CornmillHouse-189

Positive Q121 return and increased DPS target

Triple Point Social Housing 18 May 2021 Update
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Triple Point Social Housing REIT

Positive Q121 return and increased DPS target

Q121 NAV and DPS

Real estate

18 May 2021

Price

105p

Market cap

£423m

Net debt (£m) at 31 December 2020

145.6

Gross gearing at 31 December 2020 (gross debt/gross assets)

31.5%

Shares in issue

402.8m

Free float

99%

Code

SOHO

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.9

(2.2)

12.4

Rel (local)

2

(6.8)

(10.5)

52-week high/low

114p

94p

Business description

Triple Point Social Housing REIT invests in primarily newly built and newly renovated social housing assets in the UK, with a particular focus on supported housing. The company aims to provide a stable, long-term inflation-linked income with the potential for capital growth.

Next events

Q121 DPS paid

25 June 2021

Analyst

Martyn King

+44 (0)20 3077 5745

Triple Point Social Housing REIT is a research client of Edison Investment Research Limited

A quarterly NAV and dividend update from Triple Point Social Housing REIT (SOHO) shows the portfolio remaining resilient, continuing to increase in value with consistent rent collection. The FY21 DPS target is increased 0.4%, in line with CPI, and we forecast full cover by adjusted cash earnings.

Year end

Total income (£m)

Adj. earnings* (£m)

Adj. EPS*
(p)

EPRA NTA per share (p)

DPS
(p)

P/NAV
(x)

Yield
(%)

12/19

21.1

12.3

3.50

105.4

5.10

1.00

4.8

12/20

28.9

17.7

4.90

106.4

5.18

0.99

4.9

12/21e

33.9

21.8

5.41

108.8

5.20

0.97

4.9

12/22e

36.1

23.7

5.87

112.4

5.49

0.94

5.2

Note: *Adjusted earnings is a excludes property revaluation movements and amortisation of loan arrangement fees. There is no difference between basic and fully diluted EPS and NAV.

Consistently positive returns

Unaudited IFRS (and EPRA) NAV per share was 106.55p at 31 March 2021 (end-Q121), a slight increase on end-FY20 (106.42p). Including DPS paid, the Q121 NAV total return was 1.3%, continuing the consistently positive trend since IPO. A Q121 DPS of 1.3p has been declared for payment on or around 25 June to shareholders on the register at 28 May. The company is targeting paying four equal quarterly dividends for FY21, an aggregate 5.2p or 0.4% increase on (FY20: 5.18p), in line with the annual February increase in the UK consumer price index. The Q121 DPS is close to our previous forecast, adjusted to match the target. The consistency of returns reflects the role of portfolio properties in the provision of an essential service, secured by long-term lease and care arrangements, providing good visibility of income with little direct correlation to the wider property market or economy, capable of delivering stable inflation-indexed dividend growth.

Positive outcomes driving demand

The chronic shortage of supported housing is widely forecast to increase yet compared with the alternatives of residential care or hospitals it improves lives in a cost-effective manner. It can also relieve pressures on the health service and, at both the national and local level, it is government policy to offer supported housing to more people. Private capital is crucial in meeting current and future needs, while the continued response of the lessees/approved providers to regulatory scrutiny, improving governance, operational performance and financial strength should be a positive factor for sustaining the security of contracted rents and long-term growth of the sector. Our forecasts include £75m of capital deployment in FY21, a mix of operational assets and new pre-let forward funding developments, including the c £15m of deployment announced year-to-date.

Valuation: Robust, attractive, growing income

The FY21e DPS of 5.20p represents a yield of 4.9%, with good prospects for indexed growth. Combined with robust rent collection, in our view this is attractive in a continuing low interest rate environment. The shares currently trade at slightly below NTA, in line with the average since IPO (c 0.96x) but below the peak (1.07x).

Exhibit 1: Financial summary

Period ending 31 December (£m)

2017

2018

2019

2020

2021e

2022e

2023e

INCOME STATEMENT

Total income

1.0

11.5

21.1

28.9

33.9

36.1

37.6

Directors' remuneration

(0.1)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Investment management fees

(0.5)

(2.3)

(3.9)

(4.1)

(4.6)

(4.7)

(4.8)

General & administrative expenses

(0.4)

(1.9)

(1.8)

(2.2)

(2.2)

(2.2)

(2.3)

Total expenses

(1.1)

(4.5)

(6.0)

(6.6)

(7.1)

(7.3)

(7.4)

Ongoing charge ratio (OCR)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Operating profit/(loss) before revaluation of properties

(0.0)

7.0

15.1

22.3

26.9

28.9

30.2

Change in fair value of investment properties

5.6

14.5

11.8

7.9

10.1

13.5

13.5

Operating profit/(loss)

5.6

21.5

26.9

30.2

36.9

42.4

43.6

Net finance income/(expense)

0.1

(1.6)

(3.2)

(5.6)

(6.3)

(6.4)

(6.4)

PBT

5.7

19.9

23.7

24.6

30.6

36.0

37.2

Tax

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Net profit

5.7

19.9

23.7

24.6

30.6

36.0

37.2

Adjusted for:

Change in fair value of investment properties

(5.6)

(14.5)

(11.8)

(8.0)

(10.1)

(13.5)

(13.5)

EPRA earnings

0.0

5.4

11.9

16.6

20.6

22.4

23.7

Interest capitalised on forward funded developments

0.0

0.0

(0.1)

