Triple Point Social Housing reports strong first-half earnings growth

13th Sep 2024 11:14

(Sharecast News) - Triple Point Social Housing reported a significant increase in adjusted earnings per share and robust rental growth across its portfolio in its first-half results on Friday.

The London-listed real estate investment trust said adjusted earnings per share rose to 2.74p, up from 2.1p in the same period last year.

That improvement was primarily driven by a weighted average rent increase of 6.1% on leases that underwent annual adjustments during the first half of the year, accounting for about 66% of the company's leases.

The remaining leases were scheduled for rent reviews in the second half of 2024.

Triple Point confirmed that the dividend for the period was fully covered on an adjusted earnings basis.

A dividend payment scheduled for 4 October would bring the total dividend for the first half of the year to 2.73p per share, aligning with the company's annual target of 5.46p per share.

The portfolio's total annualised contracted rental income reached £41.2m as of 30 June, slightly up from £41m at the end of 2023.

Triple Point said IFRS gross revenue for the period was £20.5m, compared to £19.6m in the first half of the prior year.

Despite the positive earnings, EPRA net tangible assets (NTA) per share dipped by 1.2% to 112.38p, reflecting a minor reduction in the portfolio's value.

The property portfolio was valued at £652.7m, excluding 13 assets valued at £21.8m that were held for sale.

On a like-for-like basis, the portfolio value saw a modest decrease of 0.5%, as strong rental growth was offset by slight outward yield movement.

All of the company's drawn debt remained fixed at a weighted average interest rate of 2.74% with a weighted average maturity of 9.1 years, providing stability amid fluctuating interest rates.

Triple Point maintained its investment-grade issuer default rating from Fitch at 'A-', with a senior secured rating of 'A'.

However, the outlook was revised from stable to negative, pending the completion of ongoing corporate initiatives.

On the operational front, the firm reported an increase in rent collection rates, achieving 93.3% of rent due during the period, up from 90.2% in 2023.

That improvement reflected consistent performance from 25 of its 27 lessees, which reported no significant rent arrears.

Significant strides were made in addressing issues with two lessees experiencing arrears, Parasol and My Space.

Post period end, Triple Point transferred all 38 properties leased to Parasol to Westmoreland, expecting rent collection to improve to between 75% and 85% during an initial 12-month stabilisation period, and subsequently to at least 90%.

Discussions were ongoing with My Space to potentially transition its 34 properties to alternative registered providers.

The company said its diversified portfolio now encompassed 481 properties across 148 local authorities, leased to 28 approved providers.

Its weighted average unexpired lease term stood at 24 years.

Efforts to include a risk-sharing lease clause - addressing concerns raised by the Regulator of Social Housing regarding long leases - had progressed, with 66% of leases now incorporating the clause.

The company said it aimed to complete the rollout by the end of 2024.

In June, construction began on a collaborative project with Golden Lane Housing to deliver 12 new apartments in Chorley for individuals with learning disabilities, autism, or mental health needs.

In a separate announcement on Friday, Triple Point updated the market on its independent review of investment management arrangements initiated earlier in the year.

The board reported significant progress, but said that additional time was needed to finalise an agreement to balance a resolution with the best interests of shareholders and stakeholders.

"The company's portfolio has continued to demonstrate operational and financial resilience and the group has benefited from strong rental growth that has increased income," said chair Chris Phillips.

"The group will continue to benefit from having exclusively long term fixed priced debt and we look forward to building on the progress made in the first half of the year particularly in relation to the increase in rent collection and the corresponding increase in dividend cover, which ensured that the dividend was fully covered on an adjusted earnings basis for the six months ending 30 June 2024."

At 1100 BST, shares in Triple Point Social Housing REIT were up 1.19% at 65.97p.

Reporting by Josh White for Sharecast.com.