Annual Report
2022
4
At a Glance
6
The Year in Brief
8
Key Highlights
10
Emma’s Story
16
Chair’s Statement
22
Strategy and Business Model
26
Key Performance Indicators
28
EPRA Performance Measures
30
The Investment Manager
32
Investment Manager’s Report
41
Portfolio Summary
46
Sustainability Report
62
Stakeholder Engagement
66
Risk Management
72
Going Concern and Viability
75
Board Approval of the Strategic Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Company Overview
Strategic Report
2022 Annual Report
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
1
Governance
78
Chair’s Letter
80
Board of Directors
82
Corporate Governance
88
Audit Committee Report
92
Management Engagement
Committee Report
94
Nomination Committee Report
97
Directors’ Remuneration Report
98
Directors’ Remuneration Policy
100
Annual Report on
Directors’ Remuneration
103
Directors’ Report
107
Directors’ Responsibilities Statement
109
Independent Auditor’s Report
Financial Statements
118
Group Statement of Comprehensive
Income
119
Group Statement of Financial
Position
120
Group Statement of Changes in
Equity
121
Group Statement of Cash Flows
122
Notes to the Group Financial Statements
142
Company Statement of Financial Position
143
Company Statement of Changes
in Equity
146
Notes to the Company Accounts
Other Information
148
Unaudited Performance Measures
150
Glossary and Definitions
152
Shareholder Information
Company
Overview
At a
Glance
/
WHO WE ARE
Triple Point Social Housing REIT plc
invests in social housing properties in
the United Kingdom (UK), focusing on
homes in the Specialised Supported
Housing sector which have been
adapted for vulnerable people with
care and support needs.
We believe our residents
deserve a home in a
community setting
that offers greater
independence than
traditional institutional
accommodation, at the
same time as meeting their
specialist care needs.
Our ambition is to be the leading
Specialised Supported Housing
investor in the UK, helping guarantee
a secure future for people in need
across the country whilst ensuring
that our shareholders have an ethical,
attractive, long-term income source
which creates social impact.
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Triple Point Social Housing REIT plc
/
WHO WE ARE
We seek to optimise the opportunities available to
vulnerable people across the UK. The properties we
invest in provide homes for people with specific care and
support requirements. These needs often result from
mental health problems, learning disabilities, or physical
and sensory impairment.
Our accommodation differentiates itself by being a
home within a community rather than the care facilities
that have historically been the mainstay for vulnerable
people whose care needs are similar to our residents.
We also seek to provide value-for-money to local
authorities by offering housing that is both more suitable
and cost-effective than traditional alternatives.
Our portfolio benefits from leases to Approved
Providers, who are bodies that receive payment from
central or local government to provide homes for people
in need of housing. Through these leases we offer our
shareholders an attractive level of income that is linked
to inflation.
2022 Annual Report
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5
The Year
in Brief
During 2022, the Group deployed
£20.3 million into Specialised
Supported Housing (and one
Children’s Services property) in the
UK, acquiring 14 homes over the
course of the year.
The Group received 91.8% of
rent due during the year, with
material rent arrears attributable
to two Approved Providers only.
As described in the Investment
Manager’s report, the Group is
taking active steps to address the
issues that have led to the rent
arrears with a view to increasing
rent collection and ensuring
the sustainability of the rental
income generated from these two
Approved Providers.
3 MARCH
2022
The Company declared an
interim dividend of 1.30
pence per Ordinary Share for
the period from 1 October
to 31 December 2021,
resulting in an aggregate
total dividend of 5.20 pence
per Ordinary Share for the
full year ended 31 December
2021.
30 MAY 2022
The Company declared an
interim dividend of 1.365 pence
per Ordinary Share for the period
from 1 January to 31 March
2022.
The Company announced an
unaudited Net Asset Value (NAV)
per Ordinary Share of 110.70p,
as at 31 March 2022.
MARCH
MAY
SEPTEMBER
23 NOVEMBER
2022
The Company declared an interim dividend
of 1.365 pence per Ordinary Share for the
period from 1 July to 30 September 2022.
The Company announced an unaudited
NAV per Ordinary Share of 111.58p, as at
30 September 2022.
NOVEMBER
AUGUST
DECEMBER
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Triple Point Social Housing REIT plc
POST PERIOD EVENTS
Following the announcement of a Government cap of 7%
on social and affordable rent increases from April 2023,
irrespective of the fact that the cap does not apply to
Specialised Supported Housing, the Company has voluntarily
chosen to implement this cap for rent reviews applicable to its
Registered Provider lessees in 2023.
On 2 March 2023, the Company declared an interim dividend
of 1.365 pence per Ordinary Share for the period from
1 October to 31 December 2022 resulting in an aggregate
dividend of 5.46 pence per Ordinary Share for the full year
ended 31 December 2022.
27 MAY 2022
Shareholders approved the Company’s
revised Investment Policy. Amendments
included:
•
Removing the Group’s minimum lease
term restriction.
•
Allowing the Group to selectively
take on the cost of funding planned
maintenance.
•
Giving the Group the ability to enter into
leases which are subject to upward only
adjustments, tracking either inflation or
central housing benefit policy.
25 AUGUST
2022
Fitch Ratings re-affirmed the Group’s
existing Investment Grade, long-term Issuer
Default Rating (IDR) of ‘A-’ with a stable
outlook and a senior secured rating of ‘A’
for the Group’s existing loan notes.
8 SEPTEMBER
2022
The Company declared an interim dividend
of 1.365 pence per Ordinary Share for the
period from 1 April to 30 June 2022.
8 DECEMBER
2022
The Group cancelled the £160 million
Revolving Credit Facility with Lloyds and
Natwest in December 2022 (the facility
had been reduced in size from £160m to
£50m in February 2022).
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Key Highlights
PORTFOLIO
VALUATION
£669.1
million
(December 2021: £642.0 million)
As at 31 December 2022, the portfolio
was independently valued at £669.1
million on an IFRS basis, representing
an uplift of 11.1% against total invested
funds of £602.2 million.
TOTAL RETURN
37.4%
(December 2021: 31.1%)
Total return since IPO to 31 December
2022 was 37.4 %.
CONTRACTED
RENTAL INCOME
£39.0 million
(December 2021: £35.8 million)
As at 31 December 2022, the contracted
rental income was £39.0 million per
annum.
WAULT
25.3 years
(December 2021: 26.2 years)
As at 31 December 2022, the WAULT
was 25.3 years (including put/call
options and reversionary leases).
RENTAL UPLIFTS
100% index
linked
2
(December 2021: 100%)
As at 31 December 2022, 100% of
contracted rental income was either
Consumer Price Inflation (“CPI”) or
Retail Price Index (“RPI”) linked.
DIVIDEND
COVER
0.92x
(December 2021: 0.99x)
Dividend cover, based on adjusted
earnings, for the period ending
31 December 2022 was 0.92x.
Historically dividend cover has been
reported on a contracted run-rate basis
which for 2021, due to all rent being
in payment, was the same as adjusted
earnings dividend cover. Due to an
increase in rent arrears over the period
we have moved to a reporting on an
adjusted earnings basis.
1
EPRA NET
TANGIBLE ASSETS
109.06p
(December 2021: 108.27 pence)
The EPRA Net Tangible Assets was equal
to the IFRS NAV and was 109.06 pence
per share as at 31 December 2022.
NET PROFIT
£24.9 million
(December 2021: £28.4 million)
Net Profit for the year ended 31
December 2022 was £24.9 million.
EPRA Net
Initial Yield
(NIY)
5.46%
(December 2021: 5.20%)
The EPRA NIY was 5.46% as at 31
December 2022.
EPRA NIY is equal to an annualised
rental income based on the cash rents
passing at the balance sheet date, less
non-recoverable property operating
expenses, divided by the market value of
the property, increased with (estimated)
purchasers’ costs.
DIVIDEND PER
ORDINARY SHARE
5.46p
(December 2021: 5.20 pence)
Dividends paid or declared in respect
of the year ending 31 December 2022
totalled 5.46 pence per share.
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LTV
37.4%
(December 2021: 37.6%)
As at 31 December 2022, the Group’s LTV
was 37.4%
ONGOING
CHARGES RATIO
1.60%
(December 2021: 1.54%)
The ongoing charges ratio was 1.60% as
at 31 December 2022 and is a ratio of
annualised ongoing charges expressed as
a percentage of average net asset value
throughout the year. This has increased
year on year due to inflation on expenses
and increase in fees charged on NAV.
TOTAL
INVESTMENT
PORTFOLIO
497
properties
(December 2021: 488)
During the year the Group purchased
14 properties with an aggregate purchase
price of £20.3 million bringing the total
portfolio to 497 properties.
MARKET
CAPITALISATION
£246.9 million
(December 2021: £389.9 million)
As at 31 December 2022, the market
capitalisation of the Group was
£246.9 million.
APPROVED
PROVIDERS
27
(December 2021: 24)
As at 31 December 2022, the Group had
leases with 27 Approved Providers.
FIXED PRICE,
RATED DEBT
2.74% and
10.6 years
(December 2021: 2.74% and 11.6 years)
At 31 December 2022, the weighted
average cost of debt was 2.74% which is
entirely fixed, and the weighted average
term to maturity was 10.6 years.
UNITS
3,456
(December 2021: 3,424)
As at 31 December 2022, the portfolio
comprised 3,456 units.
LEASES
395
(December 2021: 382)
As at 31 December 2022, the portfolio
had 395 leases.
1. Adjusted earnings is EPRA earnings adjusted for non-cash items such as ongoing amortisation of loan arrangement fees
2. 5.1% of our leases are capped.
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Leeds
Supported
Living
Gildersome - Emma’s story
/
BACKGROUND TO LEEDS
SUPPORTED LIVING
Located in the village of Gildersome, Leeds Supported
Living has been providing a Specialised Supported
Living service for adults with mental health needs since
December 2020. Staff support tenants to develop
their confidence and skills with the hope that they will
eventually be able to move on to and live independently.
The project was funded by the Group, ISL are the care
provider with 24-hour support provided by dedicated
staff and Blue Square Residential provide housing
management services.
Each of the 15 self-contained flats come with an open
plan living room and kitchen area, and an ensuite master
bedroom. Tenants benefit from a shared private garden
and a communal kitchen lounge which they use for joint
activities such as cooking. A new sensory hub is set
to open shortly in a separate cabin, providing further
activities and a place for the residents to relax in.
Conveniently located for access to local shops on nearby
Church Street and Gildersome Street, Leeds Supported
Living has a bus stop on its doorstep with the train
station only a 15-minute walk away.
We spoke with one of the tenants Emma and ISL service
manager Kirsty to find out how Emma’s life has changed
since she’s moved in.
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Triple Point Social Housing REIT plc
“For the first
time in my life,
I’ve bought loads
of furniture and
made a home.”
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2022 Annual Report
/
A HOME WHICH HAS LET THE
LIGHT IN
“For the first time in my life, I’ve bought loads of
furniture and made a home,” said Emma, who moved
into Leeds Supported Living in December 2020.
Having been in a hospital psychiatric ward for three
years, followed by a stay in rehabilitation and a
transitional housing unit, Emma credits her home and
the support from staff with changing her life.
The first thing that drew Emma to her flat was the
window in the living room, which she describes as
“huge, almost as big as a wall!”
“Living here has made a big impact on my recovery and
helped my life to get a lot better. It’s a really nice space
to be in. I love it because I get so much light into my flat
and I haven’t had that for ages.
In the transitional unit,
the only thing I could see looking out of the window was
a tree.” Emma says.
She adds: “When I was in hospital, I did not see daylight.
There was only one window on the ward – no natural
light at all. When I came here, I realised I’ve got a
massive window. It’s really good for my mental health.”
Emma’s ginger and white cat, lovingly named Angel
also helps with her mental health. ISL worked with the
Registered Provider Blue Square, to ensure that Emma
could live with her beloved cat in her flat.
Emma smiles as she says: “Angel is really cheeky, and a
bit of a comfort animal. She knows when I’m not feeling
great and will give me a cuddle. She has such a sweet
personality and it’s nice to have her here.”
As you’d expect, everyone living at Leeds Supported
Living can decorate their flats to suit their personal
preferences and tastes.
“My flat is spacious, it’s all really modern and I’m allowed
to express myself. Living here is a big step forward, after
being in institutions for five to six years where you don’t
really get the opportunity to do that,” says Emma.
Emma has added tones of purple with her furniture to
complement the grey and white colour scheme, with
tapestry decorating her rooms.
Moving in has also helped Emma to get the support
she needs with her studies - she is passionate about
psychology and is now in the final year of a psychology
degree at Leeds Beckett University.
She said: “University can be very stressful but living here
helps - all the staff are really supportive of me going to
uni. They’re energetic, enthusiastic, and some even have
psychology degrees which has helped me to gather
ideas.”
Her passion for her new home has even led to her
writing about the communal room located in the
apartment building, and how it’s impacting positively on
mental health for a university assignment.
The welcoming communal lounge is furnished with
two large cosy sofas with bright yellow and checked
cushions, a round wooden dining table and chairs in
the centre, with an assortment of plants on the south-
facing windowsill. Nestled in the corner of the room is a
bookcase full with books and board games.
In her essay, Emma wrote: “It has become an area that is
used for people to relax and socialise, bake, cook, sing,
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dance, talk, play cards, do artwork, and share laughter
and banter. People are now very relaxed here…it is clear
that they now feel more at home here.”
She adds: “There’s loads of nice colours, photos and
a board full of affirmations, which is really bright. The
communal area really helps me to get out of my flat and
develop my social skills – I’m spending a lot of time with
people from different backgrounds.”
Emma adds: “Mental health is quite unpredictable. One
of the good things about living here is that support
times are flexible, you can ask for support as and when
you need it.”
Devoting time to volunteering at a local mental health
organisation, which helps young people, is another
of Emma’s passions. As well as blogging, she runs a
creative writing group which has regular workshops.
Emma is passionate about complementary therapy
such as Reiki and will be leading yoga and meditation
sessions in the Sensory Hub.
Another of her big hobbies is baking. Emma says:
“When I was in hospital, I found a passion for baking,
and I’ve got the space to bake here. The kitchen is a
really good size. It’s great because I can do it any time
of day. Sometimes I have a bit of a midnight bake and I
hand it out to residents.”
Cheesecake is her favourite bake, and her baking
skills also make her very popular with other residents
(“Everyone loves her!” Kirsty smiles).
The future for Emma looks bright, with the potential for
her to move into a step-down service, without 24-hour
support, in the future thanks to the progress she’s made.
Emma says: “My mental health problems aren’t as grave
here. Living here has helped my life to get a lot better.”
The communal area also has another wall display
decorated with leaves with written inscriptions, such
as ‘supportive’, ‘inspirational’, and ‘empathetic’. Kirsty
explains: “We all shared three positive words about each
other which we wrote on the leaves.”
Emma has also formed friendships since moving in. She
said: “I’ve made a couple of nice friends here and we do
things together. We go out for open mic nights in the
local pub or sometimes go to the local Indian restaurant.
I have a social life here – I didn’t have one before.”
Kirsty adds: “I’ve been working here since 2022, and in
the last 12 months I’ve seen a real confidence boost in
Emma. If she has an idea, we encourage it. She also has
creative freedom which she really explores.”
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13
Strategic
Report
Chair’s
Statement
CHRIS PHILLIPS, Chair
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Triple Point Social Housing REIT plc
/ INTRODUCTION
2022 has proven to be another year of unforeseen
challenges. Inflation and resultant rising interest rates
were to be expected, but their pace of increase was
accelerated by geopolitical events, most notably
the tragic war in Ukraine, as well as the fallout from
heightened domestic political volatility in the UK in
the latter half of the year. The Bank of England base
rate increased by 375 basis points in 12 months, and
inflation reached levels not seen in over 40 years. Higher
interest rates have provided investors seeking income
with a range of options, many of which have not been
viable over the last 15 years, and inflation and its root
causes have created operational challenges for business
throughout the UK and indeed the world. Questions
remain about the impact these challenges will have on
property valuations as investors and valuers grapple with
understanding the real impact on the performance of
property assets, and their relative attractiveness when
compared to alternative sources of income.
As with most publicly traded REITs, these factors,
combined with further regulatory judgements issued by
the Regulator in relation to two of the Group’s Approved
Providers, have contributed to the Company’s shares
trading at a discount to Net Asset Value during the
period. The Board continues to actively engage with
its shareholders and is committed to addressing this
discount. As noted in our recent trading update, in order
to deliver value to shareholders, the Board and Manager
are exploring making accretive share buybacks outside
of a close period and the potential sale of a portfolio
of the Group’s properties. If the Group considered
that a potential sale of a portfolio would be in the best
interests of its shareholders, and conditional on such a
transaction not having a material adverse impact on the
Group’s leverage position, the Board would seek to use
the proceeds to optimise shareholder value in the most
efficient way.
Whilst we remain conscious of the need to address
the current share price discount to Net Asset Value, I
am pleased to report that we have delivered a stable
and consistent set of results, and we have been able to
continue to focus on providing more good homes for
vulnerable people throughout the UK. Our strategy is well
insulated against the fallout from deteriorating economic
circumstances and any resultant decline in demand for
other goods and services. The need for more Specialised
Supported Housing in the UK continues to grow and this
fact, more than anything, underpins our resilient financial
performance.
Despite challenging operating conditions, we have
delivered a total return of 5.7% comprising 5.0% from
dividend income and 0.7% from a growth in capital value.
Given current concerns around interest rates, it is worth
reiterating that all of the Group’s debt is long-term and
fixed-price with a weighted average term of 10.6 years
and a weighted average coupon of 2.74%.
This year we have been able to demonstrate to our
investors the strong inflation protection within our
portfolio. We increased our dividend target by 5.0%,
supported by strong underlying rental growth (the
weighted average rental growth for the period was 6.7%).
Looking forward, whilst Specialised Supported Housing
is excluded from the Government’s 7% cap on social
housing rent increases, we have prudently decided to
temporarily cap the Group’s rent increases at 7% for the
year of 2023. The voluntary cap applied to the portfolio’s
leases with Registered Providers for 2023 allows for
material rental growth (in excess of the Group’s highest
historical weighted average annual rental growth rate),
whilst ensuring that the Group’s rent increases remain
sustainable and in line with wider social housing sector
policy.
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Whilst the Group is well placed to navigate the current economic headwinds, we must
acknowledge that the Group’s Approved Providers have been presented with significant
operating challenges. We continue to work closely with our counterparties whose operating
margins have come under pressure from increases in maintenance, staffing and energy
costs at a time where local authorities and central Government are tightening fiscal policy.
Rent collection during the year fell below historic levels of 100% to 91.8%. As noted in the
Company’s recent trading update, these rent arrears are predominantly attributable to two
Approved Providers, My Space Housing Solutions and Parasol Homes. A full update on what
steps are being taken to actively address the causes of the rental arrears and preserve the
Group’s rental income generated from these two lessees going forward is provided in the
Investment Manager’s Report.
In conjunction with working with Approved Providers to help them address specific challenges,
we have also remained focused on helping all of our Registered Provider partners respond to
concerns raised by the Regulator about the risks associated with the long-lease model that
is commonly employed in the sector. Through amending the Company’s investment policy
and investment restrictions in May last year, which enabled the Group to enter into more
flexible leases, we commenced a process of looking to address these concerns in a way that
we hope will help deliver meaningful change to our Approved Providers whilst enhancing
the sustainability and performance of the Group’s portfolio. The Investment Manager’s report
will expand on the new flexible leases that the Group can now enter into, and the roll-out of
a new clause in the Group’s existing leases to help address concerns about risk sharing. The
clause has been developed in consultation with key stakeholders, including the Regulator. The
implementation of the clause is intended to enhance the Group’s Registered Provider lessees’
compliance with the Regulator’s standards.
It is important to us that over 94% of our lessees benefit from being regulated by the Regulator.
We believe in proportionate specialist regulation and the enhancements and protections around
governance and service provision that this brings. In over 88% of our properties specialist care
and support is provided by care providers regulated by the Care Quality Commission (“CQC”)
further enhancing both the services provided to the individuals living in our properties and the
associated regulatory protections.
As well as proving commercially challenging, 2022 exacerbated a number of existing societal
issues and has seen a growing cost-of-living crisis begin to impact the lives of millions of people
throughout the UK. Despite additional government support, high inflation has created an
affordability crisis which research has shown to disproportionately impact the most vulnerable
members of society. In the social housing sector, rising interest rates, growing maintenance
costs, labour shortages and a need to invest into existing homes to bring them up to standard
in terms of fire safety and energy efficiency have eroded the development budgets of
Registered Providers. This, combined with growing pressure on people’s ability to afford private
rents, has exacerbated the housing crisis and increased demand for social housing at a time
when Registered Providers are struggling to meet supply targets. Finally, it is rightly impossible
to ignore the clear daily pressures faced by the NHS and the social care sector and hard to see,
given the current strain on public finances, how things can materially improve in the short term
without additional funding.
More than ever therefore, it is clear that private capital is required to help meet the UK’s
social housing needs. The Group has continued to deploy capital into both new and existing
Specialised Supported Housing properties over the course of the year. In 2022, we have
delivered 14 newly developed or newly adapted properties containing 113 homes. These
additional homes should help Local Authorities move people off social housing waiting lists
and in some cases relieve pressure on the NHS by enabling people to move out of long-stay
hospitals and into their own homes.
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FINANCIAL PERFORMANCE
During the year, we continued to deploy our remaining
capital in order to address the acute need for this type of
housing and provide additional homes for people with care
and support needs. The Group invested £20.3 million in
acquiring 14 properties providing 113 additional homes.
This has enabled us to grow the Group’s portfolio to over
£669.1 million in value and provide over 3,400 homes
working alongside our Approved Provider and care provider
partners with the continued support of our shareholders and
lenders.
I am pleased to continue to report this year that we
have paid all target dividends in full as we have done
consistently since IPO. For the year ending 31 December
2022, dividend cover, based on adjusted earnings, was
0.92x. Dividend cover was lower than in previous years due
to the higher than usual level of rent arrears. Through our
focus on addressing the current level of rent payments with
My Space and Parasol (as expanded on in the Investment
Manager’s Report) we will look to increase dividend cover
this coming year and preserve it over the longer-term. We
expect to announce our dividend target for 2023 in May as
we have done in previous years.
Overall, we are proud of another set of stable financial
results which build on our performance to date. This
would not have been possible without the support of our
stakeholders, all of whom played an important role in
supporting us with delivering on our investment strategy
during the period. You can read more about our financial
performance during the period in our Key Highlights at
pages
8 to 9,
along with a more in-depth review in the
Investment Manager’s report on pages
32 to 44.
Despite the relative resilience of the Group’s financial
performance and the sector’s compelling supply and
demand fundamentals, the Company’s share price has
traded at a discount to Net Asset Value during the period.
As noted above, the Board along with the Investment
Manager, are actively considering what further steps can be
taken to address the discount.
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SOCIAL IMPACT
Social Impact remains engrained in our decision-making
processes and is central to our business model. This set
of results once again demonstrates our conviction that
financial performance and social impact are mutually
reinforcing. The independent Impact Report prepared by
The Good Economy identifies that our properties have
delivered £3.30 of Total Social Value for every £1.00
invested in the year to 31 December 2022. You can read
more on the social value and impact that our properties
create in the Impact Report prepared by the Good
Economy, available separately on our website.
/
THE BOARD
The Board, led by Ian Reeves, Chair of the Nomination
Committee, has instructed Nurole Ltd, an external
search consultancy (there is no connection between the
Company or any individual Directors and the external
search consultancy), to commence a robust succession
exercise to recruit a new non-executive director and
hopes to provide an update before the 2023 AGM. As
part of this succession exercise, the Board has taken
into consideration the diversity targets within the FCA’s
Listing Rules, which we consider to be in the interests of
the Group and its shareholders.
Further detail regarding the succession process that has
commenced can be found in the Nomination Committee
Report on pages 94 to 96.
/ OUTLOOK
The Group’s focus in 2023 will be on optimising the
performance of our portfolio. We will look to help
ensure that our Approved Providers are able to weather
the operational obstacles, principally driven by high
inflation, facing organisations throughout the UK. With
a combination of routine property inspections and
continued engagement with our care provider and
Approved Provider partners we will seek to optimise the
performance of the Group’s properties with a focus on
delivering good homes and long-term income to our
investors. Finally, through delivering on our strategic
initiatives, which are focused on addressing concerns
raised by the Regulator, we hope to deliver meaningful
and sustainable change to both the Group’s portfolio
and the wider sector.
We take comfort from the fact that the majority of
the Group’s Approved Providers are regulated by the
Regulator and the additional accountability and higher
standards this brings to their provision of social housing.
We will continue to work with our Registered Provider
partners to, where relevant, help them address any
points that have been raised by the Regulator. Similarly,
we will continue to engage directly with the Regulator
in order to ensure that we can better understand and
accommodate any observations they have about our
investment model and our engagement with our lessees.
We will remain focused on controlling and positively
influencing what we can, but we must also accept that
there are factors that we cannot control, and which
could have an impact on the Group’s performance.
Specialised Supported Housing valuations showed
resilience throughout the COVID pandemic and are
relatively well-insulated from the impact of an economic
downturn, however they are not impervious to the
pressures of rising interest rates. Whilst we feel well
positioned relative to most other real estate sectors, the
risk of further outward movement in social housing yields
remains, principally driven by the tighter spread versus
the risk-free rate. We expect any movement to be limited
relative to some other commercial property sectors
due to the excess demand for Specialised Supported
Housing coupled with a continued lack of supply.
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Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Despite these challenges, it is important to also focus
on the Group’s current strengths. We have successfully
mitigated any direct negative impact of rising interest
rates on the Group’s financial performance having
ensured that all debt financing was long-term and fixed
rate. Whilst we have capped rent increases at 7% for
next year, we expect to deliver strong rental growth
nonetheless, which will help protect investors against
a backdrop of persistent high inflation. Finally, the
Company has met its dividend target for the full year
ended 31 December 2022.
As ever, I would like to thank all our advisers, and the
Investment Manager, for their continued hard work and
dedication to our investment strategy. Our corporate
broker and joint financial adviser, Stifel Nicolaus
Europe Limited, and our joint financial adviser, Akur
Capital, continue to provide valuable and high-quality
advice during the year. Finally, I would like to thank our
shareholders for their continued support, as well as my
fellow Board members for their ongoing commitment
and assistance this year.
Chris Phillips
Chair
2 March 2023
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Strategy and
Business Model
The Board is responsible for the Company’s investment objective and investment
policy and has overall responsibility for ensuring the Group’s activities are in
line with such overall strategy. As noted in the interim report, in May 2022
shareholders approved the resolution to amend the Company’s investment policy.
The Company’s investment policy, reflecting these amendments, and investment
objective are published below.
As noted in the Chair’s Statement and the Investment
Manager’s report, in 2023 most of the Group’s leases will
be subject to a one-off rental increase cap of 7%.
/
INVESTMENT OBJECTIVE
The Company’s investment objective is to provide
shareholders with stable, long-term, inflation-linked
income from a portfolio of social housing assets in the
United Kingdom with a focus on Supported Housing
assets. The portfolio comprises investments in operating
assets and the forward funding of pre-let development
assets, the Group seeks to optimise the mix of these
assets to enable it to pay a covered dividend increasing
in line with inflation and so generate an attractive risk-
adjusted total return.
/
INVESTMENT POLICY
To achieve its investment objective, the Group invests
in a diversified portfolio of freehold or long leasehold
social housing assets in the UK. Supported Housing
assets account for at least 80% of the Group’s gross asset
value. The Group acquires portfolios of social housing
assets and single social housing assets, either directly or
via SPVs. Each asset is subject to a lease or occupancy
agreement with an Approved Provider. The rent
payable thereunder is, or is expected to be, subject to
adjustment in line with inflation (generally CPI) or central
housing benefit policy. Title to the assets remains with
the Group under the terms of the relevant lease. The
Group is not primarily responsible for any management
or maintenance obligations under the terms of the lease
or occupancy agreement, which typically are serviced
by the Approved Provider lessee, save that the Group
may take responsibility for funding the cost of planned
maintenance. The Group is not responsible for the
provision of care to residents of Supported Housing
assets.
The social housing assets are sourced in the market by
the Investment Manager.
The Group intends to hold its portfolio over the long-
term, benefitting from generally long-term upward-
only leases which are, or are expected to be, linked to
inflation or central housing benefit policy. The Group will
not be actively seeking to dispose of any of its assets,
although it may sell investments should an opportunity
arise that would enhance the value of the Group as a
whole.
The Group may forward fund the development of new
social housing assets when the Investment Manager
believes that to do so would enhance returns for
shareholders and/or secure an asset for the Group’s
portfolio at an attractive yield. Forward funding will only
be provided in circumstances in which:
(a)
there is an agreement to lease the relevant property
upon completion in place with an Approved
Provider;
(b)
planning permission has been granted in respect of
the site; and
(c)
the Group receives a return on its investment (at
least equivalent to the projected income return for
the completed asset) during the construction phase
and before the start of the lease.
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For the avoidance of doubt, the Group will not acquire
land for speculative development of social housing assets.
In addition, the Group may engage third party
contractors to renovate or customise existing social
housing assets as necessary.
GEARING
The Group uses gearing to enhance equity returns. The
Directors will employ a level of borrowing that they
consider prudent for the asset class and will seek to
achieve a low cost of funds while maintaining flexibility in
the underlying security requirements and the structure of
both the Company’s portfolio and the Group.
The Directors intend that the Group will target a level
of aggregate borrowings over the medium-term equal
to approximately 40% of the Group’s gross asset value.
The aggregate borrowings will always be subject to an
absolute maximum, calculated at the time of drawdown,
of 50% of the Group’s gross asset value.
Debt will typically be secured at the asset level, whether
over a particular property or a holding entity for a
particular property (or series of properties), without
recourse to the Group and having consideration for key
metrics including lender diversity, cost of debt, debt type
and maturity profiles.
USE OF DERIVATIVES
The Group may use derivatives for efficient portfolio
management. In particular, the Group may engage in
full or partial interest rate hedging or otherwise seek to
mitigate the risk of interest rate increases on borrowings
incurred in accordance with the Investment Policy as
part of the Group’s portfolio management. The Group
will not enter into derivative transactions for speculative
purposes.
INVESTMENT RESTRICTIONS
The following investment restrictions apply:
•
the Group will only invest in social housing assets
located in the United Kingdom;
•
the Group will only invest in social housing
assets where the counterparty to the lease or
occupancy agreement is an Approved Provider.
