Supported Housing in the UK Results for the year ended 31 December 2018 29 March 2019 Shirebrook, Derbyshire
Agenda and Presentation Team Page Section Presentation Team Highlights 3 BEN BEATON Co-Managing Operational Overview 6 Partner JAMES Financial Results 16 CRANMER Co-Managing Partner Outlook 23 MAX SHENKMAN Partner and Head Appendix 25 of Investment The Value of Home 2
Highlights Thatto Heath, Liverpool
Operational Highlights as at 31 December 2018 Operational Highlights Overview 272 Properties • SOHO continues to invest in Supported Housing assets in the Properties UK 1,893 units • Market capitalisation of c.£350 million as at 31 December 2018 • A constituent of the FTSE EPRA/NAREIT Index since June 2018 272 16 • Tracey Fletcher-Ray joined the Board on 1 November 2018 167 Approved 116 Providers Portfolio 31-Dec-17 30-Jun-18 31-Dec-18 • Portfolio comprising of 272 social housing properties with Contracted Rental Income (£m) 5.89% 1,893 units Average Net Initial • 13 forward funding agreements of which 6 have reached Yield practical completion Yields £17.4m £17.4m¹ £10.4m • Average Net Initial Yield of 5.89% against a period end Contracted £7.8m rental income valuation yield of 5.25% 31-Dec-17 30-Jun-18 31-Dec-18 Long term inflation-linked leases 27.2 years Average Net Initial Yield • Contracted Rental Income of £17.4 million 1 with entire Weighted Average Unexpired Lease portfolio fully let (or pre-let for ongoing forward funded assets) Term • Leased to a well diversified tenant base of 16 Approved Providers and a WAULT of 27.2 years 5.91% 5.91% 5.89% 100% Index-linked 31-Dec-17 30-Jun-18 31-Dec-18 The Value of Home ¹ Excluding forward funded assets that have not yet completed 4 4
Financial Highlights Financial Highlights as at 31 December 2018 Financing IFRS Valuation (£m) • Gross equity proceeds raised of £155.7 million and secured £155.7m debt financing of £138.5 million through two separate facilities Equity raised with MetLife and Lloyds • During 2018 we acquired 156 assets for an aggregate £323.5m consideration of £170.8 million² and further commitments of £138.5m £21.0 million £190.0m £137.5m Debt raised Portfolio Value 31-Dec-17 30-Jun-18 31-Dec-18 • IFRS valuation of £323.5 million against total invested funds of IFRS NAV per share (p) £302.6 million £323.5m – valuation uplift of £20.8 million (+6.9%) against total IFRS Valuation invested funds • IFRS NAV per ordinary share of 103.65p 103.65p Dividend 103.65p 101.61p • Q4 2018 dividend of 1.25p to be paid on 29 March 2019 in line 100.84p IFRS NAV per share with target 31-Dec-17 30-Jun-18 31-Dec-18 • 2019 target dividend of 5.095p (an increase of 1.9% in line with 5.00p³ CPI inflation) Dividends paid or • We expect the quarterly dividend at the end of 2019 to be declared to date substantially covered by EPRA earnings Post Balance Sheet £21.0m² • Since 31 December 2018, we have acquired a further 17 assets Total Invested since 31 December 2018 for an aggregate consideration of £21.0 million² and made further commitments of £4.5 million² ¹ Excluding forward funded assets that have not yet completed The Value of Home ² Including acquisition costs 5 5 ³ 3.75 pence paid during 2018; 1.25 pence declared and expected to be paid on the 29 March 2019
Operational Overview Boathouse, Tamworth
Forward Funding: Case Study – Shirebrook, Derbyshire High-specification scheme March comprising 12 self-contained one-bed apartments ▪ The site was acquired and construction commenced in March 2018 April ▪ The scheme was funded monthly with a coupon charged during development Total Investment: £1.9m Yield on Cost: 6.03% Blended IFRS Yield: 5.35% Units: 12 June Completion Date: 11/10/2018 High quality living accommodation: – 12 self-contained one-bed apartments – 1 Care Provider apartment Completion October 2018 Purpose built dwellings to a high specification: Specialist adaptations, including; – Wet rooms September – Facilities with alarm activating pull cords – Assistive technology enabled control panels – Concierge control – Wheelchair access – Tailored living spaces The Value of Home 7
