With care home COVID-19 infection rates continuing to decline, and continuing full rent collection, Impact has reaffirmed its intention to pay its Q220 DPS in line with expectations. Across the sector, the pandemic has created operational challenges for care home operators, including Impact’s tenants, but it has also highlighted the essential service that the sector provides. This may have the positive effect of permanently improving resident funding and support investment to meet the increasing care needs of a growing elderly population.
Companies: Impact Healthcare REIT PLC
Impact Healthcare REIT (IHR) owns a portfolio of care homes which it lets to operators on long-dated, inflation-linked leases with upwards-only rent revisions. The tenants are responsible for the maintenance of the properties during the length of the lease, and contracts give IHR the right to rescind the leases if their financial performance deteriorates below a certain level (even if rent is being paid). The manager, Impact Health Partners, has built a portfolio with a core of high-quality assets which are supplemented by those which it believes can be improved, thereby achieving an uplift to valuations. The sector is supported by an ageing population in the UK and limited supply of care-home places. This could be supportive of capital values over the whole sector, and also means that there are opportunities for asset management in providing accommodation for those suffering diseases whose prevalence rises with age, such as dementia. Demand for the shares was strong until the current pandemic emerged, with IHR trading on a premium for long periods of time and issuing shares to grow the portfolio. However, the discount to NAV widened substantially in March, and has since narrowed to 10%. We discuss the impact of the pandemic on tenants in the Portfolio section; so far the full picture isn’t yet clear. IHR’s shares yield 6.6%, and the board aims to grow the payout in line with the growth in the underlying rental income, which has a floor at 2% per annum and a cap at 4%. The rent due to IHR was covered 1.8 times by tenants’ operating profits as of the end of December.
UK care home demand is driven by a growing elderly population with increasing care needs rather than by the economy. In the face of COVID-19, the operational performance of Impact’s tenants has thus far been reassuring with no impact on rent collection or quarterly DPS, and we expect no material effect on the positive long-term fundamentals. Indeed, by highlighting the essential role that the sector performs, the pandemic may have the positive effect of permanently improving resident funding.
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGR CSH ESP DIGS IHR LXI PHP RESI SIR SUPR THRL SOHO BBOX SHED WHR
Impact Healthcare REIT – Results of fundraising | Hipgnosis Songs – Acquisition | Greencoat UK Wind – Fundraising prospectus and timetable | Triple Point Social Housing – Response to BEST regulatory announcement
Companies: IHR SOND UKW SOHO
Blackstone / GSO Loan Financing – Finals to 31 December 2018 | Impact Healthcare REIT – Q1 2019 NAV and dividend
Companies: Blackstone / GSO Loan Financing (BGLF:LON)Impact Healthcare REIT PLC (IHR:LON)
Impact Healthcare REIT – Acquisition and fundraising update | PRS REIT – Acquisitions | TwentyFour Income – Results of placing | Real Estate Credit Investments – Interims to 30 September 2018
Companies: IHR TFIF RECI
Supermarket Income – Rent reviews | Impact Healthcare REIT – Acquisition | EJF Investments – Issue and repurchase of shares | Phaunos Timber – Compulsory acquisition of shares
Companies: SUPR IHR EJFI PTF
NextEnergy Solar – Update on preference shares | Impact Healthcare REIT– Q3 2018 NAV and dividend
Companies: Nextenergy Solar Fund (NESF:LON)Impact Healthcare REIT PLC (IHR:LON)
Synccona - Q2 2018 update | Tritax Big Box – Interims to 30 June 2018 | Impact Healthcare REIT – Interims to 30 June 2018
Companies: SYNC BBOX IHR
Research Tree provides access to ongoing research coverage, media content and regulatory news on Impact Healthcare REIT PLC.
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Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
What’s new: Ahead of the publication of the Group’s interims results for the six months to 31 December 2020, CLIG has released a detailed trading update which reveals:
Group consolidated FuM of US$11.0 billion (£8.0 billion), which is twice the FuM of US$5.5 billion (£4.4 billion) at the Group’s year end on 30 June 2020;
The merger with Karpus Management Inc ("KMI") added c US$3.6 billion from 1 October 2020;
Investment performance across CLIG’s investment strategies was “strong”, following “significant discount narrowing” and “good NAV performance”;
Rebalancing of client portfolios resulted in US$ 290 million of net outflows.