Notwithstanding that, the Group may acquire a
portfolio consisting predominantly of social housing
assets where a small minority of such assets are
leased to third parties who are not Approved
Providers. The acquisition of such a portfolio will
remain within the Investment Policy provided that
at least 90% (by value) of the assets are leased to
Approved Providers and, in aggregate, all such
assets within the Group’s total portfolio represent
less than 5% of the Group’s gross asset value at the
time of acquisition;
•
at least 80% of the Group’s gross asset value will be
invested in Supported Housing assets;
•
the maximum exposure to any one asset (which, for
the avoidance of doubt, will include houses and/or
apartment blocks located on a contiguous basis) will
not exceed 20% of the Group’s gross asset value;
•
the maximum exposure to any one Approved
Provider will not exceed 30% of the Group’s gross
asset value, other than in exceptional circumstances
for a period not to exceed three months;
•
the Group may forward fund social housing units in
circumstances where there is an agreement to lease
in place and where the Group receives a coupon (or
equivalent reduction in the purchase price) on its
investment (generally slightly above or equal to the
projected income return for the completed asset)
during the construction phase and before entry into
the lease. Forward funding equity commitments
will be restricted to an aggregate value of not more
than 20% of the Group’s net asset value, calculated
at the time of entering into any new forward funding
arrangement;
•
the Group will not invest in other alternative
investment funds or closed-ended investment
companies (which, for the avoidance of doubt,
does not prohibit the acquisition of SPVs which own
individual, or portfolios of, social housing assets);
•
the Group will not set itself up as an Approved
Provider; and
•
the Group will not engage in short selling.
The investment limits detailed above apply at the time of
the acquisition of the relevant asset in the portfolio. The
Group will not be required to dispose of any investment
or to rebalance its portfolio as a result of a change in
the respective valuations of its assets or a merger of
Approved Providers.
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/
INVESTMENT STRATEGY
The Group specialises in investing in UK social housing,
with a focus on Supported Housing. The strategy is
underpinned by strong local authority demand for more
social housing, which is reflected in the focus on acquiring
recently developed and refurbished properties across
the United Kingdom. The assets within the portfolio have
typically been developed for pre-identified residents and
in response to demand specified by local authorities or
NHS commissioners. The existing portfolio comprises
investments made into properties already subject
to a fully repairing and insuring lease with specialist
Approved Providers in receipt of direct payment from
local government (usually Registered Providers regulated
by the Regulator), as well as forward funding of pre-let
developments. The portfolio will not include any direct
development or speculative development investments.
Following the amendments to the Company’s investment
policy in May 2022, the Group expects to enter into
more flexible lease structures in future. These more
flexible lease structures may include entering into
leases for shorter terms and, in certain cases, the Group
may selectively take on the cost of funding planned
maintenance on some properties.
In addition, as noted in the Chair’s Statement and
the Investment Manager’s report, we are considering
including a new clause in the Group’s existing leases.
The aim of this clause is to protect Registered Providers
if factors beyond their control, such as a change in
government policy in relation to Specialised Supported
Housing rents, reduce the amount of rent they are able
to generate from a property or properties that they lease
from the Group. In some such circumstances the clause
allows for the Registered Provider to agree a new rent
level which is reflective of the revised circumstances.
Should the new rent level not be acceptable to the
Group, the Group has the ability to re-assign or terminate
the lease. As noted, we have consulted with the Group’s
valuers and lenders, and following the publication of
these results it is our intention to gain feedback from
investors before looking to roll out the new lease clause
with our Registered Provider lessees.
/
BUSINESS MODEL
The Group owns and manages social housing properties
that are leased to experienced housing managers
(typically Registered Providers, which are often referred to
as housing associations). The vast majority of the portfolio
and future deal pipeline is made up of Supported Housing
homes which are residential properties that have been
adapted or built such that care and support can easily be
provided to vulnerable residents who may have mental
health issues, learning difficulties or physical disabilities.
Whilst we have acquired operational properties, we have
tended to focus more on acquiring recently developed
or adapted properties in order to help local authorities
meet increasing demand for suitable accommodation
for vulnerable residents (the drivers of this demand are
discussed in the Investment Manager’s report on pages 32
to 44)
.
Local authorities are responsible for housing these
residents and for the provision of all care and support
services that are required.
The Supported Housing properties owned by the Group
are leased to Approved Providers which are usually not-
for-profit organisations focused on developing, tenanting
and maintaining housing assets in the public (and
private) sectors. Approved Providers are approved and
regulated by the Government with the majority through
the Regulator (or in some instances, where the Group
contracts with care providers and charitable entities, the
Care Quality Commission and the Charity Commission,
respectively). The majority of the Group’s existing leases
with Approved Providers are linked to inflation, have a
duration of 20 years or longer, and are fully repairing and
insuring – meaning that the obligations for management,
repair and maintenance of the property are passed to the
Approved Provider. Typically, the Government funds both
the rent of the individuals housed in Supported Housing
and the maintenance costs associated with managing
the property. In addition, because of the vulnerable
nature of the residents, the rent and maintenance costs
are typically paid directly from the local authority to the
Approved Provider on behalf of the individuals living in
the property. The rent paid by the local authority to the
Approved Provider on behalf of the residents is then paid
to the Group via the lease. Ultimate funding for the rent
of the individuals living in the properties owned by the
Group typically comes from the Department for Work and
Pensions in the form of housing benefit.
The majority of residents housed in Supported Housing
properties require support and/or care. This is typically
provided by a separate care provider regulated by
the Care Quality Commission. The agreement for the
provision of care for the residents is between the local
authority and the care provider. The care provider is paid
directly by the local authority. Usually, the Group has no
direct financial or legal relationship with the care provider
and the Group never has any responsibility for the
provision of care to the residents in properties the Group
owns. The care provider will often be responsible for
nominating residents into the properties and, as a result,
will normally provide some voids cover to the Approved
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Provider should they not be able to fill the asset (i.e. if
occupancy is not 100% it is often the care provider rather
than the Approved Provider that will cover the cost of
the rent due on void units). Under the terms of its lease,
the Group is owed full rent regardless of underlying
occupancy, but monitors occupancy levels and the
payment of voids cover by care providers, to ensure that
Approved Providers are appropriately protected.
Many assets that the Investment Manager sources for
the Group have been recently developed and are either
specifically designed new build properties or renovated
existing houses or apartment blocks that have been
adapted for Supported Housing. The benefit of buying
recently-developed or adapted stock is that it has been
planned in response to local authority demand and
is designed to meet the specific requirements of the
intended residents. In addition, it enables the Group to
work with a select stable of high-quality developers on
pipelines of deals rather than being reliant on acquiring
portfolios of already-built assets on the open market.
This has two advantages: firstly, it enables the Group to
source the majority of its deals off-market through trusted
developer partners and, secondly, it ensures the Group
has greater certainty over its pipeline with visibility over
the long-term deal flow of the developers it works with
and knows it will not have to compete with other funders.
As well as acquiring recently developed properties, the
Group can provide forward funding to developers of new
Supported Housing properties. Being able to provide
forward funding gives the Group a competitive advantage
over other acquirers of Supported Housing assets as it
enables the Group to offer developers a single funding
partner for both construction and the acquisition of the
completed property. This is often more appealing to
developers than having to work with two separate funders
during the build of a new property as it reduces practical
and relationship complexity. As well as strengthening
developer relationships, forward funding enables the
Group to have a greater portion of new build properties
in its portfolio which typically attract higher valuations,
are modern and have been custom-built to meet the
needs of the residents they house, helping to achieve
higher occupancy levels. The Group benefits from the
Investment Manager’s long track record of successfully
forward funding a range of property and infrastructure
assets. The Group will only provide forward funding when
the property has been pre-let to an Approved Provider
and other protections, such as fixed-priced build contracts
and deferred developer profits, have been put in place to
mitigate construction risk.
Since the Company’s IPO, the Group has set out to build a
diversified portfolio that contains assets leased to a variety
of Approved Providers, in a range of different counties,
and serviced by a number of care providers. This has
been possible due to the Investment Manager’s over
15-year track record of asset-backed investments, its
active investment in the Supported Housing sector since
2014, and the strong relationships it has enjoyed with
local authorities for over a decade. These relationships
have enabled the Group, in a relatively short space of
time, to work with numerous Approved Providers, care
providers and local authorities to help deliver Supported
Housing that provide homes to some of the most
vulnerable members of society.
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Key Performance Indicators
In order to track the Group’s progress the following key performance indicators are monitored:
KPI AND DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
COMMENT
1. DIVIDEND
Dividends paid to shareholders
and declared during the year.
Further information is set out in
Note 27.
The dividend reflects the
Company’s ability to deliver a low
risk but growing income stream
from the portfolio.
Total dividends of 5.46 pence per
share were paid or declared in
respect of the period 1 January
2022 to 31 December 2022.
(2021: 5.20 pence)
The Company has declared a
dividend of 1.365 pence per
Ordinary share in respect of the
period 1 October 2022 to
31 December 2022, which will
be paid on 31 March 2023. Total
dividends paid and declared
for the year are in line with the
Company’s target.
2. EPRA NET TANGIBLE ASSETS (NTA)
The EPRA NTA is equal to IFRS
NAV as there are no deferred tax
liabilities or other adjustments
applicable to the Group under the
REIT regime.
Further information is set out
in Note 5 of the Unaudited
Performance Measures.
EPRA NTA measure that assumes
entities buy and sell assets,
thereby crystallising certain levels
of deferred tax liability.
109.06 pence at 31 December
2022.
(31 December 2021: 108.27
pence)
The IFRS NAV (equivalent to EPRA
NTA) per share at IPO was 98
pence.
This represents an increase of
11.3% since IPO driven primarily
by yield compression at acquisition
and subsequent annual rental
uplifts.
3. LOAN TO VALUE (LTV)
A proportion of our portfolio is
funded through borrowings. Our
medium to long term target LTV
is 35% to 40% with a maximum
of 50%.
Further information is set out in
Note 20.
The Group uses gearing to
enhance equity returns.
37.4% LTV at 31 December 2022.
(31 December 2021: 37.6% LTV)
Borrowings comprise two private
placements of loan notes totalling
£263.5 million provided by
MetLife Investment Management
and Barings. The £160.0 million
revolving credit facility with Lloyds
and NatWest was completely
undrawn as at 31 December 2021,
and during the year, the Group
cancelled this facility in its entirety.
4. EPRA EARNINGS PER SHARE
EPRA Earnings per share (EPRA
EPS) excludes gains from fair
value adjustment on investment
property that are included in the
IFRS calculation for Earnings per
share.
Further information is set out in
Note 36.
A measure of a Group’s underlying
operating results and an indication
of the extent to which current
dividend payments are supported
by earnings.
4.78 pence per share for the
year ended 31 December 2022,
based on earnings excluding
the fair value gain on properties,
calculated on the weighted
average number of shares in issue
during the year.
(31 December 2021: 4.82 pence)
EPRA EPS reduced slightly
reflecting the expected credit loss.
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Triple Point Social Housing REIT plc
KPI AND DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
COMMENT
5. ADJUSTED EARNINGS PER SHARE
Adjusted earnings per share
includes adjustments for non-cash
items. The calculation is shown in
Note 36.
A key measure which reflects
actual cash flows supporting
dividend payments.
5.03 pence per share for the year
ended 31 December 2022, based
on earnings after deducting the
fair value gain on properties, and
amortisation and write-off of loan
arrangement fees; calculated on
the weighted average number of
shares in issue during the year.
(31 December 2021: 5.14 pence)
Company’s ability to meet
dividend payments from net cash
inflows. It represents a dividend
cover for the year to 31 December
2022 of 0.92x.
6. WEIGHTED AVERAGE UNEXPIRED LEASE TERM (WAULT)
The average unexpired lease
term of the investment portfolio,
weighted by annual passing rents.
Further information is set out in
the Investment Manager’s Report.
The WAULT is a key measure of
the quality of our portfolio. Long
lease terms underpin the security
of our income stream.
25.3 years at 31 December 2022
(includes put and call options).
(31 December 2021: 26.2 years)
As at 31 December 2022, the
portfolio’s WAULT stood at 25.3
years.
7. EXPOSURE TO LARGEST APPROVED PROVIDER
The percentage of the Group’s
gross assets that are leased to the
single largest Approved Provider.
The exposure to the largest
Approved Provider must be
monitored to ensure that we
are not overly exposed to one
Approved Provider in the event of
a default scenario.
29.5% at 31 December 2022.
(31 December 2021: 28.3%)
Our maximum exposure limit is
30%.
8. TOTAL RETURN
Change in EPRA NTA plus total
dividends paid during the period.
The Total Return measure
highlights the gross return to
investors including dividends paid
since the prior year.
EPRA NTA per share was 109.06
pence at 31 December 2022.
Total dividends paid during the
year ended 31 December 2022
were 5.395 pence per share.
Total return was 5.7% for the year
to 31 December 2022.
(31 December 2021: 6.62%)
The EPRA NTA per share at 31
December 2022 was 109.06
pence. Adding back dividends
paid during the year of 5.395
pence per Ordinary Share to the
EPRA NTA at 31 December 2022
results in an increase of 5.7%.
The Total Return since IPO is
37.4% at 31 December 2022.
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2022 Annual Report
EPRA Performance
Measures
The table shows additional performance measures, calculated in accordance with the Best Practices
Recommendations of the European Public Real Estate Association (EPRA). We provide these measures to aid
comparison with other European real estate businesses.
Full reconciliations of EPRA Earnings and NAV performance measures are included in Note 36 of the consolidated
financial statements and notes 3 and 5 of the Unaudited Performance Measures, respectively. A full reconciliation of
the other EPRA performance measures are included in the Unaudited Performance Measures section.
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Triple Point Social Housing REIT plc
KPI AND DEFINITION
PURPOSE
PERFORMANCE
1. EPRA EARNINGS PER SHARE
EPRA Earnings per share excludes gains from
fair value adjustment on investment property
that are included in the IFRS calculation for
Earnings per share.
A measure of a Group’s underlying operating
results and an indication of the extent to which
current dividend payments are supported by
earnings.
4.78 pence per share for the year to
31 December 2022.
(31 December 2021: 4.82 pence)
2. EPRA NET REINSTATEMENT VALUE (NRV) PER SHARE
The EPRA NRV adds back the purchasers’ costs
deducted from the IFRS valuation.
A measure that highlights the value of net
assets on a long-term basis.
£480.7 million/119.33 pence per share as at
31 December 2022.
£475.4 million/118.08 pence per share as at
31 December 2021.
3. EPRA NET TANGIBLE ASSETS (NTA) PER SHARE
The EPRA NTA is equal to IFRS NAV as
there are no deferred tax liabilities or other
adjustments applicable to the Group under the
REIT regime.
A measure that assumes entities buy and sell
assets, thereby crystallising certain levels of
deferred tax liability.
£439.3 million/109.06 pence per share as at
31 December 2022.
£436.1 million/108.27 pence per share as at
31 December 2021.
4. EPRA NET DISPOSAL VALUE (NDV)
The EPRA NDV provides a scenario where
deferred tax, financial instruments, and certain
other adjustments are calculated as to the full
extent of their liability.
A measure that shows the shareholder value if
assets and liabilities are not held until maturity.
£510.1 million /126.63 pence per share as at
31 December 2022.
£434.0 million /107.76 pence per share as at
31 December 2021.
5. EPRA NET INITIAL YIELD (NIY)
Annualised rental income based on the cash
rents passing at the balance sheet date, less
non-recoverable property operating expenses,
divided by the market value of the property,
increased with (estimated) purchasers’ costs.
A comparable measure for portfolio valuations.
This measure should make it easier for
investors to judge for themselves how the
valuation of a portfolio compares with others.
5.46% at 31 December 2022.
5.20% at 31 December 2021.
6. EPRA “TOPPED-UP” NIY
This measure incorporates an adjustment to
the EPRA NIY in respect of the expiration of
rent-free periods (or other unexpired lease
incentives such as discounted rent periods and
step rents).
The topped-up net initial yield is useful in that
it allows investors to see the yield based on
the full rent that is contracted at 31 December
2022.
5.51% at 31 December 2022.
5.27% at 31 December 2021.
7. EPRA VACANCY RATE
Estimated Market Rental Value (ERV) of vacant
space divided by ERV of the whole portfolio.
A “pure” percentage measure of investment
property space that is vacant, based on ERV.
0.00% at 31 December 2022.
0.26% at 31 December 2021.
8. EPRA COST RATIO
Administrative and operating costs (including
and excluding costs of direct vacancy) divided
by gross rental income.
A key measure to enable meaningful
measurement of the changes in a Group’s
operating costs.
21.09% at 31 December 2022.
20.91% at 31 December 2021.
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Pictured above: Max Shenkman, James Cranmer, Ben Beaton, Anne-Britt Karunaratne,
Ralph Weichelt, Isobel Gunn-Brown and Justin Hubble
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The Investment Manager
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/
JAMES CRANMER,
MANAGING PARTNER
James joined the Investment Manager in 2006 to
establish its flagship leasing business, Triple Point Lease
Partners, which has grown to be one of the UK’s most
active providers of operating lease finance into local
authorities and NHS Trust Hospitals. James has over
20 years’ experience in structured, asset and vendor
finance, and has been responsible for in excess of
£1 billion of funding into UK local authorities, NHS
Hospital Trusts, FTSE 100 and small and medium-
sized companies. James is a graduate of St. Andrews
University. He became Co-Managing Partner in 2016.
/
MAX SHENKMAN,
PARTNER & HEAD OF INVESTMENT
Max joined the Investment Manager in 2011 and has led
investments across the product range. He has arranged
both debt and equity funding for a number of property
backed transactions in the social housing, infrastructure
and agricultural sectors. Max has led over £500million
of investment into Supported Housing assets for the
Group. Prior to joining the Investment Manager, Max
was an Associate in the Debt Capital Markets team
at Lazard where he advised private equity clients on
both the buy and sell side. Max graduated from the
University of Edinburgh.
/
ANNE-BRITT KARUNARATNE,
HOUSING OPERATIONS DIRECTOR
Anne-Britt joined Triple Point in August 2021 and is
the Housing Operations Director in the Housing team.
She has over 35 years’ social housing experience,
and is responsible for looking after our portfolio of
social housing homes. Anne-Britt is passionate about
delivering great quality homes and excellent services
that make a difference to peoples’ lives and the
communities they live in.
/
BEN BEATON,
MANAGING PARTNER
Ben joined the Investment Manager in 2007 to lead
the sourcing and execution of a broad spectrum of
investments including renewable energy, long leased
infrastructure and property bridge lending. He has
spent his career building innovative products for
investors and offering attractive and flexible funding
solutions to a range of businesses, both in the public
and private sector. Ben has a BSc (Hons) in Biological
Sciences from the University of Edinburgh. He became
Co-Managing Partner in 2016.
/
RALPH WEICHELT,
HEAD OF DEBT CAPITAL MARKETS
Ralph joined Triple Point in November 2017 and is
Head of Debt Capital Markets responsible for the
debt strategies for all Triple Point managed private
and listed funds. Prior to joining Triple Point, Ralph
was a Partner in a pan-European debt advisory and
fixed income firm focusing on debt origination via the
debt capital markets for commercial real estate and
infrastructure. Prior to this, he held a number of senior
positions in pan-European real estate spanning from
fund management, transactional work to advisory. Ralph
is also a member of the Investment Committee.
/
ISOBEL GUNN-BROWN,
PARTNER & REIT CFO
Isobel joined the Investment Manager in 2010 and
acts as Finance Director to the Group leading the
financial reporting responsibilities of the Group. At the
Investment Manager Isobel is head of the Fund Finance
department. Isobel is ACCA qualified with over 30
years’ experience in the financial services sector. Her
experience is wide-ranging and includes managing the
financial reporting for three listed Investment Trusts and
two listed venture capital trusts.
/
JUSTIN HUBBLE,
PARTNER & GENERAL COUNSEL
Justin joined the Investment Manager in 2017 as
General Counsel. He began his legal career as a
barrister in New Zealand before moving to the UK
where he worked as a private practice lawyer at City
firm Ashurst during the dot-com era. On leaving
private practice he pursued in-house roles as the
General Counsel of several high growth, disruptive tech
businesses from start-up to float. Justin is qualified as
a barrister & solicitor in New Zealand and as a solicitor
in the UK. He is a graduate of Otago University, New
Zealand and holds a Master of Laws degree from
University College London.
Investment
Manager’s Report
MAX SHENKMAN, Head of Investment
32
Company Overview
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Other Information
Triple Point Social Housing REIT plc
Coming into 2022, the Group had evidenced its strong
operational performance despite the COVID pandemic
and high inflationary environment. All of the Group’s
debt was fixed-rate meaning that concerns around the
risk of rising interest rates had been mitigated through
the Group’s refinancing in August 2021. Similarly, the
inflation-linked nature of the Group’s leases (with the
majority being uncapped and linked to CPI) combined
with the Government’s stated policy of increasing social
housing rents by CPI + 1% meant that the Group was
well positioned to offer investors strong protection
against the risk of rising inflation. Valuations had
proven to be resilient and, given the strong underlying
supply and demand fundamentals of the sector,
seemed well placed to withstand a possible economic
downturn. Given these inherent protections against key
macroeconomic investor concerns, our focus at the start
of the year was on making sure that the Group’s portfolio
remained resilient and continued to perform well,
delivering good homes and sustainable returns to our
investors, deploying the Group’s remaining capital into
high quality Specialised Supported Housing properties
with a focus on additionality, and making sure that the
Group was able to constructively respond to the known
concerns raised by the Regulator around the risks posed
to Registered Providers through entering into long
leases.
Now that 2022 has drawn to a close, it is important to
look back and consider to what extent our assumptions
around the Group’s protections against inflation and
rising rates held firm, assess how successful we were
in achieving our strategic objectives, and how well we
responded to 2022, an unpredictable year that was more
volatile and tragic than anyone could have foreseen.
Taking interest rates first, this year has seen those with
floating rate debt scramble to refinance or hedge
against a backdrop of rapidly rising interest rates and
hedging costs. Our decision to refinance the Group’s
floating rate revolving credit facility in August 2021 was
hugely beneficial to the Group this year and has fully
insulated the Group from any direct financial impact
from rising interest rates. However, rates have risen at
such a pace, and to such an extent, that not only have
they increased the cost of borrowing but they have also
begun to undermine wider property market valuations,
especially those with a focus on long income, as the
gap between property yields and the risk-free rate has
narrowed. The impact on the valuation of the Group’s
properties has been limited so far and, whilst the risk of
further rate increases remains, we expect this to be the
case going forward.
This year, the Board took the decision to increase the
Company’s target dividend by 5% which was supported
by the Group’s rental income increasing on average by
6.7%. During November, in order to help alleviate the
cost-of-living crisis, the Government moved away from
the prevailing social housing rent policy (which was to
increase rents by CPI + 1%) and capped social housing
rent increases at 7% for the year, beginning April
2023. Specialised Supported Housing was excluded
from this cap. Despite Specialised Supported Housing
being excluded, the Group will voluntarily apply a 7%
temporary rent increase cap to the Group’s leases. We
took this decision with the Board because we wanted to
support the Group’s lessees and ensure that the Group’s
rent increases remained consistent with the wider social
housing sector. It also felt like the right thing to do in the
midst of a cost-of-living crisis.
A lot of the focus of the last twelve months has been
on optimising the performance of the Group’s property
portfolio. The rate of making new acquisitions was
impacted by many of the properties we targeted being
in development and so suffered from the supply chain
issues, labour shortages and/or cost increases that have
caused delays for development projects throughout the
UK. We have deployed during the year £20.3 million into
14 properties and have £13.1 million of uncommitted
cash still available. Whilst we had originally expected
to be fully deployed by the end of the year, given the
deterioration of market conditions over the course of
the year, we have retained a certain amount of capital
in order to give the Group optionality over the coming
year.
As the Chair has made clear, the Company is exploring
making accretive share buybacks and the potential sale
of a portfolio of the Group’s properties. So, whilst the
Group’s pipeline of strategically important opportunities
remains strong, given the Company’s share price is at a
significant discount to net asset value, any decision to
deploy capital into income producing properties needs
to be considered against the relative benefit of returning
capital to shareholders.
The Manager’s Housing Team of 24 people are focused
on monitoring the performance of the properties,
lessees and care providers within the Group’s portfolio.
Properties are routinely inspected by the Manager’s in-
house surveyors and this is complemented by quarterly
and bi-annual operational, financial and compliance
surveys as well as frequent engagement with senior
management teams. We have added to the asset
management side of our Housing Team at Triple Point
/ INTRODUCTION
33
2022 Annual Report
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Other Information
with two new hires, both of whom have strong direct
Registered Provider or Local Authority experience. The
constant engagement between our asset management
team and the Group’s lessees has helped to ensure
that the vast majority have performed in line with
expectations over the last 12 months. Excess demand for
Specialised Supported Housing continues to underpin
the rental payments made to the Group by its lessees,
and these payments have generally remained consistent
with the exception of two Approved Providers, more
information on which is provided in the Approved
Provider section below. If there are issues within the
portfolio at a granular level, for example a need to find
a new care provider for a property due to the exit of an
incumbent, then it is the job of the asset management
team to work with the relevant Approved Provider to
ensure that a resolution that secures the continued
delivery of a good Specialised Supported Housing
service and the sustainability of the Group’s rental
income can be found as quickly as possible, and in a
way that benefits all stakeholders. As always, the team’s
focus remains on ensuring that the individuals living
in properties owned by the Group have a good home
whilst receiving the care and support on which they rely.
34
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Triple Point Social Housing REIT plc
Social Impact remains at the core of the Group’s strategy.
The independent Impact Report prepared by The Good
Economy for the period ended 31 December 2022 sets
out the Group’s impact objectives and target outcomes
on which the Group’s performance can be measured
against. The Impact Report prepared by the Good
Economy is available separately on the Group’s website
and we look forward to continuing our work with the
Good Economy, as well as our other partners, to drive
forward standardised reporting for equity investors in the
sector.
It is now recognised that climate change can impact the
long-term value of an asset and therefore developing
robust climate risk management is an important part
of an Investment Manager’s responsibilities. The
Task Force on Climate Related Financial Disclosure
has emerged as the industry-leading standard for
providing transparency on how investments are being
protected against possible risk from climate change,
or conversely how opportunities may be captured. The
Group has chosen to make a voluntary disclosure using
this framework which can be found on page 54.The
We will continue to work with our
lessees in order to roll out a new
lease clause that we hope will
help ensure a path to compliance
for those Registered Providers
who are able to demonstrate
to the Regulator that they have
meaningfully accommodated
historic concerns.
disclosure demonstrates how the Investment Manager
approaches this challenge for the Group, through
four areas (Governance, Strategy, Risk Management,
Metrics & Targets) and in doing so seeks to provide
added reassurance to investors on how risk as a result
of climate change is understood and managed for the
Group’s assets. The Investment Manager is committed
to continuing to develop and improve its approach to
this challenge and the scope of the disclosure details
provided.
Our retrofit pilot project continues to progress well. Each
property in the pilot has been reviewed to assess the
suitability of the proposed upgrade works and costings.
Our primary focus is on a ‘fabric first’ approach, ensuring
that properties are insulated and airtight. This approach
will enable us to minimise disruption to residents whilst
reducing energy consumption. The pilot project will see
a range of new technologies and systems installed into
our properties including air source heat pumps and solar
PV panels as well as ‘fabric first’ items such as additional
insulation. We are working with a single contractor and
retrofit designer, and are in the process of agreeing how
to implement the proposed physical works in the pilot
projects.
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2022 Annual Report
At the start of the year, we were focused on amending
the Company’s investment policy in order to ensure that
we could agree more flexible leases with Registered
Providers. We are grateful for the shareholder support
regarding these changes which were agreed in May.
These amendments were required to ensure that the
Group is at the forefront of an evolving sector and able
to engage with the strongest counterparties on the best
projects. They were also reflective of our desire to alter
the Group’s investment structure to help our Registered
Provider partners address some of the concerns that the
Regulator has raised about the long-lease model and
promote their compliance with the Regulator’s standards.
The changes to the Company’s investment policy have
also enabled us, in the latter half of 2022, to begin work
on a new clause that we hope to include in all of our
existing Registered Provider leases following ongoing
consultation with stakeholders, including the Regulator.
The aim of this clause is to address some of the general
risks raised by the Regulator in relation to long leases
and in so doing protect Registered Providers if factors
beyond their control, such as a change in government
policy in relation to Specialised Supported Housing
rents, reduce the amount of rent they are able to
generate from a property or properties that they lease
from the Group. In some such circumstances, the clause
allows for the Registered Provider to agree a new rent
level which is reflective of the revised circumstances.
Should the new rent level not be acceptable to the
Group, the Group has the ability to re-assign or
terminate the lease. This clause has been developed in
close consultation with the senior management teams
of a selection of the Group’s Registered Providers and
has been discussed with the Regulator. The Group’s
valuers are supportive of the clause and have opined
that the roll-out of the clause would lead to no negative
impact on the value of the Group’s portfolio. In addition
we have had initial conversations with Group’s lenders
about the clause being included in leases over which
they have security. Now that the clause is in near agreed
form, following the publication of the annual report, it is
our intention to engage with shareholders to understand
their feedback on the clause. Subject to shareholder
feedback, we will look to roll out the clause methodically
with all of the Group’s Registered Provider lessees in
the second quarter of this year. In so doing, we hope to
enable the Boards of the Registered Providers we work
with to further their compliance with the Regulator’s
standards.
In responding to the unforeseen challenges thrown up
by 2022, we feel that the Group has arguably proven
its relative resilience. Come what may politically in the
UK, there will still be an overwhelming need for more
Specialised Supported Housing in this country and its
unlikely that political volatility is going to change that.
Similarly, with both main political parties seemingly
now wedded to fiscal prudence, private funding and
privately owned social housing properties are going
to be a critical part of our collective ability to respond
meaningfully to the housing crisis. As was demonstrated
through COVID, the Group remains resilient to a
downturn in economic circumstances. The events of
2022 served to accelerate such a downturn. Due to the
ongoing strong demand for more specialised supported
homes and the Government support for the individuals
living in the properties owned by the Group, we expect
continued resilience to these external factors, as
demonstrated by the Group since inception.
/ MARKET
As ever, growing excess demand for more homes is
one of the defining characteristics of the Specialised
Supported Housing sector. Whether it be analysis
undertaken by the National Audit Office, the conclusions
of the Government’s social care white paper or
independently commissioned research there is strong
consensus that demand for social care will continue to
grow due to better diagnosis, higher survival rates for
premature babies and longer life expectancies and this
will drive further demand for Specialised Supported
Housing. Put most succinctly, in its 2021 “People at the
Heart of Care” white paper
3
, the Government estimated
that by 2030 demand for supported housing will increase
by 125,000 homes.
This growing demand is now set against a backdrop
of a challenging operating environment for Registered
Providers. For decades now this country has looked to
Registered Providers to deliver the affordable homes that
local authorities rely on. However, an ever-growing set of
financial headwinds now face the sector and is beginning
to inhibit the ability of Registered Providers to deliver
their development pipelines. As well as the ubiquitous
concerns around rising costs and interest rates,
Registered Providers also need to accommodate within
their business plans the ability to meet the expenditure
associated with ensuring that their properties meet the
latest fire safety standards and energy efficiency targets
and an increasing level of regulation, particularly in
relation to consumer standards. As a result, Registered
36
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Financial Statements
Other Information
Providers are increasingly considering alternative sources
of capital in order to deliver on the potential of their
development pipeline. We are seeing a growing number
of larger Registered Providers interested in exploring
working with providers of private capital such as the
Group, in order to develop new homes.
