Triple Point Social Housing REIT H1 2025 Earnings Report

Triple Point Social Housing REIT EPS Results

• Actual EPS: GBX 3.34
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Triple Point Social Housing REIT Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Triple Point Social Housing REIT Announcement Details

• Quarter: H1 2025
• Date: 9/10/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 10, 2025
• Conference Call Time: 9:00AM ET

Social Housing REIT seeks to address the ongoing housing crisis by investing in the UK social housing sector, providing sustainable high-quality homes which have been adapted for vulnerable adults with long-term care and support needs including mental health issues, learning disabilities, or physical and sensory impairment. We believe our residents deserve a home that offers greater independence than institutional accommodation, at the same time as meeting their specialist care needs. Our ambition is to be the leading UK Supported Housing investor, helping guarantee secure futures for people in need across the country, while ensuring that our shareholders have an ethical, solid, long-term income source.

Triple Point Social Housing REIT H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong earnings growth: Net rental income rose 19% versus the prior half, driving a 22% increase in EPRA EPS to 3.3p and enabling a 3% dividend hike to 5.62p with 1.2x cover.
• Positive Sentiment: Material cost reductions: Management fees fell 33% (saving £700k) and the EPRA cost ratio declined to 16.5% after a detailed line-by-line review and market-cap fee restructure.
• Negative Sentiment: NTA decline: EPRA net tangible assets per share fell from 99p to 95.6p, reflecting a £14.5m drop in property valuations and a 4p per share NTA decrease.
• Positive Sentiment: Tenant issue resolutions: Leases with Parasol reassigned to Westmoreland (75% rent collected, rebased to 90%) and MySpace leases set to transfer to Inclusion Group, restarting rent payments at 31%.
• Positive Sentiment: Portfolio optimization & sustainability: Occupancy remains at 86%, an EPC upgrade program (funded 60% by ECO4) is underway, and high-yield acquisitions are being pursued to enhance long-term value.

Presentation

[Ben Green, Principal at Atrato]

Good morning, and welcome to Social Housing REIT's interim results presentation for the period ending 30 June 2025. I'm Ben Green, a Principal at Atrato, the investment manager of Soho. I'm joined by Nat Markham, our CFO, and by Adrian D'Enrico and Mike Carey, the fund managers for Soho. To start, I'm going to take it back to the basics. Soho invests in U.K. residential property. These are adapted properties housing vulnerable adults. The sector is called Specialist Supported Housing, or SSH for short. SSH provides essential social infrastructure, and Soho's portfolio delivers a staggering GBP 71 million a year of savings to the U.K. taxpayer. Our fully repairing and insuring leases generate inflation-linked income, and unusually for U.K. real estate investments, we have uncapped rent reviews. Finally, our portfolio is highly diversified with 492 properties.

[Ben Green, Principal at Atrato]

In March, we told you that we believed we were well positioned for EPS growth, that we were going to fix the immediate tenant and portfolio challenges, and that we would explore a long-term solution for approved provider credit risk. These are three points we really want to emphasize throughout the presentation. And remember that all of this is about improving the perception of the SSH sector after well-publicized missteps by others in the past. These results are the first evidence of how the sector should perform for investors. Nat, Mike, and Adrian will take you through the significant progress we've been making on all of these. But without wanting to steal their thunder, it's working. The team has been working hard to deliver on our key initiatives. Income is increasing as we resolve the tenant issues we inherited in January.

[Ben Green, Principal at Atrato]

Costs are reducing materially with the new fee structure and our cost review, and that means that earnings are growing significantly and have the potential to continue to do so. I'll come back to you at the end to summarize our outlook for the coming periods, but now I'll hand you over to Nat to take you through the financials.

[Natalie Markham, CFO at Atrato]

Good morning. I'm pleased to report the unaudited results for the period ending 30 June 2025. So here we have set out the key financial highlights for the company for the period, and we'll come to the detail in the following slides. In summary, and starting with the circle in the top left, 91.4% of contracted rent for the period was collected. And following the start of our cost reduction exercise, the EPRA cost ratio has reduced to 16.5%. This combination of increased rent and lower costs has delivered a 22% increase in earnings to 3.3 pence per share. You will recall that we have put the target dividend up by 3% to 5.62 pence per share, and even with the dividend increase, we have dividend cover of 1.2x.

[Natalie Markham, CFO at Atrato]

We'll, of course, make sure that we keep to the 90% REIT distribution requirement, and this might require an upward adjustment once we have finalized the full year results. This is obviously a great problem to have. Here you can see the income statement overview, and if we start at the top line, net rental income was GBP 19.8 million, which is up 4% from GBP 19.1 million when compared to the same period in the prior year. However, we believe that a more appropriate comparison is against the six-month period ended 31 December 2024, which I'll expand on the next slide. Looking at the net rental income when compared to the six months ended 31 December 2024, there's been an increase of 19% from GBP 16.6 million to GBP 19.8 million.