Demand Cycle for Supported Housing Better for Residents Demand for Care is Growing A community setting which promotes • People with care needs are living longer independence. Adaptive Technology should • Disability prevalence amongst people of lead to a lessening reliance on care. working age has increased from 14% to Cost savings for local authorities as 19% in the last 10 years Supported Living is cheaper than • Excess demand for Supported Housing is alternatives¹: expected to grow to 46,771 units by 2025 • Supported Housing: £1,569 per week Better Growing • Residential Care: £1,760 per week Outcomes Demand • Inpatient Care: £3,500 per week Government Referrals Policy Referrals Government Policy Specific referrals are generated by: 2014 Care Act promotes independent living • Social workers opportunities in community settings • GPs Local authority transforming care • Health advisors programmes are driving demand A bespoke care package is identified and agreed by a panel made up of commissioners and social workers 8 ¹ For adult of working age with learning disabilities The Value of Home 8 (source: Funding Supported Housing for All, Mencap housing Report 2018)
Triple Point Investment Process Due to a lack of grant funding there is an opportunity for the Company to meet commissioner demand by working with developers to create purpose built Supported Housing homes Relationships are Key: Care Provider Developers Housing Associations • Strong management team and CQC rating • Supported Housing experience with • Strong management team • Close relationships with commissioning • Experience of managing Supported strong track record • Understanding of care needs and social offices Housing assets • Experience of providing support to similar • Good relationships with Care Providers housing • Sustainable approach to development tenants and Local Authorities • Good financial performance • Strong financial performance – Local authority support – High quality product – Sustainable rents Asset Quality: • Location • Specification • Adaptations Understanding the Commence works on: Investment Committee genesis of the • Surveys Acquisition and development and • Valuations Board approval counterparties • Legal due diligence Local Authority support: involved • Demand • Value for Money • Approval of property and care package Due Diligence on Approved Provider and Care Provider 9 The Value of Home 9
Strong Pipeline of Forward Funding Opportunities Access to Best-in-Class Supported Housing Assets £26.3m Allocated to forward • Properties are built to meet tenants’ care needs offering a high level of adaptation funding • The Group benefits from the Manager’s track record of successfully forward funding a range of commitments property and infrastructure assets over the last decade • Planning approval and a pre let are in place prior to acquisition. All works are done under a fixed 9.8%¹ price contract with developer profit deferred Deployment into forward funding • The table below sets out the forward funding projects the Group undertook during FY 2018 deals in 2018 Typically 6% Yield on Cost Off Market Transactions Coupon Earned During Construction Agreement for Lease in Place The Value of Home ¹ Excludes ongoing forward funding commitments at 31 December 2018 10
Acquisition Trajectory as at 31 December 2018 • As at 31 December 2018 SOHO had invested funds of £302.6m and total committed funds of £323.6m • Since IPO SOHO has also rejected £398m of transactions that met the Company’s investment criteria but were rejected during du e diligence IPO (Aug-17) Annual Results (Dec-17) Interim Results (Jun-18) Annual Results (Dec-18) # of Assets: 116 # of Assets: 167 # of Assets: 272 Seed Portfolio Avg. Purchase NIY: 5.91% Avg. Purchase NIY: 5.91% Avg. Purchase NIY: 5.89% WAULT: 30.6yrs WAULT: 29.0yrs WAULT: 27.2yrs £400m+ £21.0m Pipeline of new social housing £51.5m properties £302.6m £180.5m £131.8m £17.9m Total Invested Funds Total Committed Funds Assets The Value of Home 11
Well Diversified Portfolio: by Geography Market Value by Region North East Properties: 38 North West % of funds invested: 13.4% East Midlands 6.0% 24.5% West Midlands North West Yorkshire 7.4% North East Properties: 76 London Properties: 16 % of funds invested: 25.1% % of funds invested: 5.8% 8.7% South East Yorkshire 16.0% South East Midlands 13.6% West Midlands South West 14.6% Properties: 39 Properties: 35 East % of funds invested: 16.1% % of funds invested: 14.1% South Wales London Assets by Region South Properties: 16 % of funds invested: 8.8% Properties: 15 North West % of funds invested: 5.0% 15 10 East Midlands East 16 76 North East 16 South Wales Properties: 3 West Midlands % of funds invested: 1.0% South East Properties: 1 23 % of funds invested: 0.3% London Yorkshire 39 35 South South East South West 38 South West Properties: 23 East Properties: 10 % of funds invested: 7.5% % of funds invested: 2.9% South Wales The Value of Home 12
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