Whilst the case for private capital remains strong and
there is a consensus around growing demand for social
care and the efficacy of Specialised Supported Housing,
it is important not to focus solely on meeting demand.
The recent Levelling Up, Housing and Communities
Committee’s report on Exempt Accommodation was an
important reminder of the need to focus on delivering
services that meet the needs of the individuals and which
are appropriately regulated. Amongst other things, the
report recommended the implementation of minimum
standards for exempt accommodation, including on
referrals, care and support, and quality of housing and a
requirement for all exempt accommodation providers to
be registered.
The Group has leases with 27 Approved Providers,
having entered into leases with another three Approved
Providers during the period. The vast majority of
these lessees have performed steadily over the last 12
months, managing the challenges of inflation and labour
shortages well. However, two of the Group’s lessees
(Parasol and My Space) fell behind with their rental
payments over the course of 2022, which in turn has
caused rent collection at the portfolio level to slip below
historical levels.
Since the latter half of 2022, whilst Parasol have
continued to make regular rental payments to the
Group, these have not reflected the full amount of rent
due and so rental arrears have built up. We have been
engaging consistently with both the management team
and the Board of Parasol and understand they have
taken meaningful steps to address the underlying causes
behind the build up of arrears. Our expectation is that
we will agree a plan with Parasol in March that will see
rent payments increase over the course of the year,
simultaneously we are working with Parasol to put in
place a repayment plan for the arrears that built up over
the course of 2022.
As noted in the Company’s recent trading update,
in January, the Regulator published an Enforcement
Notice about My Space Housing Solutions in which
it noted concerns around solvency. This followed on
from the Regulatory Judgement of My Space published
in December in which My Space was downgraded to
the non-compliant rating of V4 for viability and G4
for governance (from a V3 G3 previously). My Space
currently have a number of actions prescribed by the
Regulator that they need to complete within a relatively
short timeframe. We have taken the decision to actively
look to move the Group’s properties away from My
Space. We have identified a possible alternative
Registered Provider and are in the process of providing
all of the information required for the Registered
Provider to determine whether they can provide the right
level of service to the individuals living in the properties.
Protecting the welfare of the residents of these
properties is the Group’s principal concern and it should
be noted that a transfer might require lease terms to be
amended. The Regulator has requested that My Space
consider, amongst other things, the option of a business
combination or merger, were a business combination or
merger be agreed then this could negate the need to
move properties.
In order to establish the downside risk, the Board and
the Manager requested the Group’s valuer, Jones Lang
LaSalle (“JLL”), to determine the potential negative
impact on the value of the Group’s property portfolio in
the event that My Space were to go into administration.
JLL have estimated this impact to be up to 2.4% of the
Group’s total portfolio valuation as of 31 December
2022.
The performance of My Space is not reflective of the
Group’s wider portfolio of lessees and whilst we are
focused on finding a resolution to the issues described
above, the Group’s other lessees do not require the
same level of engagement and are broadly performing
in line with expectations. Last year, the Regulator
issued two notices in relation to the Group’s Registered
Providers, as noted above, one related to My Space
and the other related to Highstone Housing Association
(3.5% of the Group’s rent roll). Highstone has committed
to work with the Regulator to address the issues
outlined in the regulatory notice and has already made
meaningful progress in that regard.
94.3% of the Group’s portfolio by rent roll is leased
to Registered Providers that are subject to regulatory
protections and standards provided by the Regulator.
Since IPO, of the Group’s 27 lessees, 10 have had
regulatory notices or judgements issued about them
by the Regulator highlighting issues that they need to
address. The Group’s focus has always been on working
with Registered Providers, regulated by the Regulator,
in order to deliver Specialised Supported Housing to
vulnerable individuals throughout the UK (Specialised
Supported Housing makes up 88.5% of the Group’s
properties by rent roll). We believe in proportionate
37
2022 Annual Report
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Other Information
specialist industry regulation and its ability to enhance
governance and service provision. We think this is
important when delivering homes to vulnerable adults
as it brings additional scrutiny, accountability, and higher
standards all of which are implemented by a Regulator
that is focused on the delivery of social housing.
88.5% of the Group’s properties (by rent roll) benefit
from a separate care provider, regulated by the CQC.
The care provider delivers care and/or support to the
residents living in the Group’s properties. A further
3.8% of the Group’s properties are leased directly to
a care provider regulated by the CQC, meaning that
92.3% of the Group’s properties have care and support
provided by a CQC registered care provider. Based on
data received by the Manager from lessees, the Group
estimates that, for those lessees, the average care
hours received by residents is over 40 hours per week,
considerably above guidance around the levels of care
expected in Specialised Supported Housing.
As described above, a lot of our focus this year has
been on working to ensure that the Group’s Registered
Provider partners are able to address the points that are
consistent across the range of notices and judgements
that the Regulator has put out about Registered
Providers that operate in the Specialised Supported
Housing sector. These principally concern the risks
associated with long leases and our ability to materially
address these points has been unlocked through the
recent changes to the Company’s investment policy.
We expect the Regulator to remain very active in the
sector and to hold Registered Providers to the highest
standards. We complement our work with our lessees
by direct engagement with the Regulator to keep the
Regulator informed on our areas of focus and as much as
possible better understand their concerns so they can be
reflected in any changes we make to our lease structures.
38
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Financial Review
We are pleased to present another stable set of financial results as highlighted earlier on pages 8 to 9. The Group’s
financial performance is underpinned by an increase in annualised rental income from inflationary uplifts in the
Group’s predominantly uncapped leases.
/
TOUCHING ON SOME OF THE KEY HIGHLIGHTS:
The EPRA NIY has
increased from
5.20% at 31 December
2021 to 5.46% at
31 December 2022.
The EPRA Earnings Per
Share (“EPRA EPS”) of
4.78 pence, compared
to 4.82 pence at 31
December 2021,
excludes the fair value
gain on investment
property and is measured
on the weighted average
number of shares in issue
during the period.
The EPRA NTA was 109.06
pence per share at 31
December 2022, the same
as the IFRS NAV pence per
share, compared to 108.27
pence at 31 December
2021.
EPRA NIY
EPRA ONGOING
CHARGES RATIO
EPRA EPS
EPRA NTA
RENTAL
INCOME
The annualised rental income of the Group
was £39.0 million as at 31 December 2022,
compared to £35.8 million at 31 December
2021.
£39.0m
5.46%
4.78 pence
per share
109.06 pence
per share
CASH
AND CASH
EQUIVALENTS
The Group held cash and cash equivalents
of £30.1 million at 31 December 2022,
compared to £52.5 million at 31 December
2021. £13.1 million of cash was available for
further investment as at 31 December 2022.
Cash generated from operating activities was
£25.7 million for the year, compared to £24.7
million for the year ended 31 December
2021.
£30.1m
A fair value gain of £8.3 million was recognised during the year on the
revaluation of the Group’s properties compared to £9.0 million in the
comparative year to 31 December 2021.
IFRS Earnings per share
was 6.18 pence for the
year to 31 December 2022,
compared to 7.05 pence for
the comparative year to
31 December 2021.
At the year end, the portfolio was independently valued
at £669.1 million on an IFRS basis compared to £642.0
million at 31 December 2021, reflecting a valuation
increase of 11.1% against the portfolio’s aggregate
purchase price (including acquisitions costs). This
reflects an EPRA net initial yield of 5.46%, against the
portfolio’s blended net initial yield of 5.90% at the point of
acquisition.
FAIR VALUE GAIN
£8.3M
IFRS
EARNINGS
PORTFOLIO
VALUATION – IFRS
6.18
pence
per
share
£669.1m
The ongoing charges ratio for the year was
1.60% compared to 1.54% for the year
ended 31 December 2021.
1.60%
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/
DEBT FINANCING
Following a refinancing in 2021, all of the Group’s debt is
fixed-price and long-term with the earliest debt maturity
occurring in mid-2028, providing strong protection from
rapidly increasing interest rates.
Over the period, the Group fully cancelled the £160.0
million revolving credit facility that had been provided by
Lloyds and NatWest. The undrawn facility had previously
remained in place following a reduction from £160.0
million to £50.0 million in February 2022 to provide the
Group with access to additional capital for deployment.
However, the recent increase in SONIA rates have made
this facility non-accretive to investor returns and the
remaining facility was cancelled in December 2022.
As at 31 December 2022, the Group’s debt structure
comprised two facilities with a combined value of
£263.5 million. Both facilities are fixed-priced (with a
weighted average coupon of 2.74%), long-term (with
a weighted average maturity of 10.6 years) and fully
drawn. The Group continues to maintain significant
covenant headroom across both facilities while also
having additional liquidity in the form of £75.1 million
unencumbered properties.
In August 2021, the Group secured £195.0 million of
long-term, fixed-rate, interest only, sustainability linked
loan notes through a private placement with Barings
and MetLife Investment Management clients against a
defined portfolio of the Group’s properties at a loan-
to-value of 50% at the point at which the debt was put
in place. The loan notes are divided into two tranches
of £77.5 million and £117.5 million with maturities in
2031 and 2036 respectively. Across both tranches the
weighted average coupon is 2.634%.
In addition, the Group has a long-term, fixed-rate facility
with MetLife Investment Management providing £68.5
million of debt secured against a defined portfolio of the
Group’s properties at a loan-to-value of 40% at the point
at which the debt was put in place. The facility comprises
two tranches of £41.5 million and £27.0 million with
maturities in 2028 and 2033, respectively. Across both
tranches the weighted average coupon is 3.039%.
In August 2022, the Group completed its first annual
review with Fitch Ratings, and we were pleased that
the Group’s existing rating of ‘A-’ with a Stable Outlook
and senior secured ratings of ‘A’ were re-affirmed by
Fitch Ratings in respect of both debt facilities. This is
a reflection of not only the Group’s continued financial
resilience, but also the resilience of the sector in spite of
the broader economic and market conditions.
Further information on the Group’s debt facilities is set
out in Note 20 of the financial statements.
DRAWN DEBT MATURITY PROFILE
£110.0m
£0m
£50m
£100m
£150m
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
£41.5m
£77.5m
£117.5m
£27.0m
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Triple Point Social Housing REIT plc
* calculated excluding acquisition costs
/
PORTFOLIO SUMMARY BY LOCATION
Scotland
Properties: 2
% of Funds Invested
*
: 1.0
Wales
Properties: 2
% of Funds Invested
*
: 0.6
East Midlands
Properties: 58
% of Funds Invested
*
: 11.9
Yorkshire
Properties: 64
% of Funds Invested
*
: 14.8
East
Properties: 20
% of Funds Invested
*
: 4.1
London
Properties: 27
% of Funds Invested
*
: 8.5
South East
Properties: 62
% of Funds Invested
*
: 9.4
South West
Properties: 29
% of Funds Invested
*
: 4.7
West Midlands
Properties: 84
% of Funds Invested
*
: 16.3
North West
Properties: 99
% of Funds Invested
*
: 19.8
North East
Properties: 50
% of Funds Invested
*
: 8.9
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/
PROPERTY PORTFOLIO REVIEW
As at 31 December 2022, the portfolio comprised 497
properties providing 3,456 homes, showing a broad
geographic diversification across the UK and reflecting
our investment strategy of providing additional homes
to address the acute need for Specialised Supported
Housing.
The IFRS value of the portfolio as at 31 December
2022 was £669.1 million, representing a 4.2% increase
compared to £642.0 million in 2021. On a like for like
basis there has been some negative adjustment to the
valuation yields of the Group’s properties reflecting
a general trend in real estate, principally driven by
rising interest rates over the last 12 months. However,
at a range of between 10bps to 25bps this outward
yield movement for the Group’s properties over the
12-month period has been limited relative to commercial
property sectors. This is reflective of excess demand for
Specialised Supported Housing and a continued lack
of supply, and the fact that, prior to this year, yields had
not tightened as much in the Specialised Supported
Housing sector as they had in some commercial property
sectors. In addition to this general outward movement
in yields, in the latter half of 2022 further outward
yield adjustments were applied to two of the Group’s
Approved Providers, My Space and Parasol, to reflect
rent arrears that had built up over the course of the year.
During the period, the Group bought 14 properties
for a total investment cost of £20.3 million (including
acquisition costs) as we looked to deploy our remaining
capital. As reported in the interim report, in the first half
of the year the Group disposed of four properties and
exchanged on the sale of two further properties. The
exchanges have now completed and so the Group has
sold 6 properties during the period. The decision to
sell these properties was taken due to changes in the
underlying investment cases and therefore, we believe
this to have been in the best interest of shareholders.
Where occupied properties have been sold, the Group’s
priority has been ensuring that the sale proceeded
in a way that ensured the continuous provision of the
services at the property and maintaining the well-being
of its residents. Since IPO, the Group has sold seven
properties as a result of changes in the underlying
investment cases and its focus remains on securing long-
term, inflation-linked income to generate sustainable
financial returns.
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/
RENTAL INCOME
The Group’s 395 leases generated a total annualised
rental income of £39.0 million at the period end,
an increase of £3.2 million since 2021 that was
predominantly driven by the Group’s rental income
increasing on average by 6.7% during the period.
All rents under the leases are currently indexed against
either CPI (92.6%) or RPI (7.4%). At the period end, the
portfolio had a WAULT of 25.3 years, which at present
we anticipate continuing to remain above 20 years,
with 77.6% of the portfolio’s rental income showing a
current unexpired lease term of 20 years or longer. As
we move into 2023, we expect to start entering into
more flexible lease terms as part of bringing new, larger
Approved Providers into the portfolio either through
new investments or by taking over the management of
existing properties.
Prior to the decision to voluntarily implement the
Government’s temporary 7% cap on social housing
rent increases in the Group’s rent increases for 2023,
the Group’s leases have been predominantly uncapped
with only a small portion (5.1% of rental income)
containing a cap and collar structure. For the purposes
of the portfolio valuation, JLL have held their inflation
assumption that CPI and RPI increase at 2% and 2.5%
per annum, respectively over the term of the relevant
leases.
/ OUTLOOK
We will need to remain focused on helping our
Approved Provider and care provider partners navigate
a high inflationary environment and remain watchful
of the impact that rising interest rates will have on the
value of the Group’s portfolio. Our asset management
team will continue to engage actively with My Space
and Parasol to ensure that we preserve the long-term
income generated by those properties we have leased to
these two organisations, but it is important to note that
we remain broadly confident about the resilience of our
other 25 lessees to the prevailing economic conditions
and this resilience is underpinned by growing demand
for Specialised Supported Housing.
Through our ongoing engagement with My Space and
Parasol we will look to increase dividend cover this
year and preserve it over the longer-term. We expect
the Group to continue to offer investors protection
against rising inflation due to both the inflation-linked
nature of the Group’s leases and the long-term fixed
price debt that the Group has secured. We have a
number of strategic objectives that we want to achieve
over the course of the year. As noted, the Board is
currently considering making accretive share buybacks
and the potential sale of a portfolio, and so any future
deployment will need to be considered in this context.
Were capital to be deployed, the focus would be on
opportunities that bring new Registered Providers into
the Group’s portfolio on flexible lease terms and which
demonstrate how our recent change in investment policy
has enabled us to secure best in class opportunities for
the Group. We will continue to work with our lessees in
order to roll out a new lease clause that we hope will
help ensure a path to compliance for those Registered
Providers who are able to demonstrate to the Regulator
that they have meaningfully accommodated historic
concerns. As always, we will remain focused on ensuring
that our partners deliver good homes to our residents
throughout the UK.
Max Shenkman
Head of Investment
2 March 2023
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RENTAL INCOME BY APPROVED PROVIDER
RENTAL INCOME BY LEASE LENGTH
Inclusion
29.8%
Parasol Homes
9.6%
Falcon
8.4%
Hilldale
8.3%
My Space
7.9%
Chrysalis
5.6%
BeST
5.2%
AHS
4.6%
Blue Square
3.8%
Care Housing Association
3.6%
Highstone
3.5%
Sunnyvale
1.5%
Bespoke Care and Support
0.8%
IKE
0.7%
Lifeways
0.6%
Pivotal
0.6%
YMCA Derbyshire
0.5%
Encircle Housing
0.5%
Partners Foundation
0.4%
Forge House Care Ltd
0.3%
YMCA North Tyneside
0.3%
Prime Calibre Care
0.2%
Keys
0.2%
IHL
1.2%
Sandwell
1.2%
Wings Care
0.9%
50+ yrs
10.1%
40-50 yrs
0.0%
0-20 yrs
22.4%
20-30 yrs
64.0%
30-40 yrs
3.5%
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2022 Annual Report
Sustainability
Report
We aim to be one of the leading investors in UK Specialised Supported Housing
and this is reflected in our constantly evolving and committed approach to
embedding social outcomes through the homes we create, alongside an
understanding of the need to ensure wider environmental, social and governance
(ESG) factors in decisions taken by the Group and our counterparties.
Our business model (pages 24 to 25) seeks to ensure
that our properties are suitable to meet residents’
needs and assist local authorities in responding to
local demand for the benefit of the wider community.
Our social impact is therefore at the heart of what we
do, and we focus on investing where there is clear
long-term social need. How we do this is summarised
below and set out in further detail in the independent
Impact Report available separately on the website
https://www.triplepointreit.com/. We maintain a robust
corporate governance framework, and this is described
in further detail within our corporate governance
report on pages 82 to 87. We also recognise the
importance of a wide range of other social factors
alongside environmental considerations and in particular
environmental efficiency, which is becoming increasingly
integral to our investment strategy.
/
THE GROUP’S SUSTAINABILITY
The Group continues to provide homes to individuals
with a significant need for appropriate housing and
support. These are some of the most vulnerable members
of society, with a range of learning disabilities, physical
disabilities and mental health diagnoses. Conversations
with housing providers, care providers and local authority
commissioners confirm that there is a high level of
underlying demand for Specialised Supported Housing.
We also have a responsibility to consider the wider risk,
opportunities and impacts of sustainability issues if the
Group is to succeed in providing high quality social
housing for vulnerable people over the long term.
We understand the importance of transparent reporting
as a requisite to accountability for strong sustainability
performance. During the last year, we have identified key
environmental, social and governance data points, each
that play a role in influencing the strategy’s sustainable
future. These data points incorporate areas where the
Group has the ability to drive positive change across its
portfolio and the wider sector.
To demonstrate the commitment to sustainability
progress, the Group has opted to track and report on
these ESG data points, noted in table 1 below. In addition
to reporting, we have set targets, where appropriate and
possible, for achievement during the 2023 financial year
or beyond.
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SUSTAINABILITY TABLE 1.
THE GROUP INVESTMENTS SUSTAINABILITY PERFORMANCE FOR THE REPORTING YEAR END
31 DECEMBER 2022
METRIC
RESULTS (AS AT 31 DECEMBER, 2022)
Portfolio EPC ratings
A: 0.4%
B: 31.15%
C: 39.31%
D: 22.02%
E: 6.95%
F: 0.12%
A-C: 70.87%
Property emissions per m2
(portfolio level carbon intensity)
The average annual Co2 emissions from a Group property: 1.4 tonnes
per annum
Total portfolio Co2 emissions: 3,610 tonnes
The carbon emissions produced by the Group’s properties are
categorised as Scope 3, generated from the energy usage across the
portfolio properties.
The Group partnered with Kamma Data, an innovative data provider in
the sector, demonstrating best practice in estimating property emissions
by utilising a variety of data sources. EPC data is used as a baseline, with
a proprietary matching system indexing localised and more frequently
updated EPC databases to ensure a high coverage rate. Emissions are
recalculated using primary data from the EPC reports to better reflect
the emissions associated with new technologies, and utilise up-to-date
carbon intensity data from the National Grid.
The Investment Manager is in the process of developing a net zero plan.
The Group’s emissions data have been taken from the baseline net zero
calculations for the Group’s portfolio, as of November 2022.
We are committed to improving the accuracy level of our environmental
disclosures and continue to work with highly rated data partners to
ensure best practice is followed.
METRIC
Number of properties and location of these properties
497 properties and 3456 units. See breakdown below:
REGION
# OF ASSETS
# OF UNITS
East
20
125
East Midlands
58
442
London
27
192
North East
50
377
North West
99
732
Scotland
2
29
South East
62
276
South West
29
167
Wales
2
20
West Midlands
84
554
Yorkshire
64
542
497
3,456
METRIC
Quality rating of care providers (CQC)
85% rated Good or Outstanding
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GOVERNANCE OF COMPANY
METRIC
DATA
Investment Trust Governance:
- Board diversity
- Board experience
- Board independence
Gender split: See Governance report for gender disclosure p.96
Ethnicity split: See Governance report for ethnicity disclosure p.96
Experience / education: See the Governance report for board member
biographies p.80 to 81
Average age: 68
Non-executives vs. directors: 100% non-executive
Board engagement with ESG:
The Board receive specific sustainability training from the Investment
Manager’s Head of Sustainability at a minimum of every 2 years.
The Board received regular updates on the Eco-Retrofit Project
throughout the year. Specifically, this is an ongoing programme to fund
the upgrade of properties owned by the Group see p.35.
Consideration and approval for the implementation of a 7% rent
increase cap, in line with the Department for Levelling Up, Housing, and
Communities (DLUHC) social housing rent cap. Specialised Supporting
Housing was excluded from the cap, but the Company still took the
decision to apply the 7% cap. In making this decision, the Board
wanted to support the Group’s lessees and ensure that the Group’s rent
increases remained consistent with the wider social housing sector, and
also wanted to do the right thing in the midst of the cost-of-living crisis.
In order to address Regulator concerns regarding risks that long
leases can pose on Registered Providers (such as risk of changes to
government policy impacting the amount of housing benefit available
to individuals living in Specialised Supported Housing and therefore
RP’s ability to pay lease rent), the Board agreed to engaging with the
boards and senior management teams of some of its lessees to agree a
new lease clause that aims to re-apportion some of this risk. The clause
will ensure that where there are risks that are beyond the control of the
Group’s lessees such as changes in government policy or regulation,
then, subject to a materiality threshold being breached, these risks will
sit with the Group. The Board intends to engage with shareholders on
implementation of the lease clause.
The Board and The Nomination Committee both considered the FCA’s
new Diversity Listing Rules and the targets these set out.
/
INITIATIVE-TAKING IMPROVEMENTS
The Investment Manager’s Property Asset Management team have developed a comprehensive retrofit program,
to improve the energy efficiency of properties, seeking to meet EPC regulation changes, reduce tenant costs and
reduce portfolio-wide emissions.
To conduct retrofit work on Specialised Supported Housing requires careful and considerate planning, especially
regarding the impact of construction during retrofit work, and the ease of functionality for all technology that is
used, including heating controls and ventilation systems. To this end, where possible, the team will conduct as many
upgrades as possible in one go in order to minimise disruption to tenants, considering tenant needs and ability to
benefit from proposed upgrades. All retrofit works will closely follow sustainability best practices.
See retrofit section on page 35
for further details regarding the retrofit plans and implementation.
/
SUSTAINABILITY APPROACHES: IMPACT AND ESG INTEGRATION
The Group’s approach to sustainability is to create social impact by delivering homes for vulnerable individuals
supported through the additional management of wider risks and opportunities which may impact the quality of
those homes or the long-term value of the assets through the integration of ESG factors in the investment decision
making process.
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Impact creation
: The Group’s social impact goal is to increase the provision of Specialised Supported Housing that delivers
positive outcomes for people with care and support needs. Under this overall impact goal, the Group has established the
following set of impact objectives and identified the target outcomes to which the Fund aims to contribute:
IMPACT OBJECTIVES
The areas under the Group’s direct
control or influence:
Social Need;
Fund sustainable developments;
increase supply;
quality services and partnerships
CONTRIBUTE
TOWARDS
TARGET OUTCOMES
The outcomes for people and planet;
these depend on many factors, one of
which may be the Group’s activities
Improve wellbeing
Value for money
The Good Economy conduct an independent assessment of the impact objectives and target outcomes. Full details
regarding the impact results can be found at The Good Economy’s website.
ESG integration:
In conjunction with the Board’s endorsement, and in line with the Principles of Responsible
Investment (PRI), the Investment Manager has an ESG integration policy in place, directly relating to the Group’s
investments with the aim of ensuring value for investors, coupled with respecting society and the environment.
Within this integration policy, the Investment Manager has set out principles which it incorporates throughout its
business, for example, to consider the impact of operations on local communities and to uphold high standards of
business integrity and honesty.
An overview of how ESG is integrated throughout the investment process is outlined in table 2, whilst further details
of this process, including examples, can be found within the ESG integration policy (available on request).
SUSTAINABILITY TABLE 2.
THE GROUP INTEGRATES ESG THROUGHOUT ALL STAGES OF THE INVESTMENT PROCESS.
INVESTMENT STAGE
SUSTAINABILITY ACTIVITIES
Origination and initial due
diligence
Key ESG and impact factors are summarised within the team’s internal pipeline tracker. An opportunity will only
progress to incurring costs once the senior investment team members believe that ESG conditions are being met
or managed and the opportunity does not present a material ESG risk.
Cost incurring due diligence
Key ESG considerations are assessed on a deal-by-deal basis within the due diligence trackers. A new due
diligence tracker is completed for new transactions, the tracker also assesses transactions against six impact
objectives.
The due diligence tracker is designed to capture all the ESG metrics collated throughout the origination and due
diligence phase.
Property Investment
Committee
ESG factors are presented and considered by members of the investment committee within a paper which is
accompanied by the due diligence tracker for all supporting ESG data.
The meeting minutes will record any ESG issues raised, with confirmation that ESG factors have been considered,
and the committee believes that once any ESG conditions are met, the deal does not present a material ESG risk.
The final due diligence Tracker will record any investment committee comments or actions on ESG.
Ownership and asset
management
On-going conversations with partners to discuss and gather insight and share good practice as well as identifying
early any future challenges. Property performance is monitored to ensure that social needs continue to be met.
The governance of existing counterparties is monitored through regular meetings and inspections.
We consider how to optimise ESG performance across the portfolio – for example, upgrading the EPC ratings of
existing properties through comprehensive retrofit programs.
We engage in sector-wide discussions (including with government) about ESG performance and best practices
Exit
If properties are sold, we will disclose ESG improvements during the period of ownership.
When considering ESG within the investment process, a materiality approach is taken to ensure focus is given to
those issues most likely to negatively impact or positively strengthen the homes we are investing in. The details
below summarise the areas of interrogation.
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/ ENVIRONMENT
When acquiring assets, we look closely at their
environmental impact, and encourage a sustainable
approach for new development. We also look to ensure
the environmental impact is considered in relation to the
maintenance and upgrading of existing properties.
We now require every property we acquire to have a
minimum energy performance rating of at least a ‘C’ on
an EPC for renovated properties and at least a ‘B’ on an
EPC for new-build properties, notwithstanding the legal
requirement for any privately rented properties to have a
minimum energy performance rating of E on an EPC. A
retrofit programme also commenced in
2021 to increase
all our properties EPC ratings to a minimum of C.
Through our rigorous and evolving due diligence
process, the high standards we expect from developers
and significant investment in the Specialised Supported
Housing sector, we have been able to provide capital
and expertise that has enabled our counterparties to
progress alongside us. We focus on offering residents
resource-efficient and adapted living areas which
help ensure our investments are fit-for-purpose and
sustain their value over the long-term. As a landlord,
we consider the opportunities we have to help reduce
running costs for our lessees and occupiers, and increase
resident well-being. Considering these issues helps to
increase the security of income and preserve the long-
term value of investments.
/
CLIMATE CHANGE
The Investment Manager, in accordance with the FCA’s
ESG Sourcebook, is committed to the implementation
of disclosures consistent with the recommendations of
the Taskforce on Climate-related Financial Disclosures
(TCFD) by 30 June 2024.
Whilst the Group is not currently required to disclose
against the TCFD framework, it seeks to demonstrate
best practice in transparency and therefore has included
a disclosure within this report. Further details are found
in the Climate Risk analysis section below, and the full
report is set out below.
/
SOCIAL AND SOCIAL IMPACT
Our properties aim to provide multiple benefits to local
communities. We want to provide residents with safe
and secure accommodation, which meet their individual
care needs. We work with Approved Provider lessees
to enable them to grow the portfolio of properties they
are responsible for managing, allowing them to expand
the number of individuals they support whilst providing
employment for local carers, housing managers and
builders. While development and refurbishment can
cause some minor short-term disruption to an area,
these activities help create employment and, at the same
time, help alleviate the UK’s housing crisis.
/ GOVERNANCE
The Group looks to encourage best practice governance
among all counterparties in order to minimise
operational risks and encourage them to continually
assess how they can contribute more to employees,
residents, wider society and the environment, through
compliance with legislation and regulations, and the
adoption and implementation of issue-specific policies.
Details on the Group’s corporate governance practices
are set out on pages 82 to 87.
/
FUTURE SUSTAINABILITY
INNOVATIONS FOR THE GROUP
NET ZERO ROADMAP EXERCISE
The Investment Manager has started the process
of aligning all of its financed emissions to Net Zero
pathways. The Investment Manager is a signatory of
the Partnership for Carbon Accounting Fundamentals
and discloses its financed emissions as part of this
commitment. The Investment Manager intends to set
near-term Science-Based Targets for 2030 across all of
its eligible assets as a first step towards reaching Net
Zero emissions by 2050, and as part of our obligations as
signatories of the Net Zero Asset Managers initiative.
/
CLIMATE RISK ANALYSIS
Climate-related risks and appropriate mitigation is a
growing area of focus for the Group. The team are
seeking to roll out comprehensive climate analysis
initiatives to support risk mitigation and forward
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planning. This will encompass both existing portfolio
properties as well as becoming incorporated into the
selection process for new properties.
The Group is considering the climate change strategy
of its portfolio including a review of its climate risks and
opportunities, and has committed to disclose these in
line with The Task Force for Climate-Related Financial
Disclosures (TCFD) recommendations. These are
designed to provide a framework to take account of
climate-related risks and opportunities and ensure that
corporate reporting is consistent and comparable.
The Group is pleased to voluntarily report its progress
to date in line with the eleven disclosures set out in the
TCFD recommendations.
Please refer to page 54 to 61 to read the full TCFD
disclosure.
/
THE INVESTMENT MANAGER: TRIPLE POINT
An important aspect of the Investment Manager’s
approach to ESG is the adoption of the Principles for
Responsible Investment (‘PRI’), which they signed up to
in 2019. The PRI are designed to guide and demonstrate
best practice ESG integration, and to promote alignment
between the objectives of investors and wider society.
The principles, which are voluntary, are intended to be
actionable and measurable are detailed in the table
below.
PRINCIPLE
SUMMARY OF INVESTMENT MANAGER ACTION
1
We will incorporate ESG issues into investment analysis and decision-
making processes.