[Natalie Markham, CFO at Atrato]

You will, of course, remember that this period was materially impacted by the non-payment of My Space rents, but thanks to the hard work of the team, collection levels have significantly improved. Returning to the income statement, total overheads have decreased by 11%, which I will run through in more detail on the next slide. As we discussed at the full year results, we have been focused on reducing costs and improving value for money from the fund's key service providers. We are pleased that the results of that exercise are now starting to flow through the financial results. The most material impact in this period has been in relation to management fees. The new fee structure has resulted in these costs being 33% or GBP 0.7 million lower than in the same period in the prior year. Other overheads remain broadly consistent as we transition to new service providers.

[Natalie Markham, CFO at Atrato]

You can see on this slide that the cost reductions have resulted in the EPRA cost ratio falling back to 16.5%, which we consider to be an appropriate level given the operationally intensive nature of the portfolio. We will, of course, continue to exercise discipline with respect to overheads in order to maintain this downward pressure. Adjusted EPRA earnings per share have increased by 22% year-on-year, from 2.7 pence to 3.3 pence per share, and on this basis, the dividend was 1.21 times covered, which is materially higher than the same period last year. Moving on to the EPRA NTA, this has reduced from 99 pence per share to 95.6 pence per share, and here we have separated out the key components in this movement. What you can see really clearly here is that dividends are more than fully covered by earnings.

[Natalie Markham, CFO at Atrato]

Property values have reduced by GBP 14.5 million, resulting in a GBP 0.04 per share fall in NTA, and Adrian will talk you through this movement later on. I have included the full statement of financial position within the appendices. One of the company's greatest strengths continues to be its sector-leading debt profile. As you can see, we have an average maturity of 8.1 years at a fixed cost of 2.74%, and in June, Fitch reaffirmed the A- credit rating. Therefore, we don't have any concerns about finance costs or debt renewal. A combination of this low finance cost, the team executing the plan, and our focus on other cost reduction has started to deliver a clear path to both earnings growth and dividend growth. I'll now hand over to Michael to take you through the strategy in more detail.

[Mike Carey, Managing Director at Atrato]

So you've heard from Nat on the financials, and now I'll talk you through how we have implemented our strategy. So taking the key initiatives in turn and starting with EPS growth. So as Nat highlighted, we have increased income by 19%, and this is a result of three main factors. Firstly, proactive asset management, which includes both the successful assignment from Parasol to Westmoreland and the proposed assignment away from My Space, which I'll talk you through later. And then secondly, the great work our asset management team does on a day-to-day basis, which has resulted in 99% of rent being collected from the other approved providers, which really highlights the quality and need for Soho's portfolio. And then lastly, on income, we've had an average of 2% rental growth for the properties, where the uplift has fallen within the period.

[Mike Carey, Managing Director at Atrato]

Now, Adrian will talk you through our uncapped inflation uplifts later, but in a world where we can see higher inflation for longer, Soho provides a really strong underpin for that higher rate environment, so our income is up, and on the next slide, we'll look at how we have reduced costs, so we've moved to a market cap-based fee, which has not only incentivized us properly, but it has also led to a GBP 1.1 million saving per annum. We've also undertaken a detailed line-by-line cost review, which has, of course, created cost savings, but more importantly, has provided much better value for money for the Soho shareholders. Now, what does this mean? Well, as you can see, our EPRA cost ratio has materially reduced to 16.5%, which, as Nat mentioned, is appropriate for a fund as operationally intensive as Soho.

[Mike Carey, Managing Director at Atrato]

So our income is up and our costs are down, and of course, this means our earnings are also up, and they're up by 22%, which, as Nat mentioned, has resulted in a material increase of dividend cover from one times to 1.2 times. Now, this has meant that we've been able to increase our dividend for the first time since 2022, but more importantly, we've been able to return to a progressive dividend policy. So the second key initiative was resolving the tenant and portfolio challenges. So you may recall we inherited two long-standing tenant issues, Parasol and My Space. So taking each of those in turn, Parasol leases were assigned to Westmoreland, and this has continued to perform well, with 75% of the contracted rent being collected for this period.

[Mike Carey, Managing Director at Atrato]

And I'm also pleased to say that we now expect rents to rebase at 90% of the contracted rent as these properties return to full FRI terms. And then My Space, now you'll recall that when we took over, they had been paying reduced rent since December 2022, then stopped paying rent entirely in June 2024, and entered a CVA in March 2025. However, I'm pleased to say they have now started to pay rent again, albeit modestly, with 31% being collected for this period. But more importantly, before the CVA, we agreed on an option to assign the leases to an alternative provider. Now, I'm happy to announce we have made significant progress on this, with leases due to transfer to Inclusion Group over the course of this year.