Companies: City of London Investment Group PLC
Secure Trust Bank’s (STB) pre-close update confirms the upbeat trends evident in its Q3 update in November. The strong lending rebound continued into Q4, loan repayment holidays are at low levels, and the balance sheet has remained robust and liquid. STB reiterated that its FY20 PBT would be well ahead of £9.7m (we forecast £13.0m). However, the new COVID-19 restrictions introduced in December 2020 have affected consumer loan demand into 2021, as well as the Motor Finance business. Management expects to be better placed to disclose its outlook for FY21 when STB’s FY20 results are released on 25 March. Our forecasts (FY21 PBT £31.6m, ROE 9.1%) and fair value (1,756p per share) remain unchanged.
Companies: Secure Trust Bank Plc
Finals (9mths to Sep-20) are in line with expectations. Recurring fee income from 3rd party AuM (incl. PRSR) ensured solid profitability. The balance sheet is well resourced with £26m to develop seed assets. With a positive outlook following the launch of the £1bn JV with EQT, we see accelerating returns over the medium term. PRSR is also on track to materially complete the initial 5,200 portfolio this year. Sigma trades below our 200p+/share intrinsic valuation – which attributes no value to AuM growth, which is a strategic priority.
Companies: Sigma Capital Group plc
Volta Finance (VTA) posted a 5.7% decrease in NAV in 2020, recovering from the initial 32.4% drop in March. This was mainly supported by CLO equity tranches posting solid monthly returns in November and December 2020 at +11.0% and 9.7%, respectively. Volta had anticipated a downturn for some time and repositioned its portfolio into CLO equity over the last two years. During the early-2020 market turmoil, Volta’s manager focused on securing liquidity by fully deleveraging the portfolio and implementing cost-cutting initiatives. In December, Volta introduced a dividend policy to pay 8% of its NAV (in line with historical yields), which currently implies a prospective 9.2% yield on the share price.
Companies: Volta Finance
Allied Minds has announced that Joe Pignato has decided to step down as CEO and from the board with immediate effect. However, he will continue to support the company as CFO for an interim period as the board continues its search for a permanent CFO. As part of a streamlining process, Allied Minds will now become a board-led company with no immediate intention to appoint a new CEO. The chairman and NEDs (experienced VCs and private company investors) will represent Allied Minds on portfolio company boards (including Federated Wireless, BridgeComm and Spin Memory) with an intention to accelerate realisations where possible.
Companies: Allied Minds PLC
Sirius Real Estate has been a stand-out performer within the UK listed commercial real estate sector over the last three years, delivering a total shareholder return of 107%. The shares also offer a valuable portfolio diversifier for investors, with a geographic focus on Germany, and a focus on pro
Companies: Sirius Real Estate Limited
Vietnam Enterprise Investments (VEIL) is the largest and longest-established Vietnamese equities closed-end fund. The last quarter of 2019 and most of 2020 marked a period of portfolio repositioning for the fund. The team sold 14 holdings, and bought two, making the portfolio more focused (28 stocks at end 2020 versus 41 at end Q319) but better balanced by market cap as well as domestic and international business exposure. Over H220 the performance has picked up, with NAV total return of 28% versus 24% for the VN Index, after marginally lagging the benchmark over the past three years. The trust is well positioned for longer-term investors looking for an exposure to the fast-growing Vietnamese economy via a relatively large and liquid listed equities vehicle.
Companies: Vietnam Enterprise Investments
Personal Group's trading update indicates delivery of a solid FY20E result, an outcome better than expected earlier in the COVID-19 pandemic, reflective of the group's robust recurring revenues. Strategic progress has been made in the year with new client wins, greater diversification and Sage Employee Benefits (SEB) now moving to a paid-for model. The short-term outlook for FY21 is uncertain, given reduced new Insurance sales this year, however we view this as a temporary headwind resulting from lockdown restrictions, which will be lifted in time. With evidence of traction across the group, we remain positive, but current uncertainty (lockdowns, claims etc) means we maintain an U/R recommendation.
Companies: Personal Group Holdings Plc
Pacific Horizon (PHI) generated a very impressive uplift in its NAV over the course of 2020. This reflects its focus on growth, and technology and biotech stocks in particular. These performed well as we attempted to adjust to life under the pandemic, thereby accelerating a number of structural trends. PHI provided an NAV total return of 86.1%, which eclipsed the return on the MSCI AC Asia Pacific ex Japan of 21.2%, the broader MSCI AC World of 12.7% and the average of its Asia Pacific sector peer group of 25.3%. PHI is the top-performing trust in this sector by a significant margin. Despite this stellar growth, PHI’s manager is not resting on his laurels. Emerging Asia still remains a high-growth and underresearched region, and he continues to focus on those themes he expects to do well over the next five years. For example, EV continues to be a significant theme and the manager has been increasing exposure to the commodities needed to deliver a greener future, but which the world is structurally short of, following long-term underinvestment.