As evidenced through our detailed approach to ESG due diligence
and laid out in our ESG Integration Policy.
2
We will be active owners and incorporate ESG issues into our
ownership policies and practices.
As evidenced through engagement with RPs and developers on
processes that would benefit from improved ESG performance.
For example, when investing in construction seeking developers to
become signatories of the Considerate Code of Constructors.
3
We will seek appropriate disclosure on ESG issues by the entities in
which we invest.
As evidence through our increasing expectations on those we work
with, for example requesting developers to become signatories to
the Considerate Contractors Code.
4
We will promote acceptance and implementation of the Principles
within the investment industry.
As evidence through our involvement in the Sustainability Reporting
Standard for Social Housing and the Equity Impact Project, and
participation in the Green Lease Working Group for the Green
Finance Institute initiatives which seek to drive industry best practice
in ESG and impact.
5
We will work together to enhance our effectiveness in implementing
the Principles.
As evidenced by the ongoing participation of the investment
manager in collaborative initiatives, and in ESG innovation, such as
our work towards improved energy efficiency.
6
We will each report on our activities and progress towards
implementing the Principles.
As evidenced through the detail we publish in our Annual Report,
our ESG Integration Policy, our Impact Report and the Investment
Manager’s Group Sustainable Business Objectives report.
Triple Point became a certified B Corp in December
2022. B Corp Certification is a designation that
a business is meeting high standards of verified
performance, accountability, and transparency on
factors from employee benefits and charitable giving to
supply chain practices and input materials. To achieve
certification, a company must:
•
Demonstrate high social and environmental
performance by achieving a B Impact Assessment
score of 80 or above and passing our risk review.
Multinational corporations must also meet baseline
requirement standards.
•
Make a legal commitment by changing their
corporate governance structure to be accountable
to all stakeholders, not just shareholders, and
achieve benefit corporation status if available in
their jurisdiction.
•
Exhibit transparency by allowing information
about their performance measured against B Lab’s
standards to be publicly available on their B Corp
profile on B Lab’s website.
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WIDER GOVERNANCE AND
SUSTAINABLE BUSINESS
BEHAVIOURS OF THE GROUP AND
INVESTMENT MANAGER
BUSINESS RELATIONSHIPS
The Group has a set of corporate providers that ensure
the smooth running of the Group’s activities. The Group’s
key service providers are listed on page 152, and the
Management Engagement Committee annually reviews
the effectiveness and performance of these service
providers, taking into account any feedback received.
The Group also benefits from the commitment and
flexibility of its corporate lenders for its debt facilities.
Each of these relationships is important to the long-term
success of the business. The Group and the Investment
Manager maintain high standards of business conduct by
acting in a collaborative and responsible manner with all
its business partners that protects the reputation of the
Group as a whole.
EMPLOYEES
The Group has no employees and accordingly no
requirement to separately report on this area.
The Investment Manager is an equal opportunities
employer who respects and seeks to empower each
individual and the diverse cultures, perspectives, skills
and experiences within its workforce. The Investment
Manager places great importance on company culture
and the wellbeing of its employees and considers
various initiatives and events to ensure a positive
working environment.
HEALTH AND SAFETY
The Group is committed to fostering the highest
standards in health and safety. Day-to-day responsibility
for health and safety in our properties is shared by the
Approved Providers and care providers who manage
the housing and provide care. Our Investment Manager
requests confirmation from Approved Providers that
all properties remain compliant and property visits,
following an agreed visiting schedule, are undertaken
to verify this. Every quarter the Board is provided with
updates on the health and safety of our residents.
DIVERSITY
We are an externally managed business and do not
have any employees or office space. As such the Group
does not operate a diversity policy with regards to any
administrative, management and supervisory functions.
A description of the Board’s policy on diversity can be
found on page 95.
The Investment Manager has an Inclusion and Diversity
Policy which outlines commitments including compulsory
training for all employees on equality
and
diversity
in
the
workplace
and
unconscious
bias
training.
All staff are expected to conduct
themselves
to
help
the
organisation
provide
equal
opportunities
in
employment,
and prevent bullying, harassment,
victimisation and discrimination. Behaviours contrary
to those outlined in the policy result in disciplinary
procedures.
The Investment Manager are members of the Diversity
Project, an initiative championing a more inclusive
culture within the Savings and Investment profession
and this further informs our approach to Inclusion and
Diversity. Some of the Diversity Project’s Five Year Goals
include:
•
All member firms to support one or more graduate/
school leaver recruitment programmes focused on
socio-economic diversity
•
Gender pay gaps reduced by one third from their
2019 figures
•
50:50 male:female graduate and school leaver
recruitment
Some of the initiatives used by the Investment Manager
to support these goals are the 100 Black Intern
Programme, Investment 2020 and Girls are Investors
Programme.
Triple Point are committed to transparency around
diversity report. We have voluntarily opted to report
against the following metrics:
TRIPLE POINT HOUSING TEAM
TRIPLE POINT GROUP
64.7% women
41.5% women
33.3% women in leadership roles
(partners/ directors)
21.4% women in leadership roles
(partners)
46.6% women in leadership roles
(directors)
23.5% ethnic minority
17.0% ethnic minority
33.3% ethnic minority in
leadership roles (partners/
directors)
0% ethnic minority in leadership
roles (partners)
20% ethnic minority in leadership
roles (directors)
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HUMAN RIGHTS
The Group is not within the scope of the Modern Slavery
Act 2015 because it has not exceeded the turnover
threshold and is therefore not obliged to make a slavery
and human trafficking statement.
The Board are satisfied that, to the best of their
knowledge, the Company’s principal advisers, which
are listed in the Shareholder Information section on
page 152 comply with the provisions of the UK Modern
Slavery Act 2015.
The Investment Manager takes the risk of Modern
Slavery extremely seriously. The Investment Manager’s
responsibilities as both an employer and investor are
laid out in a separate and public Modern Slavery Act
Statement available on the Triple Point website
4
.
INVESTMENT MANAGER’S GOVERNANCE OF
SUSTAINABILITY APPROACH
The Investment Manager’s overall commitment and
approach to sustainability is overseen by the Head
of Sustainability and the supporting sustainability
governance structure. The Investment Manager’s
sustainability is governed through three core elements.
Firstly, all investments must be approved by the
Investment Manager’s Investment Committee. All of the
Investment Manager’s Investment Committee members
receive ESG training, to ensure they fully understand
the ESG integration approach in place and can assess
investment opportunities in the correct context. This
review process ensures investment decisions are
aligned with the strategy’s ESG commitments and the
organisation’s ethos on corporate responsibility and
responsible investment more generally.
Secondly, the Investment Manager has a Sustainability
Group which meets every month and is chaired by
Ben Beaton, co-Managing Partner of the Investment
Manager. This group reviews all sustainability activities
across the business, with members consisting of partners
and business heads from across all functions and is
minuted by the Company Secretarial team. Reporting
into this group is the Sustainable Investment Subgroup,
which is chaired by Lindsay Smart, the Investment
Manager’s Head of Sustainability. This group meets every
8 weeks, with members consisting of senior partners
and investment directors from across the Investment
Manager’s investment strategies and will discuss
investment opportunities and related sustainability issues
and opportunities.
Thirdly, the Investment Manger’s Head of Sustainability
is responsible for running an annual ESG performance
review of ESG integration by each strategy, to ensure
teams are implementing the ESG activity committed
to within the associated integration policy. The results
and follow-up action of this review are shared with the
Sustainability Group and with the Sustainable Investment
Subgroup.
4.
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/
COMPANY’S APPROACH TO TCFD DISCLOSURE
The Task Force for Climate-Related Financial Disclosures (TCFD) recommendations are designed to provide a
framework for the financial sector to take account of climate-related risks and opportunities and ensure that such
reporting is consistent and comparable. The Company is pleased to report here in alignment with the eleven
recommended disclosures set out in the TCFD recommendations.
The report has been prepared with reference to TCFD All Sector Guidance and Supplemental Guidance for the
Financial Sector. In addition to UK government requirements, the FCA has made it a requirement for many regulated
firms to publish TCFD-aligned climate disclosures on their website, with effect from 1 January 2023 and with the
first reports due by 30 June 2024, under ESG 2.1 in the FCA Rules. While not in scope of this requirement yet,
the Company has decided to produce this TCFD report ahead of FCA expectations to demonstrate its support
for the disclosures. Except where noted, we consider our disclosure to be consistent with all of the Task Force
on Climate-related Financial Disclosures (TCFD) Recommendations and Recommended Disclosures as detailed
in “Recommendations of the Task Force on Climate-Related Financial Disclosures”, 2017, with use of additional
guidance from “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”,
2021. The Company has identified that it is not currently compliant with TCFD recommendations for target
disclosure. It is also noted that the Company has no Scope 1 and 2 emissions, as disclosed in the Directors’ Report
on page 105. Net Zero targets are currently being formalised, which will be disclosed in subsequent reporting.
RECOMMENDATION
RECOMMENDED DISCLOSURES
PAGES
Governance
Disclose the organisation’s governance around climate-
related risks and opportunities.
a. Describe the board’s oversight of climate-related risks and
opportunities.
55
b. Describe management’s role in assessing and managing climate-
related risks and opportunities.
55
Strategy
Disclose the actual and potential impacts of climate-
related risks and opportunities on the organisation’s
businesses, strategy, and financial planning where such
information is material.
a. Describe the climate-related risks and opportunities the organisation
has identified over the short, medium, and long term.
57-61
b. Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
57-61
c. Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lower scenario.
57-61
Risk Management
Disclose how the organisation identifies, assesses, and
manages climate-related risks.
a. Describe the organisation’s processes for identifying and assessing
climate-related risks.
55-56
b. Describe the organisation’s processes for managing climate-related
risks.
55-56
c. Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall risk
management.
55-56
Metrics and Targets
Disclose the metrics and targets used to assess
and manage relevant climate-related risks and
opportunities where such information is material.
a. Disclose the metrics used by the organisation to assess climate-
related risks and opportunities in line with its strategy and risk
management process.
61
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse
gas (GHG) emissions and the related risks.
61
c. Describe the targets used by the organisation to manage climate-
related risks and opportunities and performance against targets.
61
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GOVERNANCE
•
Describe the board’s oversight of climate-related
risks and opportunities.
•
Describe management’s role in assessing and
managing climate-related risks and opportunities.
Risks to the Company, including climate risks, are
formally captured in the Company’s Risk Register which
is owned by the Board, which has ultimate responsibility
for managing the climate risks faced by the Company.
The Investment Manager shares the Risk Register on
a quarterly basis, and provides additional updates on
material climate risks on an ad hoc basis. Triple Point’s
Head of Sustainability and the Risk team are responsible
for ensuring coverage of climate-related risks within the
risk register.
GROUP BOARD
RISK COMMITTEE
RISK TEAM
SUSTAINABILITY
TEAM
INVESTMENT
TEAM
SUSTAINABLE
INVESTMENT
SUBGROUP
APPROVED
PROVIDERS
TRIPLE POINT
SOCIAL HOUSING
REIT
TRIPLE POINT
INVESTMENT
MANAGEMENT
APPROVED
PROVIDERS
At the Investment Manager level, assessment and
management of climate-related risks and opportunities
is shared across the Housing Teams and the wider
Triple Point business through the Risk Committee and
dedicated Investment Team meetings. Triple Point’s
Sustainability Team and Risk Team, co-ordinate these
processes.
Climate-related risks are increasingly assessed as part of
the standard due diligence process when acquiring or
funding the development of new properties. All climate
risks identified are presented in the materials provided
to the Investment Committee and, where relevant, will
be discussed during committee meetings to assess
the potential impact of these risks on the property
or development and to determine the time frame
over which they might materialise. Additionally, the
investment committee will assess potential mitigations
for the risks.
The central Sustainable Investment Subgroup within
Triple Point holds meetings every second month, serving
as an extra platform for the examination of ESG issues
that could impact potential investments, including the
impact of climate change. This group is comprised of
senior members of Triple Point’s investment team from
all investment strategies, bringing together a range of
expertise and viewpoints for productive discussions.
Max Shenkman is currently the representative from the
Company in this subgroup.
Where investments are made into properties that
are in construction, Triple Point’s investment team
can have more of a direct influence over the design
and development of a property, and can ensure that
any relevant mitigation measures are included in the
specification, such as additional drainage measures for
properties with increasing flood risk.
RISK MANAGEMENT
•
Describe the organisation’s processes for identifying
and assessing climate-related risks.
•
Describe the organisation’s processes for managing
climate-related risks.
•
Describe how processes for identifying, assessing,
and managing climate-related risks are integrated
into the organisation’s overall risk management.
Climate-related risks to the portfolio are identified during
an annual workshop between the Housing Team and the
sustainability team within the asset manager. During this
workshop, the subject-matter expertise of the Housing
Team and asset management teams is utilised to map
climate risks onto the assets held by the Company. A
particular emphasis is placed on how identified risks
interact with the residents of the Company’s properties
and how these can be mitigated to ensure safety and
comfort, as well as providing financial resilience to the
Company.
The method used to evaluate the importance of each
climate risk that the Company is exposed to is aligned
to the Company’s general risk management structure. It
involves a matrix with a 5-point rating system for both
the likelihood and consequence of each risk.
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•
Likelihood: low, moderate, high.
•
Impact: low, moderate, high.
Financial impact if risk happens
Low
Moderate
High
1
2
3
4
5
Likelihood of risk happening
High
5
4
Moderate
3
2
Low
1
This alignment allows for the climate-related risks to
be incorporated into broader risk management and
mitigation procedures. These risks are added to the risk
register of the strategy, which is reviewed during the
quarterly Portfolio Risk Review meeting. This meeting
brings together the Housing Team, and the sustainability,
and risk teams, with the resulting risk register being
approved by the Board and evaluated and approved by
the Risk Committee.
The period over which each risk first becomes material is
defined as:
•
Short-term: 0-2 years
•
Medium-term: 2-5 years
•
Long-term: over 5 years
These time scales are aligned to the Company’s overall
risk management framework, considering the nature of
the Group’s assets and liabilities (see page 140).
The Company uses the suggested policies of the UK
Climate Change Committee’s Sixth Carbon Budget
as a starting point for identifying transition risks to
the property sector. Key suggested policies from
the Balanced Pathway, such as minimum efficiency
standards, are considered. In addition, key physical risk
outputs such as changes in temperature, precipitation
and storm frequency, are used to qualitatively assess
the physical risks to the assets. Outputs from a variety of
scenarios are utilised, which are outlined in the Strategy
section below.
In addition to the risk-identification workshops, the
Company uses an external provider, Climate X, to
analyse and quantify the physical risk to its assets
resulting from climate change. Climate X maintains
a realistic digital twin of the earth, utilising data from
remote sensing. This digital twin is combined with the
latest, high-resolution climate modelling, to determine
the future risks from a wide range of hazards, under a
range of climate scenarios:
HAZARDS ASSESSED BY THE CLIMATE X MODEL:
River Flooding
Subsidence
Heat Stress
Coastal Flooding
Landslides
Storm
Surface Flooding
Coastal Erosion
Droughts & Wildfires
Climate X simulate the effect of future chronic and
acute weather events at the asset level, to model the
vulnerability of the asset itself, which is then used to
calculate the asset-specific risk from each individual
hazard, and estimate future value-at-risk, expressed
as expected losses per annum, as a percentage of the
total building reinstatement cost for each property. An
example of the metrics given for a property is shown
below:
RISK DASHBOARD
HAZARD
RATING
SEVERITY
PROBABILITY
ACCURACY
ACUTE
River flooding
A
0.00m Depth
3%
79%
Surface flooding
A
0.00m Depth
1%
66%
Landslide
D
1 Shallow
27%
99%
CHRONIC
Subsidence
A
0.35cm / year
90%
90%
Costal flooding
F
1.40m Depth
95%
95%
Heat stress
C
7 No of days > 30°C
99%
99%
Figure 1
:
Example output from Climate X for a property.
The probability (e.g. 95%) of a risk of a certain severity
(e.g. a flood depth of 1.4 metres) are calculated and
summarised in an overall risk rating scope from A-F.
A transparent methodology is available for each risk
rating and an accuracy is calculated, based on model
agreement.
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STRATEGY
•
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium and long term.
•
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy and financial planning.
•
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
Investing in real assets exposes the Company to
both the physical and transition risks associated with
climate change. The Company’s properties may require
additional work to bolster their resiliency against
increasingly extreme weather, or require efficiency
upgrades to meet ever-stricter efficiency standards, as
the government seeks to mitigate emissions from the
building sector, one of the largest sources of emissions
in the UK. With a greater than average efficiency, the
Company’s building stock of properties provide some
resilience against this risk, but it is recognised that risks
and opportunities will arise across a range of timeframes,
which are considered here. The main risks to the fund are
shown below:
Financial impact if risk happens
1
2
3
4
5
Likelihood of risk happening
5
1
4
3
4
3
3
5
2
2
2
1
4
1
PHYSICAL
1
Water Stress
2
Increased frequency of heatwaves
3
Increased surface flooding during more frequent storms
4
Physical damage to properties (assessed by Climate X)
TRANSITION
1
Efficiency Regulations
2
Carbon pricing in the value chain
3
Changing resident requirements
4
Market expectation to report accurate emissions information
5
Cost of capital linked to efficiency performance
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PHYSICAL RISKS*
RISK
1. WATER STRESS
2. INCREASED FREQUENCY OF
HEATWAVES
3. INCREASED SURFACE FLOODING
DURING MORE FREQUENT STORMS
DESCRIPTION
Particularly for properties in the South
East of England, an increased frequency
of droughts may cause water shortages
and also lead to subsidence issues in
certain properties.
Given the vulnerable nature of many of
the Company’s tenants, overheating of
the Company’s properties is an acute
risk.
Increasing frequency of storms may lead
to an increased frequency of surface
flooding, if current drainage options
prove to be insufficient.
POTENTIAL
FINANCIAL
IMPACTS
- Increased utility bills for Approved
Providers and residents.
- May require installation of more water-
efficient appliances.
- Subsidence may affect property values
and require repair work.
- Capex may be required to add
additional insulation and ventilation to
properties to prevent overheating.
- Frequent overheating of buildings can
cause wear and tear and potentially
lower building values.
- Potential damage to properties as a
result of flooding, requiring repairs and
affecting property value.
- Properties may need to be upgraded
to include more comprehensive
drainage systems.
LIKELIHOOD
Low to Moderate
Moderate
Moderate
IMPACT
Moderate
Low to Moderate
Low
TIME HORIZON
Medium term
Short term
Medium term
MITIGATION
AND
RESILIENCY
- Utility bills are paid by the lessee and
residents.
- Where a significant risk of subsidence
is identified, properties would not be
acquired.
- Any future biodiversity improvements
will take drought risk into
consideration, noting that tree
planting in particular can exacerbate
subsidence.
- Repairs and restoration are the
responsibility of the lessee, under the
terms of the lease, which limits the
Company’s exposure.
- The ongoing EPC retrofit programme
will provide additional insulation,
higher-quality glass, and other
measures to limit overheating. This
risk will be considered when planning
efficiency upgrades to provide
synergies wherever possible.
- Consideration of risk factors such as
roof windows, glass types, and shading
are made during due diligence,
considering resident comfort and the
ease of use of windows and blinds.
- Surface flooding risk is assessed for the
portfolio by the Company’s Climate
X analysis, in addition to assessments
from insurers and the Environment
Agency.
- The Geographic diversity of the
Company’s properties means that this
risk is unlikely to be material at the
portfolio level.
- The Company is currently exploring
the potential for increasing biodiversity
at its properties. The potential for
natural drainage options will be
assessed as part of this work.
- Insurance protection will be increased
if necessary.
*Risk four, Physical Damage to Properties, is assessed in more detail in the Scenario Analysis section of the report.
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TRANSITION RISKS
RISK
1. EFFICIENCY
REGULATIONS
2. CARBON PRICING
IN THE VALUE CHAIN
3. CHANGING
RESIDENT
REQUIREMENTS
4. MARKET
EXPECTATION TO
REPORT ACCURATE
EMISSIONS
INFORMATION
5. COST OF
CAPITAL LINKED
TO EFFICIENCY
PERFORMANCE
DESCRIPTION
Government legislation
to mandate all
residential buildings
to achieve an EPC
B rating or above
will require retrofit
of energy efficiency
measures. If
regulations develop
particularly quickly,
newly completed
properties may have to
be retrofitted.
Construction activities
and manufacturing
of materials is carbon
intensive, causing
high exposure to any
potential future carbon
pricing measures.
As part of the energy
transition, home
requirements may
change, and will need
to be factored into
planning and design
standards. Facilities
such as secure bicycle
parking, electric
vehicle charging
points and public
transport accessibility
will become more
important.
Currently, the
Company follows
market practice in
reporting estimated
emissions for its
portfolio due to
difficulties in accessing
actual energy
consumption data for
its properties. Future
market expectations
may shift to collecting
real data. Without this
data, the fund may
be less competitive in
the market-place, as
investors are less able
to gauge the risk.
The Company has an
active sustainability-
linked loan facility,
in which cost of
capital is linked to
efficiency performance,
measured via EPCs.
In the future, debt
facilities linked to ESG
performance criteria
may become more
common and have
increasingly stringent
requirements around
efficiency standards.
POTENTIAL
FINANCIAL
IMPACTS
Properties that do not
meet standards may
become stranded
assets, require
retrofitting, or face
a 'brown tax', with a
lower valuation and
less liquidity.
Carbon pricing in
the supply chain of
materials may be
passed on to the
developers, increasing
property prices.
Including these
features in property
designs may increase
costs.
Increased difficulty
accessing funding, with
a higher cost of capital.
Failure to meet
efficiency standards
results in a higher
cost of capital for the
company.
LIKELIHOOD
High
Moderate
Moderate to High
Moderate to High
Moderate
IMPACT
Moderate
Low to Moderate
Low
Low
Low
TIME HORIZON
Medium term
Long term
Short term
Short term
Short term
MITIGATION
AND
RESILIENCY
- The Company’s
portfolio is
significantly more
energy efficient
than the national
average, with only
29% of properties
rated below EPC C,
compared with 56%.
- The ongoing EPC
retrofit programme
aims to further
improve efficiency,
to stay ahead of
emerging regulation.
- The 2023 Code
of Considerate
Constructors is
recommended to
developers and
includes guidance on
tracking embodied
emissions.
- The potential
for conducting
embodied emissions
assessments of future
properties is being
assessed.
- Public transport
accessibility
assessments have
been conducted for
eligible properties.
- Fast vehicle charging
and bicycle points
are included
in developer
requirements.
- The Company will
begin to track the
number of electric
vehicle charging
points.
- The Investment
Manager continues
to explore options to
improve data quality.
- Future building
standards may
include requirements
for smart metering,
and provisioning of
data to Triple Point.
- The existing
high efficiency
performance of the
portfolio provides
resiliency.
- Funds saved from
the lower cost of
capital could be
partially used to
further increase the
efficiency of the
portfolio.
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OPPORTUNITIES
OPPORTUNITY
1. INCREASED VALUE OF ENERGY EFFICIENT HOMES
3. INCREASED SURFACE FLOODING DURING MORE
FREQUENT STORMS
TYPE
Markets
Energy Source
DESCRIPTION
As efficiency regulations increase, the value of existing
efficient homes will increase, with a ‘green premium’ attached
to housing stock with good efficiency credentials.
Although not formally assessed, the geographical spread of
the Company’s properties means that opportunities are likely
to exist for on-site renewable energy generation. Energy
generated could be provided to tenants in the first instance,
to reduce energy bills, with the excess being sold to the grid
by the Company.
FINANCIAL
IMPACT
- Increased Net Asset Value for the Company.
- Additional income stream for the Company, through selling
excess electricity.
- Increased value of properties.
LIKELIHOOD
High
High
IMPACT
High
Low
TIME HORIZON
Medium term
Long term
/
SCENARIO ANALYSIS
The Company acknowledges the uncertainty around future climate scenarios and has performed partial, qualitative
scenario analysis to understand the impact of each of the most significant risks to its portfolio under different climate
outcomes. The most prominent risks to the Company were assessed under two scenarios, and the overall resiliency of
the strategy was assessed under each:
•
Net Zero: in which warming is limited to 1.5°C by 2050, limiting physical risks but creating high transitional risk
due to the introduction of strict climate policies and rapid technology change.
•
Hot House World: in which warming reaches 4°C, as no new climate policies are introduced and technological
progress is slow, limiting transitional risks but presenting significant physical risks.
1.5°C
4°C
Transition risk
Physical risk
1.5-DEGREE WORLD – WHERE WE ASSUME HIGH LEVEL OF
REGULATION AND TRANSITIONAL RISK
4-DEGREE WORLD – WHERE WE ASSUME A LIMITED REGULATORY
RESPONSE AND GREATER PHYSICAL RISKS
Most prominent risks:
• Quicker implementation of stringent efficiency requirements for
properties affecting property values and requiring retrofit.
• Carbon pricing and net zero building requirements increasing
building costs.
• Subsidence induced by water stress.
• Increased frequency of heatwaves necessitating building upgrades
Mitigants to ensure resilience:
• The Company’s assets are currently above market-standard for
efficiency and a retrofit program is underway to bring up the
standard of the properties in advance of any legislation.
• Assessment through Climate X to quantify worst-case risks, shows limited
damage to buildings, even under the Hot House World scenario.
• EPC retrofit programme is likely to provide mitigations to overheating
risks.
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Quantitative scenario analysis was conducted for the
portfolio utilising climate modelling from Climate X
(described in the Risk Management section). Scenarios
used here are from the International Panel on Climate
Change (IPCC)’s Representative Concentration Pathways
(RCPs) 2.6 and 8.5. These scenarios align to the Net
Zero (RCP 2.6) and Hot House World (RCP 8.5) scenarios
used in the qualitative analysis. Under each scenario,
potential losses per annum and a physical risk score were
determined.
RCP 2.6
RCP 8.5
LOSSES PER ANNUM
0.9%
1.0%
RISK SCORE
A
B
Overall, the Manager believes the Company’s overall to
be resilient to climate risks under a wide range of climate
scenarios. The Company’s assets have a low vulnerability
to physical climate risks and the portfolio is more efficient
than average, with an ongoing retrofit programme to
further increase performance, limiting transition risk.
METRICS AND TARGETS
•
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in line
with its strategy and risk management process.
•
Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and the
related risks.
•
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets.
The Company recognises the need for continuous
improvement of data collection to accurately assess
exposure to climate risks and opportunities that may
be present under future climate scenarios. Four main
indicators are tracked: Climate Value-at-Risk, EPC ratings,
energy consumption, and emissions.
Climate Value-at-Risk, given by the Climate X assessment
of the portfolio, was assessed for the first time in the
current reporting year. This analysis will be conducted
during each reporting year to track the exposure of the
portfolio to physical climate risk as the portfolio changes
and climate risk modelling methods mature.
RCP 2.6
RCP 8.5
LOSSES PER ANNUM
0.9%
1.0%
RISK SCORE
A
B
The EPC ratings of each property are monitored on an
ongoing basis, to assess exposure to future efficiency
regulations, and as a starting point for the EPC retrofit
programme. Currently, 71% of the portfolio is rated at C
or above.
B
31.15%
D
22.02%
E
6.95%
C
39.31%
G
0.04%
F
0.12%
A
0.40%
Finally, the energy consumption and associated
emissions of the properties are estimated by Kamma,
data, utilising a variety of data sources. EPC data is
used as a baseline, with a proprietary matching system
indexing localised and more frequently updated EPC
databases to ensure a high coverage rate. Emissions are
recalculated using primary data from the EPC reports
to better reflect the emissions associated with new
technologies and utilise up-to-date carbon intensity data
from the National Grid.
ENERGY CONSUMPTION (GWH)
30.15
TOTAL PROPERTY EMISSIONS
3,610
EMISSIONS PER PROPERTY (TCO2E)
1.4
SOCIAL AVERAGE
2.3
NATIONAL AVERAGE
3
The Investment Manager is currently in the process
of setting Net Zero targets across its entire portfolio,
which will cover all in-scope assets, including all of the
Group’s properties. The most up to date guidance from
the Science-Based Targets Initiative (SBTi) will be used
to determine the ambition of this target, which at the
time of publication, will result in a short-term emissions
reductions target, up to 2030. Following the release of
additional guidance, longer-term targets will be set.
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This section describes how the Board engages with its key stakeholders, how it considers their interests and the
outcome of the engagement when making its decisions, the likely consequences of any decision in the long-term,
and further ensures that it maintains a reputation for high standards of business conduct. The Group is committed
to continual stakeholder engagement and implements a cycle of constant engagement at all stages of the Group’s
investment lifecycle.
/
SECTION 172(1) STATEMENT
STAKEHOLDER
WHY IS IT IMPORTANT TO ENGAGE?
HOW HAVE THE INVESTMENT MANAGER/
DIRECTORS ENGAGED?
Shareholders
Investment from our shareholders plays an important role by
providing capital to ensure we can deliver additional housing
into the Specialised Supported Housing sector.
Through the investment of private capital into an under-funded
sector, we can achieve a positive social impact whilst ensuring
our shareholders receive a long-term inflation-linked return.
The way in which we engage with our shareholders is set out
on page 87 in our Corporate Governance Report.
Residents
Our strategy is centred on providing Specialised Supported
Housing for our residents. We remain focused on providing
homes to our residents which offer them greater independence
than institutional accommodation, as well as meeting their
specialist care needs.
The Investment Manager monitors resident welfare through
engagement with Approved Providers. The Investment
Manager receives quarterly reports from Approved Providers
to ensure compliance with health and safety standards. Any
concerns are raised to the Board.
We do not generally engage with residents directly. Instead,
day-to-day engagement is done by care providers and, to a
lesser extent, Approved Providers.
Investment
Manager
The Investment Manager is responsible for executing the
Investment Objective within the Investment Policy of the
Company.
The Board maintains regular and open dialogue with the
Investment Manager at Board meetings and has regular
contact on operational and investment matters outside of
meetings.
Approved
Providers
Our relationship with Approved Providers is integral to
ensuring rent is paid to the Group and that properties are
managed appropriately.
The Group’s leases with Approved Providers are fully
repairing and insuring – meaning that Approved Providers
are responsible for management, repair and maintenance, in
addition to tenanting the properties.
The Investment Manager looks to maintain good relationships
with Approved Providers, having formal meetings with senior
management at least every six months as well as engaging
more frequently on an ad hoc basis on a variety of matters.
Quarterly operational surveys and biannual compliance surveys
are provided to the Investment Manager.
Stakeholder
Engagement
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Triple Point Social Housing REIT plc
WHAT WERE THE KEY TOPICS OF ENGAGEMENT?
WHAT WAS THE FEEDBACK OBTAINED AND THE OUTCOME OF
THE ENGAGEMENT?
- Financial and operational performance.
- Share price discount to NAV and potential rectification action.
- The share price and possible share buybacks or the sale of a portfolio.