[Mike Carey, Managing Director at Atrato]

Now, I think it's also important to say and be clear that the My Space situation is arguably the most severe tenant issue to ever hit this sector, and the resulting credit losses were due to the failure to take action sooner. Therefore, the good news is that despite this, we have a deliverable plan, and as the leases are assigned, we will see both earnings and value upside. Now, on the next slide, I'll talk you through how we are mitigating any future credit losses. Firstly, and starting on the left, you'll remember from full year results that it is crucial to get the property fundamentals right. This means the right property in the right location, the appropriate level of demand, and an approved provider paying a sustainable level of rent. Now, Adrian will talk you through this later, but 97% of Soho's portfolio has exactly that and is performing.

[Mike Carey, Managing Director at Atrato]

Secondly, in the middle, the work our team does to work with the approved providers to collect relevant data, which allows us to make informed, proactive asset management decisions, and then lastly, on the right, if an issue is not resolvable, we take strong and decisive action to assign the properties to an alternative provider, so on the next slide, I'll talk you through an example of where we have done exactly that, so we've had a non-material issue with one of our approved providers, Pivotal, who we have two properties with. Now, Pivotal got into financial difficulty in April. However, our asset management team were aware of these issues ahead of time, and we took the decision to assign the properties to an alternative provider, and I'm pleased to say that this is due to complete in October, and as of today, we have continued to receive full rent.

[Mike Carey, Managing Director at Atrato]

This is a clear example of our approach working for shareholders. You can take comfort that, yes, these tenant issues will come about, but the work we do will ensure that they do not lead to material credit losses in the future. The final initiative was working on a long-term solution for approved provider credit risk. We've talked about how we are managing approved provider risk on a daily basis, but you'll recall from full year results, we want to find a longer-term solution to mitigate this risk. I'm sure many of you will be familiar with this diagram, but I'll quickly take you through it again.

[Mike Carey, Managing Director at Atrato]

As you can see on the top left and following the purple arrows, rents are ultimately funded by the Department for Work and Pensions, which is paid via the local authority to the approved providers who lease the properties from Soho. Therefore, what we have is a cash flow that is ultimately derived from central government. However, for that cash flow to make it through to us, it has to pass through a weak counterparty. Therefore, what we need is some form of protection over Soho's income to ensure that the rent is paid directly through to Soho and not used to subsidize other rents or costs within their businesses. Now, as we have said before, this is not going to be an overnight solution, but we have made good progress so far. We have a paper that has been produced by our legal counsel.

[Mike Carey, Managing Director at Atrato]

We have consulted with three of our approved providers and also the Regulator of Social Housing, and we will keep the market up to date with progress on this key workstream. I'll now hand over to Adrian to talk through how we are optimizing Soho's portfolio.

[Adrian D'enrico, Managing Director at Atrato]

As we work to resolve the specific tenant challenges Michael's outlined, it's important to see them in the context of Soho's extensive nationwide portfolio. Here you can see some summary statistics of that portfolio. It comprises 492 properties offering homes for up to 3,412 vulnerable adults right across the U.K. As you'll remember from our annual results, in this sector, schemes with occupancy rates of 80% or higher are profitable for our lessees. You'll be pleased to see that our homes continue to be well used. Occupancy has remained stable above this threshold at 86%.

[Adrian D'enrico, Managing Director at Atrato]

As we resolve the tenant challenges discussed, that will increase. We've grown the portfolio's contracted rent to GBP 43.2 million during the half, benefiting from inflationary uplifts and proactive management. Our homes are, of course, safe and well maintained, but we also want to make sure they're comfortable and efficient for our residents. 74% of them already have an EPC rating of C or higher, which is above the U.K. national average rating of D, but we're looking to improve on this further with our EPC upgrade program. Let me just talk you through that quickly. Following a successful pilot project, which saw 30 homes upgraded, we've started work on the portfolio-wide rollout. Over the next three years, the program will improve 657 homes, bringing them to an EPC of C or above, meeting the target level ahead of the deadline in 2030.

[Adrian D'enrico, Managing Director at Atrato]

60 retrofit assessments have already been completed, works have been instructed, and three properties have already seen their rating improve. So we've hit the ground running. Based on our experience in the pilot, the majority of costs, about 60% on average, will be funded through the U.K. government's ECO4 scheme. This reduces the cost expected to be incurred by Soho to just GBP 2.5 million. These works will not only benefit our residents and the environment, but they're also expected to be accretive to value or NTA, with valuers increasingly factoring building efficiency into their assessments. So as we future-proof our homes, we're future-proofing shareholder value. Now, a key strength of the sector and the lease arrangements we have in place are the inflation linkages of our rents. Over recent months, whilst inflation had started to decline, people are becoming nervous about inflation remaining higher for longer.

