthcare REIT invests in a diversified portfolio of UK healthcare assets, particularly residential and nursing care homes, let on long leases to high-quality operators. It aims to provide shareholders with attractive and sustainable returns, primarily in the form of dividends, underpinned by structural growth in demand for care.

Investment summary

H120 performance was strong despite COVID-19. EPRA earnings grew c 47% y-o-y, driven by acquisitions, RPI-linked rental growth and operational gearing. 100% of rents due were received, with no changes to agreed lease terms, supporting continuing quarterly DPS payments in line with the full year target DPS of 6.29p (+1.9%), well covered in H120 by EPRA EPS of 3.62p. EPRA NAV/share rose slightly to 107.12p and including DPS paid the H120 EPRA NAV total return was 3.3%. Impact’s tenants performed robustly with average rent cover at 1.7x in the period as fee growth mitigated cost and near-term occupancy pressures which they are now seeking to address by restarting admissions. With low gearing (18.2% H120 LTV), good liquidity and significant access to undrawn debt, Impact anticipates a cautious return to acquisition-led portfolio growth.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 17.3 N/A 12.4 6.5 16.0 N/A
2019A 24.0 N/A 17.6 6.9 15.1 N/A
2020E 30.4 N/A 22.6 7.1 14.6 N/A
2021E 35.3 N/A 26.5 8.3 12.5 N/A
Industry outlook

Care home demand is driven by demographics and care needs with a shortage of quality care homes suggesting strong investment demand in years to come. The pandemic presents a significant near-term challenge to the sector but does not change the underlying demographic-driven fundamentals while highlighting its critical role in supporting the NHS and the importance of long-term investment.

Last updated on 18/09/2020
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Share price graph
Balance sheet
Forecast net debt (£m) 67
Forecast gearing ratio (%) 19
Price performance
%
1m
3m
12m
Actual 2.5 5.3 (5.5)
Relative* 3.4 8.2 13.4
52-week high/low 111.0p/62.0p
*% relative to local index
Key management
David Yaldron FD
Andrew Cowley Managing partner, Impact Health Partners
Rupert Barclay Non-executive chairman