- The regulatory environment of the Supported Housing sector.
- Environmental, social and governance considerations.
- The Company’s key service provider appointments, including the AIFM
and broker arrangements.
The Board and the Investment Manager are considering share buybacks
and a portfolio sale to address investor feedback about the Company’s
share price.
The Board and Investment Manager consider shareholder concerns
when speaking to the Regulator and agreed to keep shareholders
updated of any developments. We understand the importance of, and
are committed to, working with Registered Providers to address the
concerns of the Regulator. Refer to the Market Review in the Investment
Manager’s Report on pages 36 to 38.
The Investment Manager has enhanced environmental, social and
governance considerations within its investment process, and within its
own business. Refer to Investment Manager’s Report on page 35, and
the Sustainability Report on pages 46 to 61.
We provide oversight of resident welfare by ensuring properties are
safe and secure before residents move. Going forward we monitor
compliance with health and safety standards; ensure residents are
looked after by competent counterparties; and request updates on any
health and safety issues every quarter.
Resident issues raised as a result of engagement through care providers
were addressed.
Any compliance issues are remedied with any associated works
undertaken.
The Group’s investment decisions are informed by the long-term needs
of our residents.
In addition to all matters related to the execution of the Company’s
Investment Objective, the Board engaged with the Investment Manager
on developments in the market and updates from the Regulator.
As a result of the engagement between the Board and the Investment
Manager the Group has been able to execute its investment strategy
and has considered what adjustments can be made to the Group’s
model that will uphold financial and governance standards while
attracting further private investment.
Additionally, the Investment Manager produces reports to the Board
every quarter on various governance and operational matters at the
Board’s request. Capital allocation is also considered with regard to the
views of the Board.
The Investment Manager discussed a number of topics with Approved
Providers including that properties are managed in accordance with
their leases; financial reporting and governance; and specific property-
related issues such as occupancy, health and safety issues, rent levels,
management accounts and governance.
Refer to the Investment Manager’s Report on pages 32 to 44.
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STAKEHOLDER
WHY IS IT IMPORTANT TO ENGAGE?
HOW HAVE THE INVESTMENT MANAGER/
DIRECTORS ENGAGED?
Care Providers
Our residents receive care from care providers. It is important
to ensure that our vulnerable residents receive the best
possible care. In addition, the care providers share the cost
of voids with Approved Providers so we engage with care
providers to ensure our Approved Providers are able to pay our
rent in the event of empty units.
Therefore, care providers play an essential role in the
occupancy levels of our properties and strong engagement
with the Group ensures the best possible care for our residents.
The Investment Manager engages with care providers as part
of its due diligence process and regularly meets and engages
with our provider representatives when inspecting the Group’s
portfolio, when reviewing quarterly data and on an ad hoc
basis.
Local
authorities
Local authorities are responsible for identifying appropriate
housing and care for the individuals who live in the Group’s
properties.
New acquisitions are assessed to ensure that they meet the
expectations of the relevant Local Authority in order to ensure
that referrals are made as efficiently and safely as possible.
When looking at a new acquisition the Investment Manager
engages with, or receives feedback from, various departments
within local authorities including Commissioners and Housing
Benefit officers. The Investment Manager will look to engage
with a local authority in relation to an existing scheme if
required (for example if a new care provider is needed).
The Regulator
The Regulator regulates Registered Providers of social
housing to ensure providers are financially viable and properly
governed. It is important to ensure that, as much as possible,
the Group reflects observations made by the Regulator in its
investment structures and its engagement with its Registered
Provider lessees.
The Investment Manager is in contact with the Regulator in
order to understand the key concerns and priorities of the
Regulator in the Specialised Supported Housing Sector.
Lenders
The Group’s investments in social housing assets are partly
funded by debt. Prudent debt financing is required to achieve
the Group’s return targets.
All of our debt is long-term and so it is important for the Group
and the Investment Manager to form a good relationship
with our debt provider partners and provide them with all
information and commentary required.
The Investment Manager engages with its lenders mainly via
the reporting of financial and information covenants under the
existing loan agreements on a quarterly basis.
In addition, there are regular ad-hoc engagements in relation
to general topics relating to the social housing sector as well
as specific topics arising from the financial and operational
performance of the Group’s activities and future opportunities,
and any other general matters affecting the relationship
between the Group and the lenders.
/
SECTION 172(1) STATEMENT
PRINCIPAL DECISIONS
Principal decisions have been defined as those that have a material impact to the Group and its key stakeholders. In
taking these decisions, the Directors considered their duties under section 172 of the Act.
INCREASE IN TARGET DIVIDEND
During the year, the Board increased the Company’s target dividend by 5%. The decision was supported by
underlying rental growth in the Group’s leases and represented strong dividend growth in a high inflationary
environment. Further detail can be found in the Investment Manager’s Report on pages 32 to 44. The Board believed
that the decision was in the best interests of the Company’s shareholders and feel confident that the decision will not
impact the Company’s ability to pay future dividends.
RENT INCREASE CAP OF 7%
The Board voluntarily took the decision to apply a 7% rent increase cap to the Group’s leases and agreed a
temporary one-year cap with most of the Group’s lessees.
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WHAT WERE THE KEY TOPICS OF ENGAGEMENT?
WHAT WAS THE FEEDBACK OBTAINED AND THE OUTCOME OF
THE ENGAGEMENT?
The Investment Manager engages with care providers on: the specific
care and support requirements of residents including health and safety
compliance (refer to Investment Manager’s Report on pages 32 to 44);
property management by Approved Providers; financial and operational
capacity for new schemes; occupancy levels; and financial performance.
The Investment Manager rejected deals where care providers did
not meet the care or governance standards expected or where care
providers were unable to demonstrate the financial strength to meet its
obligations under a service level agreement.
Following engagement, scope of works were agreed with care providers
to produce properties that meet the specific care needs of residents.
Whilst done at the relevant local authorities discretion care providers
have been changed where expectations around the standard of care
were not met or where engagement identified care providers in financial
difficulties.
The aim of the engagement is, as much as possible, to ensure that the
properties acquired by the Group are consistent with the requirements
of the relevant local authority.
Where necessary local authorities will be engaged with directly post
the acquisition of a property to access ongoing demand levels and any
changes in commissioning strategy.
The Investment Manager will listen to feedback from local authorities
and where possible will work with Approved Providers to improve and
upgrade properties to ensure that they meet ongoing commissioning
requirements.
An initial pilot programme to implement energy efficiency upgrades
across 12 initial properties has commenced. Refer to the Investment
Manager’s Report on pages 35 for more detail.
Discussions with the Regulator are focused on ensuring the market
evolves in line with its observations, and Registered Providers can best
focus on addressing the Regulator’s observations.
The Investment Manager continues to work with the Boards of its
Registered Provider lessees to understand how best we can help them
meet the standards of the Regulator. Refer to the Investment Manager’s
Report on pages 32 to 44 for more detail.
The Group engaged on the following topics: financial and information
covenant reporting and; active asset management activities undertaken
by the Group e.g. any other asset management activity that requires
lenders’ consent.
The Group is fully compliant with its debt covenants.
The Investment Manager’s pro-active engagement with the Group’s
lenders is welcome by its lenders and to date no concerns in relation to
the performance of its loans have been raised by the lenders.
The Board continues to monitor compliance with debt covenants and
keeps liquidity under constant review to make certain the Group has
sufficient headroom in its debt facilities.
The Group cancelled the undrawn £160.0 million Revolving Credit
Facility jointly provided by Lloyds and NatWest across two separate
reductions occurring in February 2022 (a part-cancellation of £110.0
million) and December 2022 (a cancellation of the remaining £50.0
million).
In August 2022, Fitch Ratings affirmed the Group’s existing Investment
Grade, long-term Issuer Default Rating (IDR) of ‘A-’ with a stable outlook
and a senior secured rating of ‘A’ for the Group’s existing loan notes.
This cap is in line with the Government’s cap on social housing rent increases. Specialised Supported Housing
was excluded from this cap, however, the Board believed that applying the cap was in the best interests of the
shareholders, Approved Providers, residents, and the local authorities. The Board believed that 7% would still
represent further significant rental growth for the Group’s portfolio and also provide a greater degree of certainty for
investors.
CANCELLATION OF £160 MILLION REVOLVING CREDIT FACILITY
The Board decided to cancel the undrawn £160 million Revolving Credit Facility with Lloyds and Natwest across two
separate reductions occurring in February 2022 and December 2022.
In making this decision, the Board considered the Group’s liquidity position and the Investment Manager’s
engagement with the relevant lenders, and determined that the decision was in the best interests of the Group’s
investors, taking into account the Group’s gearing level and facility fees.
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Risk Management
The Board recognises that effective risk management is key to the Group’s success
and that a proactive approach is critical to ensuring the sustainable growth and
resilience of the Group.
In the Company’s 2022 Interim Report we noted that
events that emerged in the first half of 2022 could
adversely impact on three of the Group’s principal
risks outlined in the 2021 Annual Report. These events
principally related to rising interest rates and inflation
in the United Kingdom, and the UK government’s
consultation on a possible rent cap to be applied to
increases to social housing rents for the year starting in
April 2023. In addition, at the Company’s annual general
meeting in May, shareholders approved changes to the
Company’s Investment Policy and Investment Restrictions.
These changes allow the Group to enter into a broader
range of lease structures, including: shorter leases;
selectively taking on the cost of planned maintenance;
and leases where upward only rent reviews are linked to
either inflation or central housing benefit policy. Given the
approved changes to the Company’s Investment Policy
and Investment Restrictions, and now that the outcome
of the government’s rent cap consultation is known (as
noted in both the Chair’s Statement and the Investment
Manager’s Report) and the Company has a better
understanding of the impact of both rising inflation and
interest rates on the Group’s portfolio and performance,
the Company has taken the opportunity to refresh the
Group’s principal risks and uncertainties, as set out herein.
By way of background, the Group focuses on a single
sub-sector of the UK real estate market with the aim of
delivering an attractive, growing and secure income for
shareholders. The Company has a specific investment
policy, as outlined on pages 22 to 23, which is adhered
to and for which the Board has overall responsibility. The
Group does not undertake speculative development.
Furthermore, the Group looks to work with experienced
lessees and has assembled a granular portfolio with a
relatively high WAULT.
As an externally managed investment company, the
Company outsources key services to the Investment
Manager and other service providers and relies on their
systems and controls. The Board undertakes a formal
risk review, with the assistance of the audit committee,
twice a year to assess and challenge the effectiveness
of the Company’s risk management and internal control
systems. The Board regularly reviews the control reports
of the key service providers and the external auditors note
any deficiencies in internal controls and processes that
have been identified during the course of the audit. A
description of the key internal controls of the Group can
be found on page 89.
The Investment Manager has responsibility for
identifying potential risks at an early stage, escalating
risks or changes to risk, and relevant considerations and
implementing appropriate mitigations which are recorded
in the Group’s risk register. Where relevant the financial
model is stress tested to assess the potential impact
of certain risks against the likelihood of occurrence.
The Board regularly reviews the risk register to ensure
gradings and mitigating actions remain appropriate.
The Group’s risk management process is designed to
identify, evaluate and mitigate (rather than eliminate)
the significant and emerging risks the Group faces and
continues to evolve to reflect changes in the Group’s
business and operating environment. The process can
therefore only provide reasonable, and not absolute,
assurance. It does however ensure a defined approach to
decision making that decreases uncertainty surrounding
anticipated outcomes, balanced against the objective of
creating value for shareholders.
During the year, the Board has not identified or been
advised of any failings or weaknesses in the Group’s risk
management and internal control systems.
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RISK HEAT MATRIX
Risk Impact
High
9,10
3
Moderate
to High
Moderate
8
4,5,6,7
1,2
Low to
Moderate
Low
Low
Low to
Moderate
Moderate
Moderate
to High
High
Likelihood
Risk
1
Default of one or more Approved Provider lessees
2.
Risk of an Approved Provider being deemed non-compliant with the Governance and
Viability Standard by the Regulator
3.
Risk of changes to the social housing regulatory regime and changes to government policy
in relation to social housing and housing benefit.
4.
Non-payment of voids cover by care providers
5.
Property valuations may be subject to change over time
6.
Risk of poor or inadequate housing management (including compliance) or poor provision of
care services by the Group’s Approved Providers lessees and care providers respectively.
7.
Higher than projected levels of inflation may impact Approved Providers’ ability to pay rent
due under the Group’s leases.
8.
The potential impact of climate change on the valuation of the Group’s properties
9.
Unable to operate within debt covenants
10.
Reliance on the Investment Manager
/
PRINCIPAL RISKS AND UNCERTAINTIES
The table below sets out what we the Company believes to be the principal risks and uncertainties facing the Group.
As noted above the table has been updated to reflect changes to the Company’s Investment Policy and Investment
Restrictions and any risks emerging as a result of the events and trends of 2022. The table does not cover all of the
risks that the Group may face. Additional risks and uncertainties not presently known to management or deemed to
be less material at the date of this report may also have an adverse effect on the Group.
In the 2021 Annual Report two emerging risks were reported: “change in social housing legislation” and the
“Ukraine-Russia conflict”. The risk of “change in social housing legislation” has been incorporated into the risk of
“changes to the social housing regulatory regime and changes to government policy in relation to social housing and
housing benefit” in the table below. The Group has no direct exposure to Russia or Eastern European territories and
so the principle impact of the Ukraine-Russia conflict has been regarding inflation. As such we consider this risk to
be covered in the “higher than projected levels of inflation may impact Approved Providers’ ability to pay rent due
under the Group’s leases” risk detailed in the table below.
1. RISK CATEGORY – PROPERTY
DEFAULT OF ONE OR MORE APPROVED PROVIDER LESSEES
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
The default of one or more of the Group’s lessees could
impact the rental income received from the relevant assets.
If the lessee cannot remedy the default, the Group may
have to terminate, re-assign or re-negotiate the relevant
lease. This could lead to a sustained reduction in rental
income.
Additionally, were a care provider not to renew the service
level agreement with a lessee, this may result in a lessee
having to cover rental payment on void units without
receiving the corresponding housing benefit payment from
the care provider.
Under the terms of the Company’s investment policy and
restrictions, no more than 30% of the Group’s Gross Asset
Value may be exposed to one lessee. This restriction is in
place to mitigate against the risk of significant rent loss in
the event of an Approved Provider default.
Were a lessee to default or were the Group to believe it
likely that a lessee would default, the Group could look
to move the affected properties to another Approved
Provider with whom the Group has a good relationship.
The intention would be to ensure both the ongoing
provision of housing to the residents, and, as much as
possible, the preservation of the income stream associated
with the relevant properties.
Moderate
LIKELIHOOD
Moderate to High
CHANGE IN YEAR
Increased
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2. RISK CATEGORY – REGULATORY
RISK OF AN APPROVED PROVIDER BEING DEEMED NON-COMPLIANT WITH THE GOVERNANCE AND VIABILITY STANDARD BY THE
REGULATOR
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
Should an Approved Provider with which the Group has
one or more leases in place be deemed non-compliant
by the Regulator, in particular in relation to viability,
depending on the further actions of the Regulator, it is
possible that there may be a negative impact on the
market value of the relevant properties which are the
subject of such lease(s). Depending on the exposure of the
Group to such Approved Provider, this in turn may have
a material adverse effect on the Group’s Net Asset Value
unless the matter is resolved through an improvement in
the relevant Approved Provider’s rating or the transfer of
leases to an alternative Approved Provider.
The Investment Manager has established relationships with
the Approved Providers with whom it works. The Approved
Providers keep the Investment Manager informed of
developments surrounding regulatory notices.
As at 31 December 2022, the Group has assembled a
diversified portfolio with leases to 27 Approved Providers.
The Group has leases in place with 10 Registered Providers
that have been deemed non-compliant by the Regulator.
Where Registered Providers have been deemed non-
compliant the Group has looked to work with them in order
to help address the issues identified by the Regulator. The
Group’s commitment to this approach can be seen through
the Group’s proposed new lease clause described in
both the Chair’s Statement and the Investment Manager’s
Report.
In all but two cases there has been no subsequent
reduction in value in the properties we lease to the
Registered Providers that have been deemed non-
compliant by the Regulator.
Moderate
LIKELIHOOD
Moderate to High
CHANGE IN YEAR
Increased
3. RISK CATEGORY – REGULATORY
RISK OF CHANGES TO THE SOCIAL HOUSING REGULATORY REGIME AND CHANGES TO GOVERNMENT POLICY IN RELATION TO SOCIAL
HOUSING AND HOUSING BENEFIT.
THE PREVIOUSLY NOTED EMERGING RISK CONCERNING CHANGES IN SOCIAL HOUSING LEGISLATION HAS NOW BEEN INCORPORATED
INTO THIS RISK.
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
The Social Housing Regulation Bill is in the process of
being passed by the UK government which is reflective of
the government’s ability, and desire, to change and update
regulation and policy relating to social housing.
In addition future governments may take a different
approach to the social housing regulatory regime, resulting
in significant changes to the law and other regulation or
practices of the Government with regard to social housing.
It is important that the Group works with the Group’s
Approved Provider lessees to help en-sure that they
respond proactively to any changes in regulation or policy
and the Group under-stands what, if any, impact it will have
on their organisation and the properties that the Group
leases to them.
As demand for social housing remains high relative to sup-
ply, the Board and the Investment Manager are confident
there will continue to be a viable market within which to
operate and a need for private in-vestment to deliver more
homes
In addition, the social housing regulatory regime in which
most of the Group’s lessees operate provides a high
degree of accountability and transparency.
High
LIKELIHOOD
Low to Moderate
CHANGE IN YEAR
Stable
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6. RISK CATEGORY – PROPERTY (NEW)
RISK OF POOR OR INADEQUATE HOUSING MANAGEMENT (INCLUDING COMPLIANCE) OR POOR PROVISION OF CARE SERVICES BY THE
GROUP’S APPROVED PROVIDERS LESSEES AND CARE PROVIDERS RESPECTIVELY.
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
Approved Providers and care providers face a number
of operational challenges (e.g. rising costs and labour
shortages) which have heightened the risk of poor or
inadequate housing management or poor care being
provided in relation to the Group’s properties.
Poor services being provided to the individuals in the
Group’s properties could undermine the benefits of
Specialised Supported Housing and cause reputational
damage to the Group which could negatively impact the
Group’s performance and/or the price of the Company’s
shares.
The Investment Manager undertakes strategic property
inspections in order to review the physical condition of the
Group’s properties as well as the quality of services being
provided to the Group’s residents. In addition, there is
frequent engagement with the Group’s Approved Providers
and care providers as well as quarterly operational and
compliance surveys which provide data on the performance
of the Group’s properties.
Moderate
LIKELIHOOD
Moderate
CHANGE IN YEAR
New
4. RISK CATEGORY – FINANCIAL RISK
NON-PAYMENT OF VOIDS COVER BY CARE PROVIDERS
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
If a care provider gets into financial difficulty and is unable
to pay contracted voids cover to an Approved Provider, this
could have a negative impact on the financial performance
of the Approved Provider which ultimately could impact its
ability to pay the Group its rent. This risk is compounded if
there is low occupancy in a property.
The Investment Manager closely monitors the performance
of the care providers to ensure, so far as reasonably
possible, that they are financially viable and performing
well. Should a care provider get into financial difficulty, the
Group works with a wide range of alternative care providers
who could step in to provide care services and therefore
cover the voids payment.
Occupancy is also closely monitored and the Investment
Manager works with Approved Providers and care
providers to optimise occupancy.
Moderate
LIKELIHOOD
Moderate
CHANGE IN YEAR
Stable
5. RISK CATEGORY – FINANCIAL
PROPERTY VALUATIONS MAY BE SUBJECT TO CHANGE OVER TIME
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
Property valuations are inherently subjective and uncertain.
Market conditions, which may impact the creditworthiness
of lessees, may adversely affect valuations. This is
particularly relevant at the moment given rising interest
rates and the resultant negative impact on property
valuations.
The portfolio is valued on a Market Value basis, which
takes into account the expected rental income to be
received under the leases in the future. This valuation
methodology provides a significantly higher valuation than
the Vacant Possession value of a property. In the event of
an unremedied default of an Approved Provider lessee,
the value of those assets in the portfolio may be negatively
affected.
Any changes could affect the Group’s net as-set value and
the share price of the Group.
All of the Group’s property assets are independently valued
quarterly by Jones Lang LaSalle, a specialist property
valuation firm, who are provided with regular updates
on portfolio activity by the Investment Manager. The
Investment Manager meets with the external valuers to
discuss the basis of their valuations and their quality control
processes. Default risk of lessees is mitigated in accordance
with the lessee default principal risk explanation provided
above. In order to protect against loss in value, the
Investment Manager’s property management team seeks
routinely to visit each property in the portfolio, and works
closely with the Group’s lessees to ensure, to the extent
reasonably possible, their ongoing financial strength
viability, and that governance procedures remain robust
through the duration of the relevant lease.
Moderate
LIKELIHOOD
Moderate
CHANGE IN YEAR
Stable
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9. RISK CATEGORY – FINANCIAL
UNABLE TO OPERATE WITHIN DEBT COVENANTS
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
The borrowings the Group currently has and which the
Group uses in the future may contain loan to value and
interest covenants ratios. If property valuations and rental
income significantly decrease, such covenants could be
breached. The impact of such an event could include
(among other things): an increase in borrowing costs; a
requirement for additional cash or property collateral;
payment of a fee to the lender; a sale of an asset or assets,
or a forfeit of an asset or any assets to a lender.
Any of the above could result in a material decrease to the
Group’s Net Asset Value.
The Investment Manager monitors loan to value and
interest covenants ratios on an ongoing basis. In the
unlikely event that an event of default occurs under these
covenants the Group has a remedy period during which it
can potentially cure the covenant breach by either injecting
cash collateral or unencumbered property assets in order
to restore covenant compliance.
During the year to 31 December 2022, no debt covenants
have been breached.
High
LIKELIHOOD
Low
CHANGE IN YEAR
Stable
8. RISK CATEGORY – CLIMATE RISK (NEW)
THE POTENTIAL IMPACT OF CLIMATE CHANGE ON THE VALUATION OF THE GROUP’S PROPERTIES
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
Changing weather patterns under
projected climate change scenarios could
physically damage the Group’s properties
and reduce their value. New minimum
efficiency standards could require retrofit-
ting of efficiency measures, or result in a
reduction in valuations. The impact of the
most prominent climate-related risks to the
portfolio is assessed in detail in the Group’s
TCFD reporting on page 54.
The Investment Manager’s sustainability team has been working with the
housing team to assess the risk that climate change poses to the Group’s
properties. The key transition risks to the portfolio have been identified
and qualitatively assessed. Physical risks to the portfolio have been
assessed using a new piece of analytical software and the outputs of this
analysis are demonstrated in the Group’s TCFD reporting on page 54. The
Investment Manager will work to ensure protections are put in place for
any properties that are deemed to be at high risk to the negative impact
of climate change. The Group believes that the Group’s reporting on
climate change is ahead of regulatory requirements.
Moderate
LIKELIHOOD
Low to Moderate
CHANGE IN YEAR
New
7. RISK CATEGORY – FINANCIAL RISK
HIGHER THAN PROJECTED LEVELS OF INFLATION MAY IMPACT APPROVED PROVIDERS’ ABILITY TO PAY RENT DUE UNDER THE
GROUP’S LEASES.
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
The Group’s leases contain upward only
rent reviews, generally linked to inflation
(typically CPI), with the majority being
uncapped.
Annual rental uplifts have been, and will
continue to be, higher than projected as
a result of increased inflation in 2022 and
2023.
Whilst the social housing rent increase cap of 7% will not apply to
Specialised Supported Housing, the Group has decided to apply a
temporary 7% cap to the rent increases it agrees with its Registered
Provider lessees for the calendar year 2023.
This should help to ensure that the Group’s lessees are able to agree rent
increases with Local Authorities, in relation to the Group’s residents, that
are in-line with the rent increases in the Group’s leases.
Moderate
LIKELIHOOD
Moderate
CHANGE IN YEAR
Increased
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10. RISK CATEGORY – CORPORATE
RELIANCE ON THE INVESTMENT MANAGER
RISK IMPACT
RISK MITIGATION
POTENTIAL IMPACT
The Company continues to rely on the Investment
Manager’s services and its reputation in the social housing
market. As a result, the Group’s performance will, to a
large extent, depend on the Investment Manager’s asset
management abilities in the property market. Termination
of the Investment Management Agreement would severely
affect the Investment Manager’s ability to effectively
manage the Group’s operations and may have a negative
impact on the Group’s performance and/or the price of the
Company’s shares.
Unless there is a default, either party may terminate the
Investment Management Agreement by giving not less
than 12 months’ written notice. The Board regularly reviews
and monitors the Investment Manager’s performance. In
addition, the Board meets regularly with the Investment
Manager to ensure that the Company and the Investment
Manager maintain a positive working relationship.
High
LIKELIHOOD
Low
CHANGE IN YEAR
Stable
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Going Concern
and Viability
/
GOING CONCERN
The Strategic Report and financial statements have set
out the current financial position of the Group and Parent
Company. The Board has regularly reviewed the position
of the Company and its ability to continue as a going
concern in Board meetings throughout the year. The
Group has targeted high-quality properties in line with
yield expectations and will continue to analyse investment
opportunities to ensure that they are the right fit for the
Group.
The Group benefits from a secure income stream from
long leases which are not overly reliant on any one
tenant and present a well-diversified risk. The Directors
have reviewed the Group’s forecast which shows the
expected annualised rental income exceeds the expected
operating costs of the Group. 91.8% of rental income
due and payable for the period ended 31 December
2022 has been collected, rent arrears are predominantly
attributable to two Approved Providers, My Space
Housing Solutions and Parasol Homes.
The Directors believe that the Group is still well placed to
manage its financing and other business risks and that the
Group will remain viable, continuing to operate and meet
its liabilities as they fall due. During the year, Fitch Ratings
Limited assigned the Company an investment Long-Term
Issuer Default Rating of ‘A-’ with a stable outlook.
The Directors have performed an assessment of the ability
of the Group to continue as a going concern, for a period
of at least 12 months from the date of signing these
financial statements. The Directors have considered the
expected obligations of the Group for the next 12 months
and are confident that all will be met.
The Directors have also considered the financing provided
to the Group. Norland Estates Limited and TP REIT
Propco 2 Limited have bank facilities with MetLife and
Metlife and Barings respectively. TP REIT Propco 5 Ltd’s
Revolving Credit Facility (RCF) with Lloyds and Natwest
cancelled in December 2022. Prior to cancellation the
facility was undrawn.
The loans secured by Norland Estates Limited and TP
REIT Propco 2 Limited are subject to asset cover ratio
covenants and interest cover ratio covenants which can
be found in the table below. The Directors have also
considered reverse stress testing and the circumstances
that would lead to a covenant breach. Given the level of
headroom, the Directors are of the view that the risk of
scenarios materialising that would lead to a breach of the
covenants is remote.
NORLAND ESTATES
LIMITED
TP REIT PROPCO 2
LIMITED
Asset Cover (ACR)
Asset Cover Ratio Covenant
x2.00
x1.67
Asset Cover Ratio 31 December
2022
x2.77
x2.10
Blended Net initial yield
5.55%
5.34%
Headroom (yield movement)
196bps
130bps
Interest Cover (ICR)
Interest Cover Ratio Covenant
1.75x
1.75x
Interest Cover Ratio 31
December 2022
5.02x
4.41x
Headroom (rental income
movement)
65%
60%
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Triple Point Social Housing REIT plc
The loan secured by Norland Estates Limited asset cover
ratio was amended from previous covenant of x2.25 in
August 2021 to bring more in line with the ACR covenant
in the new Note Purchase Agreement with MetLife and
Barings.
Under the downside model the forecasts have been
stressed to show the effect of some Care Providers
ceasing to pay their voids liability, and as a result this
causes Approved Providers to default under some
of
the Group leases. Under the downside model the
Group will be able to settle its liabilities for a period of at
least 12 months from the date of signing these financial
statements. As a result of the above, the Directors are of
the opinion that the going concern basis adopted in the
preparation of the financial statements is appropriate.
The Group has no short or medium term refinancing risk
given the 10.6 year average maturity of its long term
debt facilities with MetLife and Barings, the first of which
expires in June 2028, and which are fully fixed at an all-in
weighted average rate of 2.74%.
Based on the forecasts prepared and the intentions of
the parent company, the Directors consider that the
Group will be able to settle its liabilities for a period of at
least 12 months from the date of signing these financial
statements and therefore has prepared these financial
statements on the going concern basis.
/
VIABILITY STATEMENT
In accordance with Principle 21 of the AIC Code, the
Board has assessed the prospects of the Group over a
period longer than 12 months required by the relevant
’Going Concern’ provisions. The Board has considered
the nature of the Group’s assets and liabilities, and
associated cash flows, and has determined that five years,
up to 31 December 2027, is the maximum timescale over
which the performance of the Group can be forecast
with a material degree of accuracy and therefore is the
appropriate period over which to consider the viability.
In determining this timescale the Board has considered
the following:
•
That the business model of the Group assumes the
future growth in its investment portfolio through the
acquisition of Supported Housing assets which are
intended to be held for the duration of the viability
period.
•
The length of the service level agreements between
Approved Providers and care providers.
•
The future growth of its investment portfolio of
properties is achieved through long-term, inflation
linked, fully repairing and insuring leases
•
The Group’s property portfolio has a WAULT of 25.3
years to expiry, representing a secure income stream
for the period under consideration
•
The Group’s Loan Notes have a weighted average
term of 10.6 years
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In assessing the Company’s viability, the Board has
carried out a robust assessment of the emerging risks
and principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency, liquidity and dividend cover for a five-year
period.
The Directors’ assessment has been made with reference
to the principal risks and uncertainties and emerging
risks summarised on pages 66 to 71 and how they could
impact the prospects of the Group and Company both
individually and in aggregate. The following risks in
particular have been addressed in the assessment:
1.
Default of one or more Approved Provider lessees
(taking into account that two of the Group’s lessees
have built up arrears during 2022)
2.
Risk of changes to the social housing regulatory
regime
3.
Non-payment of voids cover by care providers
The business model was subject to a sensitivity analysis,
which involved flexing a number of key assumptions
underlying the forecasts. The sensitivities performed were
designed to provide the Directors with an understanding
of the Group’s performance in the event of a severe
but plausible downturn scenario, taking full account of
mitigating actions that could be taken to avoid or reduce
the impact or occurrence of the underlying risks outlined
below:
•
Rental income:
It is assumed that some care
providers do not meet their void payment obligations
and this causes Approved Providers to default under
7% of the Group’s leases.
•
Property valuations:
It is assumed that where there
are void units Approved Providers will default on
their leases, resulting in those units being valued
significantly below their vacant possession value. We
believe this represents a severe reduction in value.
•
Inflation:
No inflation uplift on rental income but
costs and dividends increase in line with inflation.