[Adrian D'enrico, Managing Director at Atrato]

If that happens, Soho will be protected for three reasons. Firstly, 100% of our rental income is inflation-linked, and all of our leases benefit from annual reviews. Secondly, the vast majority have uncapped uplifts. So in a higher-for-longer environment, Soho's rent will track and benefit from that inflation. And thirdly, our uplifts are underpinned by government policy, with the government's recent rent settlement confirming annual increases of CPI plus one until at least 2036. So this rent settlement not only provides confidence to our future cash flows, but it also highlights how social housing and specialized supported housing is a vital component of the U.K. residential market. So we have an established diversified portfolio, which will continue to deliver long-term growing income. And that portfolio was valued at the 30th of June at a net initial yield of 6.42%.

[Adrian D'enrico, Managing Director at Atrato]

As Nat told you earlier in the NTA Bridge slide, over the first half of the year, we saw a revaluation adjustment of 20 basis points, reflecting a GBP 14.5 million decline. We believe our net initial yield now reflects market pricing for our assets. But what I really want to focus on this slide is the relative value. Frankly, it's incredible compared to the other living sectors. We believe the yield differential is really compelling. While we continue to resolve the tenant challenges, we're also working to optimize our portfolio. We received 494 properties when we took on the management of Soho at the start of the year, and we immediately commenced the property review, selling two vacant schemes in the South West. Through lots of hard work, I'm pleased to confirm that we've already completed that full portfolio review.

[Adrian D'enrico, Managing Director at Atrato]

We must say that on the whole, we've been pleasantly surprised by the quality of the portfolio. As you can see, 97% of the properties are performing well. Of the remainder, we've identified only five properties where we're undertaking asset management initiatives to enhance their performance, and there are just 12 which we'll look to sell. This is just a small fraction of the portfolio, of course. By acting decisively, exiting these poorer quality, non-performing properties, we are optimizing the portfolio for growth or a sale. Of course, our capital allocation decisions are guided by our cost of capital. We will remain disciplined and do what's best for shareholders. While share buybacks and portfolio sales will remain under constant review, we're also considering factors such as share liquidity, maintaining our LTV at an appropriate level, and supporting the overall strategy to deliver for residents and shareholders.

[Adrian D'enrico, Managing Director at Atrato]

At present, it's worth emphasizing we're very much in a buyer's market. We're seeing really strong opportunities for deployment, including recently developed stabilized schemes, which are available for us to move on quickly. At current pricing, these investments that we are assessing will be accretive to shareholder returns. Taking advantage of these opportunities will let us diversify our counterparty exposures, bring in new compliance-approved providers, drive the dividend, and make the portfolio as attractive as it can be. So what does that look like in practical terms? As we exit those weaker, non-performing properties, we will bring in more best-in-class assets like this one, Chorley. This is the latest addition to our portfolio and reached practical completion a fortnight ago. It's let to Golden Lane Housing, who are rated V1G1 by the Regulator of Social Housing. That's the highest level.

[Adrian D'enrico, Managing Director at Atrato]

It's a high-quality, purpose-built scheme with integrated safety and comfort adaptations. 12 residents with learning disabilities have already been identified, and they'll start moving into their new homes in the next few days. Chorley is a great example of the quality of homes our residents deserve and also the types of property and counterparties that will help Soho deliver for its shareholders. I'll pass you back to Ben now to summarize the outlook for Soho.

[Ben Green, Principal at Atrato]

To conclude, if you only remember two things from this presentation, I'd like you to take away that we have the potential for significant further earnings growth and material capital upside. Taking earnings growth first, our dividend yield is already 8.2%, and it's well covered. But I want to emphasize again our uncapped inflation uplifts, which are extremely valuable in an economic environment which may well deliver higher inflation for longer.

[Ben Green, Principal at Atrato]

When you combine that with our work to maximize the rents from the My Space properties, we have the potential for significant rental growth. Then remember our low cost of debt for another eight years. Taking all of these together, the potential for material earnings growth is really exciting. At the same time, we're working hard to continue to turn around the perception of the sector. As I said at the start, there have been a lot of well-publicized missteps by others in the past. We are doing things properly, and combined with portfolio optimization, this will either be recognized by the public markets or it will create the opportunity for a private market takeout at attractive levels for shareholders. Thank you very much for taking the time to listen to the investment case for Social Housing REIT. If you have any questions, please do feel free to reach out.

[Ben Green, Principal at Atrato]

All of the contact details are on the next slide.

Participants

Analysts

• Ben Green, Principal at Atrato
• Adrian D'enrico, Managing Director at Atrato
• Mike Carey, Managing Director at Atrato
• Natalie Markham, CFO at Atrato