Companies: Pacific Horizon Investment Trust
Martin Currie Global Portfolio Trust’s (MNP’s) manager Zehrid Osmani reports that his ongoing focus on long-term structural, sustainable business models was beneficial for the fund’s performance during the coronavirus-led market sell-off in Q120, with portfolio companies undertaking measures to protect their brand equity. He is encouraged by a general increase in investor awareness of environmental, social and governance (ESG) issues, an area of research that Martin Currie has focused on for several years, as he believes that ESG improvements can lead to higher total returns for shareholders. MNP’s performance has improved since the appointment of Osmani in October 2018, and its NAV is now ahead of its benchmark over the last one, three, five and 10 years.
Companies: Martin Currie Global Portfolio Trust
AVI Global Trust (AGT) offers a genuinely different investment approach to those of competing trusts in the AIC’s global sector. It also has a good track record of beating its performance benchmark, the MSCI All Countries World ex the United States Index, with dividends reinvested and translated back into pounds. Some well-timed trades and a willingness to look through the current COVID-19 disruption affecting some businesses have helped drive strong performance from AGT over the past few months. The trust’s shares are on an attractive discount, 10.3% at close of business on 22 January 2021, and it is itself invested in a portfolio of high-quality family holding companies, closed-end funds and cash/asset-rich Japanese securities, which collectively trade at a weighted average discount of 30.1% (as at 18 January 2021) to the value of their underlying assets. The manager sees numerous catalysts to unlock value from AGT’s portfolio over 2021.
Companies: Avi Global Trust
Redde Northgate has come through the COVID crisis in very good shape so far. We expect minimal impact on the former Northgate business from “lockdown 2.0”, a strong recovery in profits and a re-rating as normality returns and Redde reverts to mean. We could see further useful earnings upside from acquisitions such as Nationwide and revenue synergies not yet included. The Group is transforming itself into a mobility business which is higher returning, more diversified and has sustainable compounding growth prospects.
Companies: Redde Northgate PLC
Further media reports that Dr Martens, the British Boot brand is planning an IPO on the LSE. It is currently owned by PE group, Permira who is expected to sell down its stake at the IPO. March 2020 YE the group had revenues of £672m and EBITDA of £184m. Deal size TBC. Upon Admission to AIM, Nightcap will acquire The London Cocktail Club Limited (the "London Cocktail Club"), which is an award winning independent operator of ten individually themed cocktail bars in nine London locations and one location in Bristol. Offer TBC Due mid Jan. HSS Hire Group, HSS.L transfer from Main to Aim. Mkt Cap c. £70m. Recently raised £52.6m. Leading supplier of tool and equipment for hire in the United Kingdom and Ireland and has provided equipment hire services in the United Kingdom for more than 60 years, primarily focusing on the B2B market. Due 14 Jan. VH Global Sustainable Energy Opportunities plc, a closed-ended investment Company focused on making sustainable energy infrastructure investments, today announces intends to launch an initial public offering of shares on the Official List (Premium) of the Main Market of the London Stock Exchange. Due by Early Feb.
Companies: IUG CBP KAT APP RST DIS NICL BOKU CNIC HE1
Pacific Horizon (PHI) generated a very impressive uplift in its NAV over the course of 2020. This reflects its focus on growth, and technology and biotechnology stocks in particular. These performed well as we attempted to adjust to life under the pandemic, thereby accelerating a number of structural trends. PHI provided an NAV total return of 86.1%, which eclipsed the return on the MSCI AC Asia Pacific ex Japan index of 21.2%, the broader MSCI AC World of 12.7% and the average of its Asia Pacific sector peer group (see page 23) of 25.3%. PHI is the topperforming trust in this sector by a significant margin. Despite this stellar growth, PHI’s manager is not resting on his laurels. Emerging Asia still remains a high-growth and underresearched region, and he continues to focus on those themes he expects to do well over the next five years. For example, companies exposed to the growth in electric vehicles (EV) continue to be a significant theme. The manager has been increasing exposure to the commodities needed to deliver a greener future, but which the world is structurally short of, following long-term underinvestment.