The outcome in the downturn scenario on the Group’s
covenant testing is that there are no breaches and the
Group can maintain a covenant headroom on existing
facilities.
In the downturn scenario mitigating actions to reduce
variable costs such as marketing, PR and any other non-
critical spend would be required to enable the Group to
meet its future liabilities.
The remaining principal risks and uncertainties, whilst
having an impact on the Group’s business, are not
considered by the Directors to have a reasonable
likelihood of impacting the Group’s viability over the
five-year period.
Based on the results of this analysis, the Directors have a
reasonable expectation that the Group and Company will
be able to continue in operation and meet its liabilities as
they fall due for the next five years.
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/
BOARD APPROVAL OF THE STRATEGIC REPORT
The Strategic Report has been approved by the Board of Directors and signed on its behalf by:
Chris Phillips
Chair
2 March 2023
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2022 Annual Report
Governance
CHRIS PHILLIPS, Chair
Chair’s Letter
/
DEAR SHAREHOLDER,
I am pleased to introduce the Corporate Governance
Report for the year ended 31 December 2022. The Board
recognises that a strong governance framework underpins
our purpose and strategy.
As set out in the Investment Manager’s Report on pages
32 to 44, new and unforeseen challenges have pervaded
2022. Against a backdrop of inflation, rising interest rates,
Russia’s attack on Ukraine and the resultant impact on
energy and food markets, and a tumultuous year for UK
politics, the Board has continued to oversee the Group’s
provision of sustainable, high-quality homes for vulnerable
people throughout the UK. Alongside this key ambition,
we have also worked with the Investment Manager
and our key stakeholders, to look for ways to close the
discount to net asset value that the Company has been
trading at during the period.
/
STAKEHOLDER ENGAGEMENT
The Board’s engagement with the Group’s key
stakeholders has been of primary focus during the
period. This has been particularly prevalent, given the
recent regulatory judgements issued by the Regulator
in relation to two of the Group’s Approved Providers. At
our quarterly Board meetings, the Investment Manager
has updated us on its relationship with the Approved
Providers and ensures us that it maintains regular dialogue
to encourage Approved Providers to continually improve
their operations.
Our investors are also of vital consideration for the Board’s
decisions. We have endeavoured to keep shareholders
abreast of any events impacting the Group and we have
been able to demonstrate the robustness of our business
model against a high inflationary environment, by
increasing our dividend target by 5.0% in respect of the
financial year ended 31 December 2022.
The views of our stakeholders are of critical importance to
the Board’s decision-making process, and a full overview
of our engagement with all stakeholders is set out in more
detail on pages 62 to 65. We will continue to engage
openly with all our stakeholders to understand their views
on governance and performance.
/
BOARD AGENDA IN 2022
The Board has focussed on a broad range of matters
during 2022 and have continued to seek ways to
strengthen the performance of our existing portfolio.
We were pleased to note that, at the Company’s Annual
General Meeting on 27 May 2022, shareholders voted in
favour of the proposed amendments to the Investment
Policy, following consultation with a number of our
investors. In summary, these amendments removed the
Group’s minimum lease term restriction; allowed the
Group to selectively take on the cost of funding planned
maintenance; and provided the Group with the ability
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to enter into leases which are subject to upward only
adjustments, tracking either inflation or central housing
benefit policy. These amendments have ensured that the
Group retains the requisite flexibility to continue to be
at the forefront of this evolving Specialised Supported
Housing sector and allows our Approved Providers to
accommodate observations made by the Regulator, and
thereby remain an attractive partner to the Group.
In addition, despite the Government excluding the
Specialised Supported Housing sector from the 7% cap
on social housing rent increases, the Board made the
decision to temporarily cap the Group’s rent increases at
7% for 2023.
The Board considers that commitment to continuous
improvement is an essential factor in an effective and
sustainable governance structure. To that end, the
Board requested an interim review of its progress in
implementing the recommendations that arose from
our external Board evaluation. The review confirmed
that we have made good progress in implementing the
review recommendations and enhancing governance
oversight, and no further issues had arisen in the period
that required additional attention. One area identified
that still required further progress was in relation to the
Board’s succession planning. I am happy to confirm
that advancement has been made in this regard and
I am grateful to Ian Reeves for leading the succession
process as Chair of the Nomination Committee. We look
forward to updating shareholders on the outcome of the
recruitment process as soon as practicable.
Further detail on the appointment process is included in
Ian Reeves’ Nomination Committee report on pages 94 to
96.
/
ANNUAL GENERAL MEETING
We are planning to hold our Annual General Meeting
(“AGM”) on 23 May 2023, and I look forward to the
opportunity this provides to meet with shareholders in
person. The detailed arrangements will be communicated
in our Notice of AGM published in March 2023.
/
COMPLIANCE STATEMENT
Throughout the year to 31 December 2022, the Board has
considered the Principles and Provisions of the AIC Code
of Corporate Governance (AIC Code). The AIC Code
addresses the Principles and Provisions set out in the
UK Corporate Governance Code (the UK Code), as well
as setting out additional Provisions on issues that are of
specific relevance to Triple Point Social Housing REIT plc.
The Board considers that reporting against the Principles
and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council, provides more
relevant information to shareholders.
The Company has complied with the Principles and
Provisions of the AIC Code. The AIC Code is available on
the AIC website (www.theaic.co.uk).
/
LOOKING AHEAD TO 2023
The Board remains focused on developing our high
standards of governance, to support the strategic
direction of the Group and deliver sustainable long-term
value for shareholders and all stakeholders. In this section
of the Annual Report, we report on our compliance with
the principles of corporate governance and highlight the
key governance events which have taken place in the year.
Chris Phillips
Chair
2 March 2023
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Left to right: Paul Oliver, Peter Coward, Tracey Fletcher-Ray, Chris Phillips and Ian Reeves CBE
Board of Directors
CHAIR
CHRIS PHILLIPS (72)
Appointed
17 July 2017
Committee memberships
Management Engagement Committee
Nomination Committee
Skills and experience
Chris has extensive experience of real estate and listed companies. He was Managing Director of PB Securities, the
UK subsidiary of Prudential Bache, for three years, before joining Lombard Odier as the Managing Director of its
London broking business. He then joined Colliers International and after heading its residential consultancy business,
became the first Managing Director of Colliers Capital UK Limited (Colliers commercial real estate property fund).
Having served on the Board of Places for People for 14 years, 10 of them as Chair, Chris stood down from the role in
January 2021.
Principal external appointments
London & Newcastle 2010 Holdings Limited (Chair)
Shetland Space Centre (Director)
Nova Innovations Ltd (Chair)
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CHANGES TO BOARD COMMITTEE MEMBERSHIP
•
As announced on 24 March 2022, Tracey Fletcher-Ray replaced Chris Phillips as Chair of the
Management Engagement Committee with effect from 24 March 2022. Chris Phillips will remain a
member of the Management Engagement Committee.
SENIOR INDEPENDENT DIRECTOR
IAN REEVES CBE (78)
Appointed
17 July 2017
Committee memberships
Audit Committee
Management Engagement Committee
Nomination Committee (Chair)
Skills and experience
Ian is co-founder and CEO of Synaps International Limited. He is visiting Professor of Infrastructure Investment
and Construction at The Alliance Manchester Business School, Chair of The Estates and Infrastructure Exchange
(EIX) and a Director of Xinous Inc.
He was appointed as a Non-executive Director and Chair of Geiger Counter
Limited on 13 December 2021 and 9 March 2022 respectively.
Ian was founder and Chair of High-Point Rendel Group, a pioneering management and engineering consultancy
company with a global network of offices. He has been president and CEO of Cleveland Bridge, Chairman of
McGee Group, Chairman of Constructing Excellence and Chair of the London regional council of the CBI.
Ian was awarded his CBE in 2003 for services to business and charity.
Principal external appointments
Synaps International Limited (co-founder and CEO)
The Estates and Infrastructure Exchange (Chair)
Geiger Counter Limited (Chair)
Xinous Inc (Director)
NON-EXECUTIVE DIRECTOR
PETER COWARD (66)
Appointed
17 July 2017
Committee memberships
Audit Committee (Chair)
Management Engagement Committee
Nomination Committee
Skills and experience
Peter is a chartered accountant with international commercial and corporate finance experience. He has over
25 years’ experience as a Senior Tax Partner at PricewaterhouseCoopers specialising in property, and has
worked with a wide range of firms to develop a knowledge and understanding of tax regimes worldwide and of
organisational and project structuring to optimise the tax position.
Principal external appointments
Bradda Capital Ltd (Director)
ChanceryGate Limited (Director)
Matfen Hall Ltd (Director)
The Heat Vault Company Ltd (Director)
True Potential Group Limited (Director)
NON-EXECUTIVE DIRECTOR
PAUL OLIVER (67)
Appointed
17 July 2017
Committee memberships
Audit Committee
Management Engagement Committee
Nomination Committee
Skills and experience
Paul has over 40 years’ experience in real estate development and investment management in both the UK
and Europe. He has led commercial real estate development teams and has been at the forefront of the
establishment of property funds since 1988. In 2002 he launched Teesland PLC on the LSE building funds under
management to €6.5 billion before sale to Valad in June 2007. Paul founded Curlew Capital in 2010 to pursue
‘Operational’ real estate markets focussing on ‘Beds’ – 2 funds in UK PBSA and a portfolio for Young Urban
residents in the Netherlands.
Principal external appointments
Curlew Capital Ltd (CEO)
NON-EXECUTIVE DIRECTOR
TRACEY FLETCHER-RAY (58)
Appointed
1 November 2018
Committee memberships
Audit Committee (appointed 24 January 2019)
Management Engagement Committee (Chair) (appointed as a member on 24 January 2019 and as Chair on
24 March 2022)
Skills and experience
Tracey has considerable expertise as an executive and non-executive director in the care and support sectors.
Tracey previously was a non-executive director to L&Q Group, one of the UK's largest Housing Associations and
developers, and was Managing Director of Caring Homes, a leading provider of care homes for the elderly. She
is currently CEO of Witherslack Group, a leading provider of specialist education and care for young people
with special educational needs.
She spent nearly two years as Managing Director at Berendsen PLC developing the company's healthcare
business, strategy and growth and eight years at Bupa UK, holding Managing Director roles in the Care Home
business which involved contracting with and providing services on behalf of local authorities and the NHS, and
Bupa Health Clinics.
Principal external appointments
Witherslack Group (CEO)
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Corporate Governance
/
GOVERNANCE FRAMEWORK
Our Governance Framework demonstrates how we operate, representing the key governance arrangements through
which the Board and its Committees can implement the highest standards of challenge and oversight. It is not an
exhaustive list of every organisation or service provider that the Group has engaged with on governance matters.
THE BOARD
The Board is collectively responsible for promoting the long-term sustainable success of the Group and generating value for
shareholders, whilst also remaining cognisant of its duties to its other stakeholders and its contribution to wider society. It does this
by providing effective oversight over the management and conduct of the Group’s business, strategy and development. The Board
determines the Company’s Investment Objective and Investment Policy, and reviews investment activity and performance.
The Board maintains effective oversight of the Investment Manager and compliance with the principles and provisions of the
AIC Code. The Board ensures the maintenance of a sound system of internal controls and risk management (including financial,
operational and compliance controls) and reviews the overall effectiveness of systems in place. Further, the Board is responsible for
approval of any changes to the capital, corporate and/or management structure of the Group.
The Board delegates day-to-day management of the business to the Investment Manager, save for such matters reserved for the
Board’s approval. To assist in carrying out its responsibilities, the Board has established three Committees. The Terms of Reference
for each of the Board’s Committee are available to view on the Company’s website https://www.triplepointreit.com/corporate-
governance/131/.
ALTERNATIVE INVESTMENT
FUND MANAGER
Triple Point Investment Management LLP is the Company’s
AIFM, and as such is responsible for portfolio management
and risk management of the Group pursuant to AIFMD.
The Investment Manager also provides certain property
management services to the Group, including the
preparation of budgets for the properties and co-ordinating
with third parties providing services to the Group. Further
information on the AIFM arrangements can be found on
pages 92 to 93.
COMPANY
SECRETARIAT
Ensures that Board procedures are complied with, advises
the Board on all governance matters, and supports the Chair,
the Board and its Committees to function effectively.
AUDIT
COMMITTEE
Assists the Board with reviewing
the effectiveness of the Group’s
financial reporting, maintaining an
appropriate relationship with the
Group’s auditor and monitoring the
internal control systems. See pages
88 to 91 for more detail.
MANAGEMENT
ENGAGEMENT
COMMITTEE
Assists the Board with reviewing
the contractual relationships of the
Investment Manager and third-party
service providers, and holding their
performance to account. See pages
92 to 93 for more detail.
NOMINATION
COMMITTEE
Assists the Board by leading the
recruitment process for candidates
for the Board, ensuring plans are
in place for orderly succession
to the board and overseeing the
development of a diverse pipeline.
See pages 94 to 96 for more detail.
SHAREHOLDERS
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KEY MATTERS RESERVED FOR THE BOARD
Board membership and powers including the
appointment and removal of Board members.
Establishing the overall control framework, Stock
Exchange related matters, including the approval
of communications to the Stock Exchange, and
communications with shareholders, other than
announcements of a routine nature.
Key commercial matters, including review of all
investments and divestments, and any significant
changes in lease terms.
The appointment, termination, and regular
assessment of the performance of the principal
advisers, including the AIFM, the Investment
Manager, Tax Advisers, Legal Advisers, Financial
Adviser, Administrator and Company Secretary,
Broker, Registrar, PR Adviser and Auditor.
The approval of the budget and financial models.
The approval of annual and half yearly
financial reports, to 31 December and 30 June
respectively, dividends, accounting policies and
significant changes in accounting practices.
The approval of the net asset value calculation
prepared by the Administrator on a quarterly
basis at 31 March, 30 June, 30 September and 31
December each year.
The review of the adequacy of corporate
governance procedures.
The review of significant estimates and
judgements of the Group.
The review of the risk inventory and the
effectiveness of internal controls.
Approval of changes to the Group’s capital
structure, dividend policy, treasury policy,
borrowing facilities and any banking relationships,
hedging strategy, cash management, the Group’s
business strategy, acquisitions and disposals and
capital expenditure.
Approval of any related party transactions subject
to further regulatory requirement.
Oversight of the Group’s operations ensuring
compliance with statutory and regulatory
obligations.
Corporate Governance
/
BOARD MEMBERSHIP AND
MEETING ATTENDANCE
Individual Directors’ attendance during the year to
31 December 2022 is set out below:
DIRECTOR
BOARD MEETINGS
ATTENDED /
REQUIRING
ATTENDANCE
GENERAL
MEETINGS
ATTENDED /
REQUIRING
ATTENDANCE
Chris Phillips (Chair)
8/8
1/1
Ian Reeves CBE
7/8
0/1
Peter Coward
6/8
1/1
Paul Oliver
8/8
1/1
Tracey Fletcher-Ray
8/8
1/1
/ COMPOSITION
The Group has a non-executive Chair and four other
non-executive Directors, including a Senior Independent
Director, all of whom are considered independent
on and since their appointment. All Directors are
independent of the Investment Manager.
Chris Phillips is the Chair of the Board. The Chair leads
the Board and is responsible for the Board’s overall
effectiveness in directing the Group. The Chair, in
conjunction with the Company Secretary, ensures that
accurate, timely and clear information is circulated to
the Directors, and sufficient time is given in meetings to
review all agenda items thoroughly in preparation for and
during Board meetings, following up any issues arising in
the Board meetings effectively. He promotes a culture of
openness and constructive debate to ensure the effective
contribution of all Directors, facilitating a co-operative
environment between the Investment Manager and the
Directors, and encourages Directors to critically examine
information and reports to constructively challenge
the Investment Manager and hold third party service
providers to account where appropriate.
The Chair has put mechanisms in place to facilitate
effective communication between shareholders and the
Board, to ensure that their views, issues and concerns
are considered as part of the decision-making process.
Ian Reeves is the Senior Independent Director and, if
required, will act as a sounding board and intermediary
for the other Directors and shareholders. In addition
to the Chair, Ian Reeves engages with shareholders or
Directors if they have any issues or concerns, or if there
are any unresolved matters that shareholders or other
Directors believe should be brought to his attention.
The Directors hold or have held senior positions in
industry and commerce and contribute a wide range of
skills, experience and objective perspective to the Board.
The Board committees allow the Directors to focus in
greater detail and depth on key matters such as strategy,
governance, internal controls and risk management.
/
TIME COMMITMENT
Non-executive Directors are expected to devote sufficient
time to carry out their duties effectively. The expectation
regarding time commitment is set out in the Directors’
letters of appointment. Directors are required to disclose
the potential external role and ensure it is approved by the
Board prior to the acceptance of any such appointment.
During the year, the Board was satisfied that all Directors
were and remain able to commit sufficient time to
discharge their responsibilities effectively having given due
consideration to their other significant commitments.
During the year, Tracey Fletcher-Ray was appointed as
Chief Executive Officer of Witherslack Group. The Board,
taking into consideration the expected time commitment
of the role, approved the external appointment.
There were no external appointments accepted during
the year which were considered to be significant for the
relevant directors, taking into account the expected time
commitment and nature of these roles.
The Directors’ other principal commitments are listed on
pages 80 to 81.
/
BOARD COMMITTEES
The Board has established a management engagement
committee, an audit committee and a nomination
committee. Given that the Company has no executive
Directors or other employees, the Board does not
consider it necessary to establish a separate remuneration
committee. The functions and activities of each of the
committees are described in their respective reports.
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BOARD MEETINGS
The Board meets formally at least on a quarterly basis
with additional meetings as they may decide are
required from time to time. During 2022, the Board held
four scheduled meetings and four extra Board meetings
including one strategy meeting attended by those
Directors available at the time, to deal with transactional
and specific events such as property management
strategies and review of the Group’s Investment Policy.
The Chair sets the agenda for the meetings and ensures,
in conjunction with the Company Secretary, prior to each
meeting that the Directors receive accurate, clear and
timely information to help them to discharge their duties.
For this purpose, the Board receives periodic reports
from the Investment Manager detailing the performance
of the Group. The meetings focus on a review of
portfolio performance and associated matters such
as pipeline, gearing, asset management, occupancy,
marketing/investor relations, peer group comparisons,
regulatory matters, environmental and social matters and
the impact of macro-economic issues.
/
KEY DECISIONS OF THE
BOARD 2022
During the year, the Board considered the following
matters:
•
the Group’s longer-term strategy;
•
proposed changes to, and analysis of, the Group’s
current and future lease terms;
•
proposed changes to the Company’s Investment
Policy;
•
the eventual cancellation of the undrawn £160
million Revolving Credit Facility (“RCF”), jointly
provided by Lloyds and NatWest, in December 2022
following an initial reduction agreed in February
2022;
•
amendments to the Investment Management
Agreement that ensured the right of first refusal
applied to all Specialised Supported Housing assets
regardless of length of lease;
•
implementation of a temporary rent cap for the year
of 2023 in line with the Department for Levelling Up,
Housing and Communities (DLUHC) social housing
rent increase cap of 7%;
•
subject to shareholder consultation, a new lease
clause, that addresses the Regulator’s concerns
regarding the long-lease model and ensures that
where there are risks that are beyond the control of the
Group’s lessees, then, subject to a materiality threshold
being breached, the risks will sit with the Group;
•
an increase to the target aggregate dividend by 5%
for the year ended 31 December 2022;
•
the valuation methodology of the Group’s portfolio;
•
the risks and related mitigations of the Group’s lease
counterparties;
•
the standards of Registered Providers that had
received a non-compliant rating by the Regulator
and updates on regulatory developments within the
social housing sector;
•
the declaration of the Company’s interim dividends;
•
the Group’s due diligence process;
•
the risk profile of the Group and its counterparties;
•
capital deployment, investment pipeline and review
of rejected deals;
•
the budget for general, administrative and
marketing expenses;
•
the Group’s compliance with the REIT regime;
•
the Group’s financial public relations and
communication strategy;
•
the Group’s property insurance;
•
the key performance indicators by which the Group
measures success;
•
review of quarterly management accounts;
•
half yearly broker report regarding the Company’s
share price rating, performance and trading and
NAV performance;
•
analysis of the Company’s shareholder register;
•
considered a Dividend Re-Investment Scheme
(DRIP);
•
an interim review, to measure the Board’s progress
against recommendations arising from the last
external evaluation;
•
the recommendations of its Nomination Committee
with respect to Board diversity, succession planning
and the current balance of skills, experience and
knowledge;
•
a quarterly review of corporate governance
compliance, Group subsidiary activity and
depositary report; and
•
the Group’s social impact including environmental
and governance matters.
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/
PERFORMANCE EVALUATION
The Directors recognise that the evaluation process is
a significant opportunity to review the practices and
performance of the Board, its Committees, and its
individual Directors and to implement actions to improve
the Board’s effectiveness and contribute to the Group’s
success.
The Board evaluation in respect of the year ended 31
December 2020 was undertaken by an independent
third-party evaluator, Satori Board Review (“Satori”).
This year, Satori revisited the Board to provide further
external validation of progress in making the changes
outlined and agreed by the Board. It was determined
that the Board had broadly implemented the
recommendations arising from the last external review
and the key focus moving forward was the establishment
of an orderly succession plan. The Board have made
good progress in this regard and further detail is set out
in the Nomination Committee report on pages 94 to 96.
A full performance evaluation of the Board, its
committees and the individual Directors will continue to
be conducted annually. The Chair will regularly consider
an externally facilitated Board evaluation.
In respect of the year ended 31 December 2022,
the Board conducted a performance evaluation by
completing a written questionnaire to appraise and
gather useful learnings on the functioning of the Board,
the Group’s committees and individual Directors.
The Chair, supported by the Company Secretary, acted
on the results of the evaluation. The results of the
questionnaire demonstrated that there is consensus that
the performance and functioning of the Board remains
effective.
There were however areas of improvement that were
identified. The key challenges and recommendations of
next steps are outlined below.
CHALLENGES
RECOMMENDATIONS OF
NEXT STEPS
Diversity
There has been significant
emphasis placed upon gender
and ethnic diversity as a result of
the changes to the Listing Rules,
amongst other things. The Board
are encouraged to ensure that
diversity of all kinds, including
social diversity, is given due
consideration in the constitution
of the Board.
CHALLENGES
RECOMMENDATIONS OF
NEXT STEPS
Director Training
The Board is encouraged to
dedicate more time to enhance
professional development of the
Directors, to ensure continuous
improvement of knowledge and
skills. With a new Director due
to join the Board, the existing
Directors should be conscious
of ensuring that they receive a
comprehensive induction and are
integrated well within the Board.
Strategy
A core focus for the Board over
the coming year will be the
strategy for the Company moving
forward. The Board should ensure
that sufficient time is given to
discussing this.
KPIs
The Board acknowledge that
the KPIs and performance
monitoring have improved during
the year however the process
is still evolving. It is therefore
recommended that the Board
continue to critically evaluate
the KPIs to ensure that they
support the strategy and allow
the Board to effectively assess
the performance of the Company
and portfolio.
/
CONFLICTS OF INTERESTS
The Group operates a conflicts of interest policy that has
been approved by the Board and sets out the approach
to be adopted and procedures to be followed where a
Director, or such other persons to whom the Board has
determined the policy applies, has an interest which
conflicts, or potentially may conflict, with the interests of
the Group. Under the policy and the Company’s Articles
of Association, the Board may authorise potential
matters of conflict that may arise, subject to imposing
limits or conditions when giving authorisation, if this is
appropriate.
The Group reserves the right to withhold information
relating, or relevant, to a conflict matter from the
Director concerned and/or to exclude the Director from
any Board information, discussions or decisions which
may or will relate to that matter of conflict or where
the Chair considers that it would be inappropriate for
such Director to take part in the discussion or decision
or to receive such information. Procedures have been
established to monitor actual and potential conflicts of
interest on a regular basis and the Board is satisfied that
these procedures are working effectively.
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The Investment Manager maintain conflicts of interest
policies to avoid and manage any conflicts of interest
that may arise between themselves and the Group. The
Investment Manager has established a clear and robust
framework to ensure that any conflicts of interest are
appropriately governed that includes:
•
potential conflicts where the Investment Manager is
party to the transaction;
•
the Investment Manager’s obligation to, as far
as reasonably practical, exclusively offer all new
investment opportunities to the Group; and
•
other conflict matters regarding the value, quality
or other terms relating to the acquisition or disposal
of assets from or to the Group or provision of debt
funding by the Investment Manager to the Group
/
PROFESSIONAL DEVELOPMENT
The Directors received a comprehensive induction
programme on joining the Board that covered
the Group’s investment activities, the role and
responsibilities of a Director and guidance on corporate
governance and applicable regulatory and legislative
landscape. The Directors’ training and development was
assessed as part of the annual effectiveness evaluation
and, in any event, the Chair regularly reviews and
discusses the development needs with each Director.
Each Director is fully aware that they should take
responsibility for their own individual development
needs and take the necessary steps to ensure they
are wholly informed of regulatory and business
developments.
During the year, the Directors received periodic
guidance on technical, regulatory and compliance
changes at quarterly Board meetings, and on an ad hoc
basis where necessary.
/
SHAREHOLDER ENGAGEMENT
The Group encourages active interest and contribution
from both its shareholders and responds promptly to all
queries received by the Group.
The Board recognises
the importance of maintaining strong relationships with
shareholders and the Directors place a great deal of
importance on understanding shareholder sentiment.
The Investment Manager and the Group’s Joint Financial
Advisers regularly meet to discuss, amongst other things,
the views of the Company’s shareholders. The Group’s
Corporate Broker speaks to shareholders regularly and
ensures shareholder views are clearly communicated to
the Board. The Board takes responsibility for, and has
a direct involvement in, the content of communications
regarding major corporate matters.
The Board encourages shareholders to attend and vote
on the resolutions at the Annual General Meeting, and
to ask the Board any questions that they may have.
The Chair makes himself available, as necessary, to speak
to shareholders. In addition, the Chairs of the Board’s
committees make themselves available, as necessary, on
significant matters related to their areas of responsibility
when required.
The Board is committed to providing investors with
regular announcements of events affecting the Group.
The Group publish quarterly factsheets that are
available to download, along with all other investor
documentation, from the Group’s website
During the year, the Group regularly engaged with
shareholders. Of particular note this year, the Board
and Investment Manager consulted with shareholders
regarding the proposed changes to the Investment
Policy (further detail in the Chair’s Statement on pages
16 to 21), ahead of the 2022 AGM.
As the restrictions put in place by the Government
during the COVID pandemic have lifted, the Board will
look to increase its direct engagement with shareholders
in future.
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Audit Committee
Report
/ RESPONSIBILITIES
The Audit Committee has the primary responsibility of
reviewing the financial statements and the accounting
principles and practices underlying them, liaising with the
external auditors and reviewing the effectiveness of the
Group’s internal controls.
The main role of the Audit Committee is to:
•
provide formal and transparent arrangements for
considering how to apply the financial reporting and
internal control principles set out in the AIC Code
and to maintain an appropriate relationship with the
external auditors;
•
where requested, provide advice to the Board on
whether the annual report and accounts, taken as
a whole, is fair, balanced and understandable and
provides the information necessary for shareholders
to assess the Group’s position and performance,
business model and strategy;
•
monitor the integrity of the financial statements of
the Group and any formal announcements relating
to the Group’s financial performance and reviewing
significant financial reporting judgements contained
in them;
•
review the Group’s internal financial controls and
the Group’s internal control and risk management
systems;
•
make recommendations to the Board to put to the
shareholders for their approval in general meetings
in relation to the appointment, re-appointment and
removal of the external auditor and to approve
the remuneration and terms of engagement of the
external auditor;
•
review and monitor the external auditor’s
independence and objectivity and the effectiveness of
the audit process, taking into consideration relevant
UK professional and regulatory requirements;
•
liaise with the Group’s Tax Adviser in relation to
ensuring continuing compliance with the REIT regime;
•
develop and implement policy on the engagement
of the external auditor to supply non-audit services,
taking into account relevant ethical guidance
regarding the provision of non-audit services by the
external audit firm;
•
report to the Board, identifying any matters in respect
of which it considers that action or improvement is
needed and make recommendations as to the steps
to be taken; and
•
report to the Board on how it has discharged its
responsibilities.
The Audit Committee’s Terms of Reference can be found
on the Group’s website at https://www.triplepointreit.com/
corporate-governance/131/.
PETER COWARD,
Audit Committee Chair
AUDIT COMMITTEE MEMBERS
AUDIT COMMITTEE
MEETINGS ATTENDED /
REQUIRING ATTENDANCE
Peter Coward (Chair)
2/2
Ian Reeves CBE
2/2
Paul Oliver
2/2
Tracey Fletcher-Ray
2/2
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COMMITTEE MEMBERSHIP
The Audit Committee is chaired by Peter Coward and
comprises of four members.
The Board is satisfied that at least one member of the
Audit Committee has recent and relevant financial
experience. Peter Coward is qualified as a Chartered
Accountant and was, until the end of June 2016, a Senior
Tax Partner at PricewaterhouseCoopers LLP specialising in
property. The Board is also satisfied that the Committee,
collectively, has competence relevant to the sector in
which the Group operates.
/ ACTIVITIES
The Audit Committee meets at least twice a year to
consider the annual report, interim report, any other
formal financial performance announcements, and
any other matters as specified under the Committee’s
Terms of Reference. The Committee regularly reports
to the Board on how it discharged its responsibilities.
During the year, the Audit Committee discussed and
considered the external audit performance, objectivity
and independence, the external auditor re-appointment,
accounting policies and alternative accounting treatments,
significant accounting judgements and estimates, and the
risk register.
/
PERFORMANCE EVALUATION
Refer to the Corporate Governance section for further
details on the performance evaluation.
/
INTERNAL CONTROL AND RISK
MANAGEMENT
The Group has an ongoing process in place for
identifying, evaluating and managing the principal and
emerging risks faced by the Group.
During the year, the Board carried out a robust
assessment of the Group’s emerging and principal risks,
further reviewed by the Audit Committee, and satisfied
itself that the procedures for identifying the information
needed to monitor and manage these risks were robust.
The Group has in place the following key internal controls:
•
a risk register identifying risks and controls to
mitigate their potential impact and/or likelihood
and this is maintained by the Investment Manager
subject to the supervision and oversight of the
Committee;
•
a procedure to ensure that the Group can continue
to operate as a REIT;
•
internal control reports of the Investment Manager,
Administrator and Depositary, which are reviewed
by the Board;
•
forecasts and management accounts prepared by
the Investment Manager and Administrator, which
allow the Board to assess performance; and
•
there is an agreed and defined Investment Policy,
specified levels of authority and exposure limits in
relation to investments, leverage and payments.
The Board also receives a quarterly depositary report.
INDOS Financial Limited are responsible for cash
monitoring, asset verification and oversight of the Group
and the Investment Manager in performing its function
under the AIFMD. The Depositary reports its findings on
a quarterly basis during which it monitors and verifies all
new acquisitions, share issues, loan facilities, shareholder
distributions and other key events. In addition, on
an ongoing basis, the Depositary tests the quarterly
management accounts, bank reconciliations and performs
a quarterly review of the Group when discharging its
duties.