(0.1)

0.0

0.0

0.0

Amortisation of loan arrangement fees

0.0

0.0

0.5

1.2

1.2

1.2

1.2

Adjusted earnings

0.0

5.4

12.3

17.7

21.8

23.7

25.0

Basic & diluted average number of shares (m)

143.8

237.6

351.1

360.9

402.8

402.8

402.8

Basic & diluted IFRS EPS (p)

3.94

8.37

6.75

6.82

7.60

8.93

9.23

Basic & diluted EPRA EPS (p)

0.02

2.27

3.39

4.61

5.11

5.57

5.89

Basic & diluted adjusted EPS (p)

0.02

2.29

3.50

4.90

5.41

5.87

6.20

DPS declared (p)

1.00

5.00

5.10

5.18

5.20

5.49

5.80

Adj. EPS/DPS

0.02

0.46

0.69

0.95

1.04

1.07

1.07

BALANCE SHEET

Investment properties

138.5

324.1

472.3

572.1

642.5

673.5

687.0

Other receivables

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Total non-current assets

138.5

324.1

472.3

572.1

642.5

673.5

687.0

Cash & equivalents

58.2

114.6

67.7

53.7

30.2

15.1

17.0

Other current assets

12.0

3.4

4.3

4.3

5.6

5.9

6.0

Total current assets

70.2

118.0

72.0

58.0

35.8

21.0

23.0

Trade & other payables

(5.9)

(9.0)

(8.1)

(5.0)

(12.3)

(12.9)

(13.2)

Other current liabilities

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Total current liabilities

(5.9)

(9.0)

(8.1)

(5.0)

(12.3)

(12.9)

(13.2)

Bank loan & borrowings

0.0

(67.4)

(165.0)

(194.9)

(226.2)

(227.4)

(228.7)

Other non-current liabilities

(1.2)

(1.6)

(1.5)

(1.5)

(1.5)

(1.5)

(1.5)

Total non-current liabilities

(1.2)

(68.9)

(166.5)

(196.4)

(227.7)

(228.9)

(230.2)

IFRS net assets

201.7

364.2

369.7

428.7

438.3

452.7

466.6

EPRA net assets

201.7

364.2

369.7

428.7

438.3

452.7

466.6

Period-end basic & diluted number of shares (m)

200.0

351.4

350.9

402.8

402.8

402.8

402.8

Basic & diluted IFRS NAV per share (p)

100.8

103.6

105.4

106.4

108.8

112.4

115.9

Basic & diluted EPRA NTA per share (p)

100.8

103.6

105.4

106.4

108.8

112.4

115.9

CASH FLOW

Net cash flow from operating activity

0.8

5.4

16.3

24.5

32.7

29.2

30.3

Cash flow from investing activity

(142.0)

(160.6)

(135.5)

(94.4)

(60.2)

(17.5)

0.0

Net proceeds from equity issuance

196.0

106.0

0.0

53.1

0.0

0.0

0.0

Net proceeds from C share issuance

0.0

46.6

0.0

0.0

0.0

0.0

0.0

Loan interest paid

(0.0)

(1.6)

(2.9)

(4.6)

(5.1)

(5.2)

(5.2)

Bank borrowings drawn/(repaid)

0.0

58.0

111.1

29.4

30.0

0.0

0.0

Share repurchase

0.0

0.0

(0.4)

0.0

0.0

0.0

0.0

Dividends paid

0.0

(10.1)

(17.8)

(18.8)

(20.9)

(21.6)

(23.2)

Other cash flow from financing activity

0.0

(1.2)

(3.5)

(1.1)

0.0

(0.0)

(0.0)

Cash flow from financing activity

196.0

197.8

86.6

58.0

4.0

(26.9)

(28.4)

Change in cash

54.8

42.6

(32.6)

(11.9)

(23.5)

(15.1)

1.9

Opening cash

0.0

54.8

97.3

64.7

52.9

29.4

14.2

Closing cash (excluding restricted cash)

54.8

97.3

64.7

52.9

29.4

14.2

16.2

Restricted cash

3.4

17.3

3.0

0.8

0.8

0.8

0.8

Cash as per balance sheet

58.2

114.6

67.7

53.7

30.2

15.1

17.0

Debt as per balance sheet

0.0

(67.4)

(165.0)

(194.9)

(226.2)

(227.4)

(228.7)

Unamortised loan arrangement costs

0.0

(1.1)

(4.1)

(3.6)

(2.3)

(1.1)

0.2

Total debt

0.0

(68.5)

(169.1)

(198.5)

(228.5)

(228.5)

(228.5)

Net (debt)/cash excluding restricted cash

54.8

28.8

(104.4)

(145.6)

(199.1)

(214.3)

(212.3)

Net LTV (net debt/investment property)

N/A

NA

22.1%

25.5%

31.0%

31.8%

30.9%

Company gearing (gross debt/gross asset value)

0.0%

15.5%

31.1%

31.5%

33.7%

32.9%

32.2%

Source: Triple Point Social Housing historical data, Edison Investment Research forecasts


General disclaimer and copyright

This report has been commissioned by Triple Point Social Housing REIT and prepared and issued by Edison, in consideration of a fee payable by Triple Point Social Housing REIT. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Triple Point Social Housing REIT and prepared and issued by Edison, in consideration of a fee payable by Triple Point Social Housing REIT. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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