Taking into account the review of the reports provided
and its knowledge of the business, the Audit Committee
has reviewed and approved any statements included in
the annual report concerning internal controls and risk
management and has determined that the effectiveness
of the internal controls was satisfactory. The principal risks
and uncertainties identified from the risk register and a
description of the Group’s risk management procedures
can be found on pages 66 to 71.
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SIGNIFICANT ISSUES
CONSIDERED BY THE AUDIT
COMMITTEE
The Audit Committee considered the key accounting
judgements underlying the preparation of the financial
statements, focusing specifically on:
VIABILITY AND GOING CONCERN
The Board is required to consider and report on the
longer-term viability of the business as well as assess
the appropriateness of applying the going concern
assumption.
The Audit Committee have taken account of the solvency
and liquidity position of the Group from the financial
statements and the information provided from the
Investment Manager on the forecasted cash flow for the
Group, expected pipeline and expected fund raising
plans through a fundraise or debt finance over the period
to December 2027. As a result, the Audit Committee
consider that it is appropriate to adopt the going concern
basis of preparation of the financial statements.
VALUATION OF PROPERTY PORTFOLIO
The valuation of the Group’s property portfolio is
fundamental to the Group’s statement of financial position
and reported results.
The valuations of the properties at the end of the financial
period were performed by Jones Lang LaSalle, whom
the Audit Committee consider having sufficient local and
national knowledge of social housing and Supported
Housing and the skills and knowledge to undertake the
valuations competently. The Audit Committee met with
the Group’s Valuer to discuss the valuation methodology
of the Group’s portfolio and examine the suitability of the
value of assets leased to Registered Providers that had
received non-compliant ratings.
The Audit Committee considered the underlying
assumptions of IFRS valuation basis and portfolio
valuation and gains comfort from the valuer’s
methodology and other supporting market information.
The Audit Committee have considered the subjectivity of
the property valuations which could affect the NAV and
share price of the Group, and these were discussed with
the Investment Manager and external auditor.
REVENUE RECOGNITION
The Group’s revenue solely comprises of rental income
from investment property assets, and therefore it is
integral that the underlying assumptions for determining
rental income are appropriate. Rental income is
recognised on a straight-line basis over the lease
term, thereby relying on the Investment Manager’s
determination of the lease term, based on whether they
are reasonably certain the option to extend the lease term
will be exercised. The Audit Committee gained comfort
of these assumptions by reviewing the external auditor’s
analysis including a review of the lease documentation,
investigation of differences to actual revenue recognised
in the year compared to expectations, rental uplift against
external market data, and how they challenged any
significant assumptions made by the Investment Manager.
The Board has considered the appropriateness of the
ECL provision which relates to rental arrears for two of
the Group’s Approved Providers. The ECL provision
represents a default probability for two Approved
Providers, on outstanding rent due at 31 December
2022, which was determined based on their latest known
financial position and any repayments plans that had been
agreed or discussed.
/
INTERNAL AUDIT
The Board has considered the appropriateness of
establishing an internal audit function and, having regard
to the structure and nature of the Group’s activities, has
concluded that the function is unnecessary. The Audit
Committee will review on an annual basis the need for this
function and make appropriate recommendations to the
Board.
/
EXTERNAL AUDITORS, AUDIT
FEES AND NON-AUDIT SERVICES
An important responsibility of the Audit Committee
each year is to monitor the performance, objectivity and
independence of the Group’s external auditors, currently
BDO LLP (“BDO”). In evaluating BDO’s performance,
the Audit Committee examine effectiveness of the audit
process, independence and objectivity of the auditor,
taking into consideration the length of tenure of the
external auditors, the non-audit services undertaken
during the year and relevant UK professional and
regulatory requirements, and the quality of delivery of its
services.
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BDO were appointed as the external auditors of
the Group on 18 July 2017, and a formal external
audit tender process was undertaken in 2019. BDO
were recommended by the Audit Committee for re-
appointment at the 2022 AGM and the resolution was
duly passed. We have also transitioned our lead BDO
partner for the 2022 audit following completion of the
previous audit partner’s five-year term. I would like to
thank Edward for his leadership of the external audit and
welcome Charles Ellis as our new lead audit partner.
The auditors attend all Audit Committee meetings and
I, as Audit Committee Chair, have a number of meetings
with the lead audit partner as required. The auditors work
with the Investment Manager and discuss their findings
and recommendations with the Audit Committee.
The Audit Committee has approved a non-audit services
policy that determines the services that BDO can provide
and the maximum fee that may be raised for non-audit
services in comparison to the statutory audit fee, in line
with the FRC Ethical Standards for Auditors.
In accordance with the policy, and to ensure that
independence and objectivity is satisfactorily safeguarded,
the approval of the Audit Committee must be obtained
before the external auditor is engaged to provide any
permitted non-audit services above a fee threshold of
£5,000. The Audit Committee has also agreed that the
role of reporting accountant although a permitted service,
where necessary, would be undertaken by a firm other
than BDO to ensure best practice compliance with the
non-audit service policy.
BDO are prohibited from providing services to the
Group that would be considered to jeopardise their
independence, such as tax services, bookkeeping and
preparation of accounting records, financial systems
design and implementation, valuation services, internal
audit outsourcing and services linked to the financing,
capital structure and asset allocation. The Group’s non-
audit services policy is reviewed annually to ensure it
continues to be in line with best practice.
The Committee annually reviews the level of non-audit
fees to ensure that the provision of non-audit services
does not impair the auditor’s independence or objectivity,
taking into account the relevant regulations and the FRC’s
Ethical Standard. The policy provides that total fees for
non-audit services provided by the auditor to the Group
shall be limited to no more than 70% of the average of
the statutory audit fee for the Group paid to the auditor in
the last three consecutive financial years.
The total audit fee in relation to the year ended 31
December 2022 for audit of the Group and subsidiaries
was £273,000 (net of VAT). The total non-audit fees for the
year ended 31 December 2022 were £36,000 (net of VAT)
in relation to the interim review. The ratio of non-audit
services fees to audit fees in the year was 13.2%.
Peter Coward
Audit Committee Chair
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Management Engagement
Committee Report
/ RESPONSIBILITIES
The main function of the Management Engagement
Committee is to review and make recommendations on
any proposed amendment to the Investment Management
Agreement and keep under review the performance of
the Investment Manager. The Committee will regularly
review the composition of the key executives performing
the services on behalf of the Investment Manager and
monitor and evaluate the performance of other key service
providers to the Group.
The Management Engagement Committee’s Terms of
Reference can be found on the Group’s website at https://
/
COMMITTEE MEMBERSHIP
The Management Engagement Committee is chaired by
Tracey Fletcher-Ray and comprises of all the Directors.
/ ACTIVITIES
During the year, the Management Engagement
Committee conducted a comprehensive review of the
key agreements with its service providers, and a detailed
review of the performance, composition, personnel,
processes and internal control systems of the Investment
Manager, and a review of the Group’s other corporate
advisers and key service providers. The discussion
included an assessment of performance and suitability of
the services provided in the context of the fees paid to
each provider, and a review of the termination period of
each agreement.
The Management Engagement Committee considered
the terms of the Investment Management Agreement,
to ensure it continues to reflect properly the commercial
arrangements agreed between the Company and the
Investment Manager and were satisfied that this was the
case.
/
PERFORMANCE EVALUATION
Refer to the Corporate Governance section for further
details on the performance evaluation.
MANAGEMENT ENGAGEMENT
COMMITTEE MEMBERS
MANAGEMENT ENGAGEMENT
COMMITTEE MEETINGS
ATTENDED / REQUIRING
ATTENDANCE
Tracey Fletcher-Ray (Chair)
2/2
Chris Phillips
1/2
Ian Reeves CBE
2/2
Peter Coward
2/2
Paul Oliver
2/2
TRACEY FLETCHER-RAY,
Management Engagement
Committee Chair
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MANAGEMENT ARRANGEMENTS
AGREEMENT
The Company operates as an externally managed
alternative investment fund for the purposes of the AIFMD.
In its role as AIFM, the Investment Manager is responsible
for portfolio management and risk management of the
Group pursuant to the AIFMD.
The Company AIFM is Triple Point Investment
Management LLP.
For the performance of the risk management function,
which is set out within the AIFM Agreement, and excludes
the portfolio management aspect of the role, the
Investment Manager receives an annual fee which equates
to 3.5 basis points on net assets of up to £300 million, and
3.0 basis points for net assets above £300 million.
The AIFM Agreement is terminable by the Investment
Manager on giving the Group not less than 12 months’
written notice and using its reasonable endeavours to assist
with the appointment of a successor alternative investment
fund manager of the Company or the Company giving to
the Investment Manager not less than 12 months’ written
notice. The AIFM Agreement may be terminated earlier by
either party with immediate effect in certain circumstances,
including, if an order or resolution for liquidation is passed
for the other party or the other party has committed a
breach of its obligations under the AIFM Agreement that is
material in the context of the AIFM Agreement.
The Group has given certain market standard indemnities
in favour of the Investment Manager in respect of the
Investment Manager’s potential losses in carrying on its
responsibilities under the AIFM Agreement.
The annual fee paid under the AIFM Agreement for the
year ended 31 December 2022 was £192,000 (£175,000 as
at 31 December 2021). No performance fee is payable to
the Investment Manager.
INVESTMENT MANAGEMENT AGREEMENT
Under the Investment Management Agreement, which
governs the portfolio management aspects of the AIFM
role, the Investment Manager is entitled to receive an
annual management fee which is calculated quarterly in
arrears based upon a percentage of the NAV of the Group
(not taking into account uncommitted cash balances
excluding debt) as at 31 March, 30 June, 30 September
and 31 December in each year on the following basis:
COMPANY BASIC NAV
(EXCLUDING CASH BALANCES)
ANNUAL MANAGEMENT FEE
(PERCENTAGE OF BASIC NAV)
Up to and including £250 million
1.0%
Above £250 million and up to
and including £500 million
0.9%
Above £500 million and up to
and including £1 billion
0.8%
Above £1 billion
0.7%
The annual fee paid to the Investment Manager under the
Investment Management Agreement for the year ended
31 December 2022 was £4.70 million.
On a semi-annual basis, once the Group’s half year or
year-end NAV has been announced, the Investment
Manager shall procure that 25% of the management fee
(net of any applicable tax) for the relevant six-month period
immediately preceding the date of that NAV shall be
applied by subscribing for, or acquiring, Ordinary Shares
(’Management Shares’). The Investment Manager subscribes
for or acquires Management Shares on a semi-annual
basis as anticipated under the Investment Management
Agreement.
The Investment Manager is also entitled to be reimbursed
for all disbursements, fees and costs payable to third
parties properly incurred by the Investment Manager on
behalf of the Group pursuant to provision of the services
under the Investment Management Agreement.
There are no performance, acquisition, exit or property
management fees.
The Investment Management Agreement may be terminated
by the Investment Manager or the Group by not less than
12 months’ written notice. In the event of termination, fees
will be calculated to the date of expiry or termination payable
pro rata on the day of such expiry or termination.
/
CONTINUING APPOINTMENT OF
THE INVESTMENT MANAGER
The Management Engagement Committee has reviewed
the continuing appointment of the Investment Manager
and based on the Group’s strong investment performance,
deep sector expertise and counterparty relationships, the
committee are satisfied that their appointment remains in
the best interests of shareholders as a whole.
Tracey Fletcher-Ray
Management Engagement Committee Chair
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Nomination
Committee Report
/ RESPONSIBILITIES
The Nomination Committee’s main function is to lead
the process for appointments, ensuring plans are in
place for orderly succession to the Board, overseeing the
development of a diverse pipeline for succession and any
other matters as specified under the Committee’s Terms of
Reference. This includes ensuring that any appointments
and succession plans are based on merit and objective
criteria, and, within this context, promoting diversity of
gender, social and ethnic backgrounds, cognitive and
personal strengths.
The Nomination Committee’s Terms of Reference
can be found on the Group’s website at https://www.
triplepointreit.com/corporate-governance/131/.
/
COMMITTEE MEMBERSHIP
The Nomination Committee is chaired by Ian Reeves and
comprises of four members.
/ ACTIVITIES
The Committee met twice during the period to
31 December 2022 to review the balance of skills and
experience, the size and structure of the Board, and held a
further meeting in 2023 to focus on long-term succession
planning. The Committee also reviewed the time and
significant commitments of the Board and satisfied itself
that the Directors were able to commit sufficient time to
discharge their responsibilities effectively having given due
consideration of external appointments.
/
SUCCESSION PLANNING AND
RECRUITMENT
A key focus of the Nomination Committee during the year
has been implementing a long-term succession plan for
the Board. Once a decision is made to recruit an additional
Director, under its Terms of Reference, the Nomination
Committee has the responsibility in identifying and
leading that process on behalf of the Board. A formal role
description is created, which is based upon requirements
identified from a review of the current balance of
experience and skills, as well as having due regard to
the benefits of diversity of gender, social and ethnic
backgrounds, cognitive and personal strengths.
The Committee is then responsible for engaging with
an independent external search consultant in order to
facilitate the search. In accordance with the Group’s
Diversity Policy, the Committee engages with an external
search consultant that can commit in undertaking an open
and transparent process that includes potential candidates
from different social and ethnic backgrounds.
NOMINATION COMMITTEE
MEMBERS
NOMINATION COMMITTEE
MEETINGS ATTENDED /
REQUIRING ATTENDANCE
Ian Reeves CBE (Chair)
2/2
Chris Phillips
2/2
Peter Coward
2/2
Paul Oliver
2/2
IAN REEVES, Nomination
Committee Chair
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During the year, the Committee engaged with Nurole
to support in its recruitment process. Nurole provided
a long-list of candidates which was reviewed by the
Committee to create a shortlist. Interviews then took place
with short-listed candidates and selected Committee
members, and feedback was provided to the Committee.
Once a preferred candidate is selected, the Nomination
Committee will recommend the individual to the Board for
appointment.
/
PERFORMANCE EVALUATION
Refer to the Corporate Governance for further details on
the performance evaluation.
/
RE-ELECTION OF DIRECTORS
All Directors submit themselves for election or re-election
on an annual basis. All Directors in office as at the date of
this report are to be proposed for re-election at the
2023 AGM.
/
TENURE POLICY
The Board considers that the length of time each Director,
including the Chair, serves on the Board should not be
limited and has not set a finite tenure policy. Continuity,
self-examination and ability to do the job are the
relevant criteria on which the Board assesses a Director’s
independence. Length of service of current Directors and
future succession planning will be reviewed each year as
part of the Board evaluation process.
/ DIVERSITY
The Board’s objective is to maintain effective decision-
making, including the impact of succession planning. The
Board recognises the benefits of all types of diversity and
supports the recommendations of the Hampton-Alexander
Review and the Parker Review. All Board appointments will
be made on merit, and promote diversity of gender, social
and ethnic backgrounds, cognitive and personal strengths,
ensuring that such appointment will develop and enhance
the operation of the Board to best serve the Group’s
strategy.
The Board recognises the importance of diversity in the
boardroom which introduces different perspectives to the
Board debate and considers it to be in the interests of
the Group and its shareholders to take into consideration
diversity criteria when appointing a new individual to
the Board. In line with the Company’s succession plan,
when undertaking the appointment of a new Director, the
Nomination Committee will instruct an external search
consultancy to undertake an open and transparent process
that includes potential candidates from different social and
ethnic backgrounds.
Members of the Board should collectively possess a
diverse range of skills, expertise, industry knowledge and
business. The Board will continue to monitor diversity,
taking such steps as it considers appropriate to maintain its
position as a meritocratic and diverse business.
The FCA’s Listing Rules require that the Company reports
on whether the following targets have been met: at least
40% of individuals on the Board are women; at least one
of the senior Board positions is held by a woman; and at
least one individual on its Board is from a minority ethnic
background.
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Financial Statements
Other Information
The Company is not required to report against the FCA’s Listing Rule requirements until the year ending 31 December
2023, however due to the Company’s commitment to transparency and increasing diversity, the Company has decided
to voluntarily report. The following table sets out the gender and ethnic diversity of the Board as at 31 December 2022 in
accordance with the FCA’s Listing Rules:
GENDER DIVERSITY
NUMBER OF BOARD
MEMBERS
PERCENTAGE OF THE
BOARD
NUMBER OF SENIOR
POSITIONS ON THE
BOARD
1
Men
4
80
2
Women
1
20
–
Not specified / prefer not to say
–
–
–
ETHNIC DIVERSITY
White British or other White (including minority white groups)
5
100
2
Mixed/Multiple Ethnic Groups
–
–
–
Asian/Asian British
–
–
–
Black / African / Caribbean / Black British
–
–
–
Other ethnic group, including Arab
–
–
–
Not specified / prefer not to say
–
–
–
1 Senior positions include Chair and Senior Independent Director
Although for the reporting period, the Board did not meet the FCA’s targets with respect to diversity, the Board has
commenced a succession exercise to appoint a new non-executive director, and it is intended that this process will result
in the Company meeting the recommended targets, whilst ensuring that succession is managed in an orderly manner.
In addition, the role of Management Engagement Committee Chair, which the Board considers to be a senior position, is
held by a woman. However, we remain committed to pushing the benefits of a diverse Board and will continue to make
improvements in this regard.
As an investment company with solely independent, Non-executive Directors, the Group does not have a Chief Executive
or a Chief Financial Officer and has no employees. Accordingly, no disclosures regarding executive management
positions have been included.
Ian Reeves CBE
Nomination Committee Chair
Triple Point Social Housing REIT plc
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Other Information
/
ANNUAL STATEMENT
Dear shareholder,
I am pleased to present the Directors’ Remuneration
Report on behalf of the Board for the year ended
31 December 2022. It is set out in two sections in line
with legislative reporting regulations:
•
Directors’ Remuneration Policy (on pages 98 to 99)
– This sets out our Remuneration Policy for Directors
of the Company that has been in place since 14 May
2021 following approval by shareholders.
•
Annual Report on Directors’ Remuneration (on
pages 100 to 102) – This sets out how the Directors
were paid for the year ended 31 December 2022.
There will be an advisory shareholder vote on this
section of the report at our 2023 AGM.
Prior to our IPO in August 2017, the Group introduced
a remuneration framework to ensure that remuneration
was aligned with best market practice whilst attracting
and securing the right non-executive Directors to deliver
our investment objectives.
The scale and structure of the Directors’ remuneration
was determined by the Company in consultation with
the Group’s Financial Adviser having been benchmarked
against companies of a similar size in the sector and
having regard to the time commitment and expected
contribution to the role.
The Group does not have any executive Directors or
employees, and, as a result, operates a simple and
transparent remuneration policy with no variable
element, that reflects the non-executive Directors’
duties, responsibilities and time spent.
/
DISCRETION EXERCISED UNDER
THE DIRECTORS’ REMUNERATION
POLICY
At the date of this report, no discretion is intended to be
exercised under the Directors’ Remuneration Policy.
We value engagement with our shareholders and for the
constructive feedback we receive and look forward to
your support at the forthcoming AGM.
Chris Phillips
Chair
Directors’
Remuneration Report
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Other Information
/
APPROVAL OF REMUNERATION POLICY
Our Directors’ Remuneration Policy was last approved by shareholders at the Annual General Meeting of the Group
held on 14 May 2021 and became effective from the conclusion of the Annual General Meeting. In accordance
with section 439A of the Companies Act 2006, the provisions of the policy will apply until they are next put
to shareholders for renewal of that approval, which must be at intervals of not more than three years, or if the
Remuneration Policy is varied, in which event shareholder approval for the new Remuneration Policy will be sought.
The policy applies to the non-executive Directors; the Company has no executive Directors or employees.
/
REMUNERATION POLICY OVERVIEW
The Group’s objective is to have a simple and transparent remuneration structure, aligned with the Group’s strategy.
The Group aims to provide remuneration packages with no variable element which will retain non-executive Directors
with the skills and experience necessary to maximise shareholder value on a long-term basis. The remuneration
packages for the recruitment of non-executive Directors will be set with reference to the remuneration packages of
comparable businesses.
/
POLICY TABLE
The Directors are entitled only to the fees as set out in the table below from the date of their appointment. No
element of Directors’ remuneration is subject to performance factors.
COMPONENT
OPERATION
LINK TO STRATEGY
Annual Fee
Each Director receives a basic fee which is paid on a monthly
basis.
The total aggregate fees that can be paid to the Directors in
any given financial year will be calculated in accordance with the
Company’s Articles of Association.
The level of the annual fee has been set to attract and
retain high calibre Directors with the skills and experience
necessary for the role.
The fee has been benchmarked against companies of
a similar size in the sector, having regard to the time
commitment and expected contribution to the role.
Additional Fees
The Directors are each entitled to an additional fee of £7,500
in connection with the production of every prospectus by the
Group.
A Director who performs services, which in the opinion of the
Board are outside the scope of the ordinary duties of a non-
executive director, may also be paid such extra remuneration or
may receive such other benefits as the Board may determine.
The additional fee in connection with the production of
every prospectus has been included in recognition of the
additional time commitment and contribution required in the
preparation of a prospectus by the Company.
The additional fee for services outside of the scope of
ordinary duties offers flexibilities for a Director to be awarded
additional remuneration to adequately compensate a
Director where this is considered appropriate for the effective
functioning of, or in furtherance of, the Company’s aims.
Other benefits
Article 18.5 of the Company’s Articles of Association permits
for any Director to be repaid expenses incurred in attending or
returning from meetings of the Board, committees of the Board
or shareholder meetings or otherwise in connection with the
performance of their duties as Directors of the Company.
The Board has the power to pay and agree to pay gratuities,
pensions or other retirement, superannuation, death or disability
benefits to (or to any person in respect of) any Director or ex-
Director and for the purpose of providing any such gratuities,
pensions or other benefits to contribute to any scheme or fund
or to pay premiums.
In line with market practice, the Company will reimburse the
Directors for expenses to ensure that they are able to carry
out their duties effectively.
The Directors do not currently receive any additional
benefits; however the Board has included the power to offer
the additional benefits as specified to create flexibility in the
approach to retain or attract high calibre Board members.
Directors’
Remuneration Policy
Triple Point Social Housing REIT plc
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Other Information
/
SERVICE CONTRACTS
The Directors are engaged under letters of appointment and do not have service contracts with the Company.
/
DIRECTORS’ TERM OF OFFICE
Under the terms of the Directors’ letters of appointment, each directorship is for an initial period of 12 months and
thereafter terminable on three months’ written notice by either the Director or the Company. Each Director will be
subject to annual re-election by shareholders at the Company’s Annual General Meeting in each financial year.
/
POLICY ON PAYMENT FOR LOSS OF OFFICE
The Directors are entitled to payment of the fees as specified above, notwithstanding termination of their
appointment, for the initial period of 12 months from the date of their appointment. Thereafter, there is no
compensation payable upon termination of office as a Director of the Company.
/
CONSIDERATION OF SHAREHOLDER VIEWS
The Company is committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. Where
there are substantial votes against resolutions in relation to Directors’ remuneration, the Company will seek the
reasons for any such vote and will detail any resulting actions in the Directors’ Remuneration Report.
2023 Annual Report
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Other Information
/
CONSIDERATION OF REMUNERATION MATTERS
The Board does not consider it necessary to establish a separate remuneration committee as it has no executive
Directors. The Board as a whole considers the remuneration of the Directors.
/
SINGLE TOTAL FIGURE (AUDITED TABLE)
NON-EXECUTIVE
DIRECTORS
ANNUAL
FEE
1
ADDITIONAL
FEE
2
OTHER
TAXABLE
BENEFITS
3
TOTAL
2022
TOTAL
2021
% 2021 ANNUAL CHANGE
ANNUAL
FEE
1
ADDITIONAL
FEE
2
OTHER
TAXABLE
BENEFITS
3
Chris Phillips
£75,000
–
–
£75,000
£75,000
0%
0%
N/A
Ian Reeves CBE
£50,000
–
–
£50,000
£50,000
0%
0%
N/A
Peter Coward
£50,000
–
–
£50,000
£50,000
0%
0%
N/A
Paul Oliver
£50,000
–
–
£50,000
£50,000
0%
0%
N/A
Tracey Fletcher-Ray
£50,000
–
–
£50,000
£50,000
0%
0%
N/A
1 The Directors are paid a fixed annual fee. The fees do not have any variable or performance related elements, however, the Directors are entitled to an additional fee of £7,500 in connection
with the production of every prospectus prepared with a fundraising by the Group. Refer to Directors’ Fees section below.
2 The Company received no additional fees for the year ended 31 December 2022.
3 The Company does not provide a pension, retirement or similar benefits.
/
DIRECTORS’ FEES
The Directors are each paid an annual fee of £50,000 other than the Chair who is entitled to receive an annual fee
of £75,000. In addition to the annual fee, each Director is entitled to an additional fee of £7,500 in connection with
the production of every prospectus prepared with a fundraising by the Group in recognition of the additional time
contribution and commitment required. Any Director who performs services, which in the opinion of the Board are
outside the scope of the ordinary duties of a non-executive director, may also be paid such extra remuneration or
may receive such other benefits as the Board may determine. The additional fees are treated as a cost of issue not
included as an expense through the Statement of Comprehensive Income. Directors are further entitled to recover all
reasonable expenses properly incurred in connection with performing their duties as a Director. Directors’ expenses
for the year to 31 December 2022 totalled £3,238 (£1,546 as at 31 December 2021). No other remuneration was paid
or payable during the year to any Director.
Annual Report on
Directors’ Remuneration
Triple Point Social Housing REIT plc
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Financial Statements
Other Information
/
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS
(AUDITED TABLE)
Outlined are details of the Directors’ shareholdings as at 31 December 2022. In the period between 31 December
2022 and the date of this report, Peter Coward acquired a further 813 ordinary shares on 11 January 2023, making
the total number of shares he holds 80,076.
The Directors are not required to hold any shares of the Company by way of qualification. A Director who is not a
shareholder of the Company shall nevertheless be entitled to attend and speak at shareholders’ meetings.
DIRECTOR
NUMBER OF SHARES HELD AS
AT 31 DECEMBER 2021
NUMBER OF SHARES HELD AS
AT 31 DECEMBER 2022
PERCENTAGE OF ISSUED
SHARE CAPITAL AS AT
31 DECEMBER 2022
Chris Phillips
54,854*
54,854*
0.01%
Ian Reeves CBE
0
0
0.00%
Peter Coward
78,543**
79,263**
0.02%
Paul Oliver
77,967
77,967
0.02%
Tracey Fletcher-Ray
37,735
37,735
0.01%
*25,000 Ordinary Shares were subscribed through Chris Phillip’s self-invested personal pension with the balance subscribed by Centaurea Investments Limited
**54,263 Ordinary Shares were subscribed through Peter Coward’s self-invested personal pension.
/
TOTAL SHAREHOLDER RETURN
The graph below illustrates the total shareholder return of the Company’s Ordinary Shares over the period relative to
a return on a hypothetical holding over the same period in the FTSE All-Share Index and the FTSE EPRA/NAREIT UK
Index. These indices have been chosen as they are considered to be the most appropriate benchmarks against which
to assess the relative performance of the Company as the FTSE All Share represents companies of a similar capital
size, and the constituents of the FTSE EPRA/NAREIT UK Index are UK based real estate companies.
08/08/2017
08/09/2017
08/10/2017
08/11/2017
08/12/2017
08/01/2018
08/02/2018
08/03/2018
08/04/2018
08/05/2018
08/06/2018
08/07/2018
08/08/2018
08/09/2018
08/10/2018
08/11/2018
08/12/2018
08/01/2019
08/02/2019
08/03/2019
08/04/2019
08/05/2019
08/06/2019
08/07/2019
08/08/2019
08/09/2019
08/10/2019
08/11/2019
08/12/2019
08/01/2020
08/02/2020
08/03/2020
08/04/2020
08/05/2020
08/06/2020
08/07/2020
08/08/2020
08/09/2020
08/10/2020
08/11/2020
08/12/2020
08/01/2021
08/02/2021
08/03/2021
08/04/2021
08/05/2021
08/06/2021
08/07/2021
08/08/2021
08/09/2021
08/10/2021
08/11/2021
08/12/2021
08/01/2022
08/02/2022
08/03/2022
08/04/2022
08/05/2022
08/06/2022
08/07/2022
08/08/2022
08/09/2022
08/10/2022
08/11/2022
08/12/2022
40.00%
0.00%
-30.00%
-20.00%
-20.00%
20.00%
10.00%
30.00%
Group - Total return
FTSE NAREIT UK - Total return index
FTSE All Share - Total return index
2023 Annual Report
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Other Information
/
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below shows the total spend on remuneration compared to the distributions to shareholders by way of
dividends, share buybacks and the management fees incurred by the Company. As the Group has no employees the
total spend on remuneration comprises only the Directors’ fees.
2022
2021
Directors’ fees
£275,000
£275,000
Dividends paid
£21,730,467
£20,924,889
Share buybacks
–
–
Management fee
£4,704,319
£4,546,596
/
CONSIDERATION OF SHAREHOLDER VIEWS
During the year, the Company did not receive any communications from shareholders specifically regarding Directors’
pay.
The resolution to approve the Directors’ Remuneration Report (excluding the Directors’ Remuneration Policy) was
passed at the Annual General Meeting on
27 May 2022. The resolution to approve the Directors’ Remuneration Policy was passed on a poll at the Annual
General Meeting on 14 May 2021.
DIRECTOR
VOTING FOR
VOTING AGAINST
VOTES WITHHELD
Remuneration Report (approved at
AGM on 27 May 2022)
99.97%
0.03%
64,780
Remuneration Policy (approved at
AGM on 14 May 2021)
97.87%
2.13%
504,233
On behalf of the Board:
Chris Phillips
Chair
2 March 2023
Triple Point Social Housing REIT plc
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Strategic Report
Governance
Financial Statements
Other Information
The Directors are pleased to present the annual report,
including the Group’s and Company’s audited financial
statements as at, and for the year ended 31 December
2022.
The information that fulfils the requirements of the
Corporate Governance statement in accordance with
rule 7.2 of the DTR can be found in this Directors’ report
and in the Governance section on pages 78 to 108 all
of which is incorporated into this Directors’ report by
reference.
/
PRINCIPAL ACTIVITY
The Company is a closed-ended investment company
and is a Real Estate Investment Trust which was
incorporated in England and Wales on 12 June 2017.
The Company is a holding company of a number
of subsidiaries. The Group invests in properties in
accordance with the investment policy and Investment
Objective.
/ DIRECTORS
The names of the Directors who served from 1 January
2022 to 31 December 2022 are set out in the Board of
Directors section on pages 80 to 81, together with their
biographical details and principal external appointments.
The Articles govern the appointment and replacements
of Directors.
/
AIFM AND INVESTMENT
MANAGER
The names of the partners and employees of the Group’s
AIFM and Investment Manager are set out on pages
page 31 and a summary of the principal contents of
the AIFM agreement and the Investment Management
Agreement are set out in the management engagement
committee report on pages 92 to 93.
/
FINANCIAL RESULTS AND DIVIDENDS
The financial results for the year can be found in the Group Statement of Comprehensive Income which can be found
on page 118. In line with the target for the financial year, the Company declared the following interim dividends in
respect of the year to 31 December 2022, amounting to 5.46 pence per share.
RELEVANT PERIOD
DIVIDEND
PER SHARE (P)
EX DIVIDEND
DATE
RECORD
DATE
PAYMENT
DATE
1 January to 31 March 2022
1.365
9 June 2022
10 June 2022
24 June 2022
1 April to 30 June 2022
1.365
15 September 2022
16 September 2022
30 September 2022
1 July to 30 September 2022
1.365
1 December 2022
2 December 2022
16 December 2022
1 October to 31 December 2022
1.365
16 March 2023
17 March 2023
31 March 2023
Directors’
Report
2023 Annual Report
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Financial Statements
Other Information
/
POWERS OF THE DIRECTORS
The powers given to the Directors are contained within
the current articles of association of the Company (the
’Articles’), are subject to relevant legislation and, in
certain circumstances (including in relation to the issuing
or buying back by the Company of its shares), are
subject to the authority being given to the Directors by
shareholders in general meetings.
The Articles govern the appointment and replacements
of Directors.
/
DIRECTORS’ INDEMNITY
The Group has indemnified the Directors against certain
liabilities which may be incurred in the course of their
duties. This indemnity remains in force as at the date of
this report and will also indemnify any new directors that
join the Board. The Company maintains directors’ and
officers’ liability insurance which gives appropriate cover
for legal action brought against the Directors.
/
FINANCIAL RISK MANAGEMENT
The information relating to the Group’s financial risk
management and policies can be found in Note 33 of
the financial statements.
/
POST-BALANCE SHEET EVENTS
Important events that have occurred since the end of the
financial year can be found in Note
34 of the notes to
the financial statements.
/
AMENDMENT TO THE ARTICLES
The Articles may only be amended with shareholders’
approval in accordance with relevant legislation.
/
SHARE CAPITAL
The Company was admitted to trading on the Specialist
Fund Segment of the Main Market of the London Stock
Exchange on 8 August 2017 and migrated to trading on
the premium segment of the Main Market on 27 March
2018.
As at 31 December 2022, the Company had 403,239,002
Ordinary Shares in issue, 450,000 of which were held
in treasury, as can be found in Note
22 of the financial
statements. The shares held in treasury do not carry any
voting rights and therefore the total number of voting
rights in the Company is 402,789,002. There are no
restrictions on voting rights of securities in the Company.
There are no restrictions on the transfer of securities
in the Company other than certain restrictions which
may be impaired by law, for example, Market Abuse
Regulations, and the Group’s Share Dealing Code.
The Company is not aware of any agreements between
holders of securities that may result in restrictions on
transferring securities in the Company. There are no
securities of the Company carrying special rights with
regards to the control of the Company in issue.
As a REIT, the Company’s Ordinary Shares will be
’excluded securities’ under the FCA’s rules on non-
mainstream pooled investments. Accordingly, the
promotion of the Ordinary Shares will not be subject
to the FCA’s restriction on the promotion of non-
mainstream pooled investments.
/
PURCHASE OF OWN ORDINARY
SHARES
At the Company’s Annual General Meeting on 27 May
2022, the Company was granted authority to make
market purchases up to a maximum of 40,278,900
Ordinary Shares.
As at the date of this report, 450,000 Ordinary Shares
were purchased (during 2019) in the market and held in
treasury. A resolution to renew the Company’s authority
to purchase shares in accordance with the Notice of
AGM will be put to the shareholders at the Annual
General Meeting on 23 May 2023.
Triple Point Social Housing REIT plc
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Financial Statements
Other Information
/
CHANGE OF CONTROL
Under the Group’s financing facilities, any change of
control at the borrower or immediate parent company
level may trigger a repayment of the outstanding
amounts to the lending banks. In certain facilities, the
change of control provisions also include a change of
control at the ultimate parent company level.
The Directors do not receive compensation for loss of
office occurring due to a change of control.
/
GREENHOUSE GAS EMISSIONS,
ENERGY CONSUMPTION AND
ENERGY EFFICIENCY
The Board is cognisant of the impact of the Group’s
operations on emissions. In supporting the construction
of new build properties, we hope to encourage best
practice, in turn helping to reduce the industry’s
impact on emissions and the consumption of depleting
resources. The Group voluntarily disclose Scope
3 property greenhouse gas emissions within the
sustainability report, further information on page 54.
In relation to the Streamlined Energy and Carbon
Reporting (SECR), implemented by The Companies
(Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018, for the
year ended 31 December 2022 the Group is considered
to be a low energy user (<40,000kWh) and therefore falls
below the threshold to produce an energy and carbon
report.
/
MAJOR SHAREHOLDINGS
In accordance with DTR 5, the Company was advised of the following significant direct and indirect interests in the
issued ordinary share capital of the Company as at 31 December 2022.
SHAREHOLDER
INTERESTS IN ORDINARY SHARES
% HOLDING DISCLOSED
BlackRock, Inc.
53,520,406
13.27%
East Riding of Yorkshire Council
32,879,797
9.36%
Investec Wealth & Management Limited
28,892,160
8.22%
Nottinghamshire County Council Pension Fund
19,417,475
5.53%
Evelyn Partners Investment Management Services
19,892,781
4.93%
Smith and Williamson Holdings Limited
11,788,972
4.78%
Brewin Dolphin Limited
16,032,858
4.56%
South Yorkshire Pensions Authority
11,955,713
3.40%
Information provided to the Company pursuant to DTR 5 is available via the Regulatory News section on the Group’s
website.
2023 Annual Report
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Strategic Report
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Financial Statements
Other Information
/
CONTRACTS OF SIGNIFICANCE
There are no contracts of significance of the Company
or a subsidiary in which a Director is or was materially
interested or to which a controlling shareholder was a
party.
/
DISCLOSURE OF INFORMATION
TO THE AUDITORS
So far as the Directors are aware, there is no relevant
audit information of which the auditor is unaware.
The Directors have taken all the steps that they ought
to have taken as Directors to make themselves aware of
any relevant audit information and to establish that the
auditor is aware of that information.
/
RELATED PARTY TRANSACTIONS
Related Party transactions for the period to
31 December 2022 can be found in Note 15 of the
financial statements.
/
RESEARCH AND DEVELOPMENT
No expenditure on research and development was made
during the year (2021: Nil).
/
DONATIONS AND
CONTRIBUTIONS
No political or charitable donations were made during
the year (2021: Nil).
/
BRANCHES OUTSIDE THE UK
There are no branches of the business located outside
the UK.
/
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will
be held on 23 May 2023 at 10.00am at 5 New Street
Square, London, EC4A 3TW.
/
INFORMATION INCLUDED IN
THE STRATEGIC REPORT
The information that fulfils the reporting requirements
relating to the following matters can be found on the
pages identified.
SUBJECT MATTER
PAGE REFERENCE
Likely future developments
16-21
Employee engagement
52-53
Employment of disabled persons
52-53
Business relationships
52-53
On behalf of the Board:
Chris Phillips
Chair
2 March 2023
Triple Point Social Housing REIT plc
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Governance
Financial Statements
Other Information
The directors are responsible for preparing the annual
report and the financial statements in accordance with
UK adopted international accounting standards and
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year.
Under that law the
directors are required to prepare the Group financial
statements in accordance with UK adopted international
accounting standards and have elected to prepare the
Parent Company financial statements in accordance
with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and
applicable law). Under company law the directors must
not approve the financial statements unless they are
satisfied that they give a true and fair view of the state
of affairs of the Group and Parent Company and of the
profit or loss for the Group for that period.
In preparing these financial statements, the directors are
required to:
•
select suitable accounting policies and then apply
them consistently;
•
make judgements and accounting estimates that are
reasonable and prudent;
•
state whether they have been prepared in
accordance with UK adopted international
accounting standards, subject to any material
departures disclosed and explained in the financial
statements;
•
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Company will continue in
business; and
•
prepare a Directors’ report, a strategic report and
Directors’ remuneration report which comply with
the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and enable them to ensure that the
financial statements comply with the Companies Act
2006.
They are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps
for the prevention and detection of fraud and other
irregularities. The Directors are responsible for ensuring
that the annual report and accounts, taken as a whole,
are fair, balanced, and understandable and provides
the information necessary for shareholders to assess the
Group’s performance, business model and strategy.
/
WEBSITE PUBLICATION
The Directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the Company’s website in accordance with legislation
in the United Kingdom governing the preparation
and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’
responsibility also extends to the ongoing integrity of
the financial statements contained therein.
/
DIRECTORS’ RESPONSIBILITIES
PURSUANT TO DTR4
The Directors confirm to the best of their knowledge:
•
The financial statements have been prepared in
accordance with the applicable set of accounting
standards, give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
Group.
•
The Annual Report includes a fair review of the
development and performance of the business and
the financial position of the Group and Company,
together with a description of the principal risks and
uncertainties that they face.
Directors’
Responsibilities Statement
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/ APPROVAL
This Directors’ responsibilities statement was approved by the Board of Directors and signed on its behalf by:
Chris Phillips
Chair
2 March 2023
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OPINION ON THE FINANCIAL STATEMENTS
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs
as at 31 December 2022 and of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
•
the Parent Company financial statements have been properly prepared in accordance with UK accounting
standards; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Triple Point Social Housing REIT plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2022 which comprise the Group Statement of Comprehensive
Income, the Group and Company Statements of Financial Position, the Group and Company Statements of Changes
in Equity, the Group Statement of Cash Flows
and notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied in their preparation of the Group financial
statements is applicable law and UK adopted international accounting standards. The financial reporting framework that
has been applied in the preparation of the Parent Company financial statements is Financial Reporting Standard 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
/
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.
INDEPENDENCE
Following the recommendation of the audit committee, we were appointed by the Directors on 18 July 2017 to audit the
financial statements for the year ended 31 December 2017 and subsequent financial periods. Following a competitive
re-tender in May 2019 we were reappointed to audit the financial statements for the year ended 31 December 2019 and
subsequent financial periods. The period of total uninterrupted engagement including retenders and reappointments is
six years, covering the years ended 31 December 2017 to 31 December 2022.
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-
audit services prohibited by that standard were not provided to the Group or the Parent Company.
Independent
Auditor’s Report
/
TO THE MEMBERS OF TRIPLE POINT SOCIAL HOUSING REIT PLC
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CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment
of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:
•
Obtaining the going concern model from the Directors, and challenging the assumptions used by the Directors
in the going concern forecast. This included assumptions around expected investment property acquisitions, the
movements in investment property valuations, movements in the Group’s level of borrowings and the associated
interest, and rental income increases. We obtained evidence, where available, to support inputs into the model.
•
Testing the arithmetical accuracy of the model.
•
Challenging the sensitivities applied by the Directors to the model, including a fall in revenue in the event
lessees are unable to meet rent payments in relation to vacant units, as well as a corresponding fall in property
valuations. On these stress tested model we challenged assumptions made by the Directors, specifically with
regards to:
i.
The expected impact on investment property valuations;
ii.
The expected impact on rental income;
iii.
The expected void period before suitable alternative tenants could be found;
iv.
The impact on the Group’s covenant compliance; and
v.
The reasonableness of the assumptions used in the stress test.
•
Performing an analysis of the headroom of the Group’s ability to meet their day to day operational costs in the
stress tested forecasts.
•
Performing an analysis of the covenant compliance and the headroom and considered these in light of our own
further stress tests.
•
Reviewing the post year end rent receipts for trade debtors as at 31 December 2022, to assess the financial
position of tenants.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
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*These are areas which have been subject to a full scope audit by the Group engagement team.
/ OVERVIEW
COVERAGE*
100% (2021: 100%) of Group revenue
100% (2021: 100%) of Group investment property
99.9% (2021: 99.6%) of Group total assets
99.8% (2021: 99.8%) of Group profit before tax
KEY AUDIT MATTERS
2022
2021
Investment property valuations
Revenue recognition
N/A
Revenue recognition is no longer considered to be a key audit matter as revenue is no longer considered to be a
significant risk
.
MATERIALITY
Group financial statements as a whole
We determined materiality for the Group financial statements as a whole to be £7,060,000 (2021: £6,990,000), which was
set at 1% (2021: 1%) of Group total assets.
/
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
The Group operates solely in the United Kingdom, and all audit procedures are performed by the Group audit team.
We identified four significant components, in addition to the Parent Company:
•
Norland Estates Limited
•
TP REIT Propco 2 Limited
•
TP REIT Propco 3 Limited
•
TP REIT Propco 4 Limited
All significant components were subject to full scope audits. Audit work on the other components in the Group was
undertaken subject to Group materiality. Material balances and significant risk areas were tested substantively and
through analytical procedures.
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KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER
HOW THE SCOPE OF OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
Investment
property valuations
Refer to notes 3.1
and 4.2 in relation to
significant estimates
and accounting
policies.
Refer to note
14 in relation
to investment
properties.
The Group’s investment property portfolio
is made up of standing assets that are
existing properties that are currently
let. They are valued using the income
capitalisation method. This method is
applied to income producing assets and
discounts the future value of rents by an
appropriate discount rate.
The Directors use an independent valuer
to assist them with the valuation of the
property portfolio. The valuation of
investment property requires significant
judgement and estimates by the Directors
and the independent valuer and is
therefore considered a significant risk
due to the subjective nature of certain
assumptions inherent in each valuation.
Any input inaccuracies or unreasonable
bases used in the valuation judgements
(such as in respect of yield profile applied)
could result in a material misstatement of
the financial statements.
There is also a risk that the Directors may
influence the significant judgements and
estimates in respect of property valuations
in order to achieve property valuation and
other performance targets to meet market
expectations. This could be achieved
through manipulation of information
provided to the valuer.
Experience of valuer and relevance of its work
• We obtained the valuation report prepared for the Directors by the
independent valuer and discussed the basis of the valuations with the
independent valuer. We checked that the basis of the valuations was in
accordance with the requirements of accounting standards.
• We assessed the external valuer’s qualifications, independence.and
objectivity.
• We obtained a copy of the instructions provided to the independent valuer
and reviewed for any limitations in scope or for evidence of Management
bias.
Data provided to the valuer
• We checked 100% of the underlying data provided to the valuer by
Management. This data included inputs such as current rent and lease term,
which we agreed to the executed lease agreements as part of our audit
work.
Assumptions and estimates used by the valuer
•
We developed yield expectations on all properties in the Group’s portfolio
using available independent industry data and reports around the year end.
• We discussed the assumptions used and the valuation movement in the year
with both Management and the independent valuer. Where the valuation
was outside of our expected range we discussed with the independent
valuer specific assumptions and reasoning for the yields applied and
corroborated their explanations where relevant. We also discussed with
the valuer their views on the impact on the valuations of the Approved
Providers having received non-compliant ratings from the regulators. We
compared their responses against our own expectations based on our sector
knowledge and through inspection of comparable market data.
Key observations:
Our testing indicated that the estimates and assumptions used in the
investment property valuations were appropriate in the context of the Group’s
property portfolio.
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/
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements.
We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect
on the financial statements as a whole. Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL
STATEMENTS
2022
£M
2021
£M
2022
£M
2021
£M
MATERIALITY
7.1
7.0
4.1
4.0
BASIS FOR DETERMINING MATERIALITY
Materiality for the Group and Parent company’s financial statement was set at 1% of total assets
(2021: 1%).
RATIONALE FOR THE BENCHMARK APPLIED
We determined that total assets would be the most appropriate basis for determining overall
materiality as we consider it to be one of the principal considerations for the users of the
financial statements in assessing the financial performance of the Group and Parent Company.
PERFORMANCE MATERIALITY
4.94
4.55
2.90
2.59
BASIS FOR DETERMINING PERFORMANCE
MATERIALITY
On the basis of our risk assessment, together with our assessment of the Group’s overall control
environment, our judgement was that overall performance materiality for the Group should
be 70% (2021: 65%) of materiality. A number of factors led to the judgement to increase the
performance materiality level from prior year. This
included the fact that there was a low level of
brought forward adjustments, with a minimal number of adjustments raised in historic audits, as
well as Management’s open consideration to adjusting for misstatements raised. We determined
that the same measure as the Group was appropriate for the Parent Company.
SPECIFIC MATERIALITY
We also determined that for other account balances, classes of transactions and disclosures not related to investment
properties, that specifically impact the measurement of EPRA earnings, a misstatement of less than materiality for the
financial statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we
determined that specific materiality for these areas should be £962,000 (2021: £970,000). This was set at 5% (2021:
5%) of European Public Real Estate Association (“EPRA”) earnings. EPRA earnings excludes the impact of the net
surplus on revaluation of investment properties. Those items which may affect EPRA earnings include rental income,
general and administrative expenses, management fees, finance income and finance cost. We further applied a
performance materiality level of 70% (2021: 65%) of specific materiality to ensure that the risk of errors exceeding
specific materiality was appropriately mitigated. The specific materiality for the Parent Company was capped at 65%
(2021: 40%) of Group specific materiality being £625,000 (2021: £388,000).
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COMPONENT MATERIALITY
We set materiality for each significant component of the Group based on a percentage of 1% (2021: 1%) of the total
assets of that component. Significant component materiality ranged from £180,000 to £4,810,000 (2021: ranged
from £388,000 to £3,980,000).
In the audit of each component, we further applied performance materiality levels of 70% (2021: 65%) of the
component materiality to our testing to ensure that the risk of errors exceeding component materiality was
appropriately mitigated.
REPORTING THRESHOLD
We agreed with the Audit Committee that for the Group financial statements we would report to them all individual
audit differences in excess of £353,000 (2021: £140,000) for items audited to financial statement materiality, and
£48,000 (2021: £19,000) for items audited to specific materiality. We also agreed to report differences below these
thresholds that, in our view, warranted reporting on qualitative grounds.
We agreed that the reporting threshold for the Parent Company would be £207,000 (2021: £79,600) for items
audited to financial statement materiality, and £31,200 (2021: £7,800) for items audited to specific materiality.
/
OTHER INFORMATION
The Directors are responsible for the other information. The other information comprises the information included in
the Annual Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
/
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the parent company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained
during the audit.
GOING CONCERN
AND LONGER-TERM
VIABILITY
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and
any material uncertainties identified set out on
pages 72 to 74; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why
the period is appropriate set out on page 72.
OTHER CODE
PROVISIONS
• Directors’ statement on fair, balanced and understandable set out on page 107;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 66
to 73;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 89; and
• The section describing the work of the audit committee set out on page 88.
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/
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
STRATEGIC REPORT
AND DIRECTORS’
REPORT
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.
DIRECTORS’
REMUNERATION
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
MATTERS ON WHICH
WE ARE REQUIRED
TO REPORT BY
EXCEPTION
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
/
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
/
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
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EXTENT TO WHICH THE AUDIT WAS CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in
which it operates, and considered the risk of acts by the Group that were contrary to applicable laws and regulations,
including fraud.
We focused
on laws and regulations that could give rise to a material misstatement in the financial statements and
considered the significant laws and regulations to be the Companies Act 2006, the UK Listing Rules, tax legislation,
housing association regulations, health and safety legislation and the Equal Opportunity Act.
Our procedures included agreeing the financial statement disclosures to underlying supporting documentation where
relevant, review of Board and Committee meeting minutes, enquiries with Management and those charged with
governance as to the risks of non-compliance with laws and regulations and any instances thereof and we obtained
an understanding of controls around procurement fraud.
We assessed the susceptibility of the financial statements to material misstatement, including fraud and considered
the fraud risk areas to be revenue recognition, investment property valuations and management override of controls.
We obtained a copy of all new leases entered into during the year and checked the calculation and recognition of
rental income and agreed this back to the tenancy schedule prepared by Management.
For all leases that were in place at 31 December 2021, we set expectations for the rental income based on
information previously extracted from the leases and compared this to the actual revenue recognised in the current
year, investigating any differences above a set threshold.
We traced a sample of rental income invoiced through to bank statements to check that rent recognised is not net
of any lease concessions or additional rent free periods granted not previously identified as well as the cash being
received from the contracting tenant.
We agreed all bank balances and loans to direct bank confirmations and agreements.
In addressing the risk of management override of internal controls, we tested a sample of journals and evaluated
whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
We identified what we considered to be the key risk characteristics and targeted our sample testing to these areas.
We obtained an explanation for journals within the sample, as well as supporting evidence.This included evaluating
any management bias within the valuation of investment property, as mentioned in the investment property
valuations key audit matter above.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members, who were deemed to have appropriate competence and capabilities, to remain alert to any indications of
fraud or non-compliance with laws and regulations throughout the audit
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or
through collusion. There are inherent limitations in the audit procedures performed and the further removed non-
compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.
uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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/
USE OF OUR REPORT
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Parent Company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose.
To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company
and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Charles Ellis (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
2 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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Financial Statements
Group Statement of Comprehensive Income
for the year ended 31 December 2022
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Financial Statements
Other Information
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118
Note
Year ended
Year ended
31 December 202
31 December 202
2
2
£’000
£’000
Year ended
31 December 2021
£’000
Income
Rental income
5
Expected credit loss
5
(2,073 )
Other income
Total income
Expenses
Directors’ remuneration
6
(308 )
(307 )
General and administrative expenses
9
(2,854 )
(2,067 )
Management fees
8
(4,704 )
(4,552 )
Total expenses
(7,866 )
(6,926 )
Gain from fair value adjustment on investment property
14
Operating profit
Finance income
11
Finance costs
12
(10,889 )
(6,823 )
Profit for the year before tax
Taxation
13
Profit and total comprehensive income for the year
IFRS Earnings per share – basic and diluted
36
The accompanying notes on pages 122 to 141 form an integral part of these Group Financial Statements.
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Other Information
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Financial Statements
Group Statement of Financial Position
as at 31 December 2022
31 December 202
31 December 202
2
2
31 December 2021
Note
£’000
£’000
£’000
Assets
Non-current assets
Investment properties
14
Trade and other receivables
15
Total non-current assets
Current assets
Assets held for sale
Trade and other receivables
16
Cash, cash equivalents and restricted cash
17
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
18
Total current liabilities
Non-current liabilities
Other payables
19
Bank and other Borrowings
20
Total non-current liabilities
Total liabilities
Total net assets
Equity
Share capital
22
Share premium reserve
23
Treasury shares reserve
24
(378 )
(378 )
Capital reduction reserve
25
Retained earnings
26
Total Equity
IFRS Net asset value per share – basic and diluted
37
The Group Financial Statements were approved and authorised for issue by the Board on 2 March 2023 and signed on its behalf by:
Chris Phillips
Chair
2 March 2023
The accompanying notes on pages 122 to 141 form an integral part of these Group Financial Statements.
Financial Statements
Group Statement of Changes in Equity
for the year ended 31 December 2022
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Financial Statements
Other Information
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Share
Share
capital
capital
£’000
£’000
Share
Share
premium
premium
reserve
reserve
£’000
£’000
Treasury
Treasury
shares
shares
reserve
reserve
£’000
£’000
Capital
Capital
reduction reserve
reduction reserve
£’000
£’000
Retained
Retained
earnings
earnings
£’000
£’000
Total
Total
equity
equity
£’000
£’000
Year ended 31 December 202
2
Note
Note
Balance at 1 January 2022
(378 )
Profit and total comprehensive income
for the year
Transactions with owners
Dividends paid
27
(21,730 )
(21,730 )
Balance at 31 December 2022
(378 )
Share
Share
capital
capital
£’000
£’000
Share
Share
premium
premium
reserve
reserve
£’000
£’000
Treasury
Treasury
shares
shares
reserve
reserve
£’000
£’000
Capital
Capital
reduction reserve
reduction reserve
£’000
£’000
Retained
Retained
earnings
earnings
£’000
£’000
Total
Total
equity
equity
£’000
£’000
Year ended 31 December 202
1
Note
Note
Balance at 1 January 2021
(378 )
Profit and total comprehensive income
for the year
Transactions with owners
Share issue costs capitalised
23
(23 )
(23 )
Dividends paid
27
(5,760 )
(15,165 )
(20,925 )
Balance at 31 December 2021
(378 )
The accompanying notes on pages 122 to 141 form an integral part of these Group Financial Statements.
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Other Information
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Financial Statements
Group Statement of Cash Flows
for the year ended 31 December 2022
Year ended
Year ended
31 December 202
31 December 202
2
2
Year ended
31 December 2021
Note
£’000
£’000
£’000
Cash flows from operating activities
Profit before income tax
Adjustments for:
Expected credit loss
Gain from fair value adjustment on investment property
(8,264 )
(8,998 )
Finance income
(56 )
(44 )
Finance costs
Operating results before working capital changes
(Increase)/Decrease in trade and other receivables
(4,127 )
(1,237 )
(Decrease)/Increase in trade and other payables
(242 )
Net cash flow generated from operating activities
Cash flows from investing activities
Purchase of investment properties
(20,611 )
(61,350 )
Prepaid acquisition costs paid
(18 )
Disposal proceeds from sale of assets
Restricted cash – paid
(5 )
(410 )
Restricted cash – released
Interest received
Net cash flow used in investing activities
(18,345 )
(61,374 )
Cash flows from financing activities
Proceeds from issue of Ordinary Shares at a premium
Ordinary Share issue costs capitalised
(23 )
Interest paid
(7,226 )
(5,615 )
Bank borrowings drawn
20
Bank borrowings repaid
20
(130,000 )
Loan arrangement fees paid
21
(599 )
(2,728 )
Dividends paid
27
(21,730 )
(20,925 )
Net cash flow generated from financing activities
(29,555 )
Net decrease in cash and cash equivalents
(22,203 )
(953 )
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
17
The accompanying notes on pages 122 to 141 form an integral part of these Group Financial Statements.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
Company Overview
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Other Information
Triple Point Social Housing REIT plc
122
1. CORPORATE INFORMATION
Estate Investment Trust (“REIT”) incorporated in England and
limited by shares on 12 June 2017. The address of the registered
office is 1 King William Street, United Kingdom, EC4N 7AF . The
Company is registered as an investment company under section
833 of the Companies Act 2006 and is domiciled in the United
The principal activity of the Company is to act as the ultimate
parent company of Triple Point Social Housing REIT PLC and its
subsidiaries (the “Group”) and to provide shareholders with an
attractive level of income, together with the potential for capital
growth from investing in a portfolio of social homes.
2. BASIS OF PREPARATION
The financial statements of the Group have been prepared in
accordance with UK-adopted International Accounting Standards
and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards. All
accounting policies have been applied consistently.
The Group’s Financial Statements have been prepared on a
historical cost basis, as modified for the Group’s investment
properties, which have been measured at fair value. Gains or
losses arising from changes in fair values are included in profit or
loss.
On 31 December 2020, IFRS as adopted by the European Union
at that date was brought into UK law and became UK-adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The
Company transitioned to UK-adopted international accounting
standards in its consolidated financial statements on 1 January
2021. There was no impact or changes in accounting policies
from the transition. The Group has applied the same accounting
policies and method of computation in these Financial Statements
as in its 2021 annual financial statements. At the date of
authorisation of these financial statements, there were a number
of standards and interpretations which were effective, however
none of which have an impact on these financial statements.
2.1. GOING CONCERN
The Group benefits from a secure income stream from long leases
which are not overly reliant on any one tenant and present a well-
diversified risk. The Directors have reviewed the Group’s forecast
which shows the expected annualised rental income exceeds the
expected operating costs of the Group. 91.8% of rental income
due and payable for the period ended 31 December 2022 has
been collected, rent arrears are predominantly attributable to two
Approved Providers, My Space Housing Solutions and Parasol
Homes.
The Directors believe that the Group is still well placed to manage
its financing and other business risks and that the Group will
remain viable, continuing to operate and meet its liabilities as
they fall due. During the year, Fitch Ratings Limited assigned the
Company an investment Long-Term Issuer Default Rating of ‘A-’
with a stable outlook.
The Directors have performed an assessment of the ability of the
Group to continue as a going concern, for a period of at least 12
months from the date of signing these financial statements. The
Directors have considered the expected obligations of the Group
for the next 12 months and are confident that all will be met.
The Directors have also considered the financing provided to the
Group. Norland Estates Limited and TP REIT Propco 2 Limited
have bank facilities with MetLife and Metlife and Barings
respectively. TP REIT Propco 5 Ltd’s Revolving Credit Facility (RCF)
with Lloyds and Natwest cancelled in December 2022. Prior to
cancellation the facility was undrawn.
The loans secured by Norland Estates Limited and TP REIT Propco
2 Limited are subject to asset cover ratio covenants and interest
cover ratio covenants which can be found in the table below. The
Directors have also considered reverse stress testing and the
circumstances that would lead to a covenant breach. Given the
level of headroom, the Directors are of the view that the risk of
scenarios materialising that would lead to a breach of the
covenants is remote.
Norland
Norland
Estates
Estates
Limited
Limited
TP REIT
Propco 2
Limited
Asset Cover (ACR)
Asset Cover Ratio Covenant
x2.00
x1.67
Asset Cover Ratio 31 December 2022
x2.77
x2.10
Blended Net initial yield
5.55%
5.34%
Headroom (yield movement)
196bps
130bps
Interest Cover (ICR)
Interest Cover Ratio Covenant
1.75x
1.75x
Interest Cover Ratio 31 December 2022
5.02x
4.41x
Headroom (rental income movement)
65%
60%
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2023 Annual Report
123
The loan secured by Norland Estates Limited asset cover ratio
was amended from previous covenant of x2.25 in August 2021 to
bring more in line with the ACR covenant in the new Note
Purchase Agreement with MetLife and Barings.
Under the downside model the forecasts have been stressed to
show the effect of some Care Providers ceasing to pay their voids
liability, and as a result this causes Approved Providers to default
under some of
the Group leases. Under the downside model the
Group will be able to settle its liabilities for a period of at least 12
months from the date of signing these financial statements. As a
result of the above, the Directors are of the opinion that the going
concern basis adopted in the preparation of the financial
statements is appropriate.
The Group has no short or medium term refinancing risk given the
10.6 year average maturity of its long term debt facilities with
MetLife and Barings, the first of which expires in June 2028, and
which are fully fixed at an all-in weighted average rate of 2.74%.
Based on the forecasts prepared and the intentions of the Parent
Company, the Directors consider that the Group will be able to
settle its liabilities for a period of at least 12 months from the date
of signing these financial statements and therefore has prepared
these financial statements on the going concern basis.
2.2. CURRENCY
The Group financial information is presented in Sterling which is
also the Company’s functional currency.
3. SIGNIFICANT ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
In the application of the Group’s accounting policies, which are
described in note 4, the Directors are required to make
judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial
year are outlined below:
ESTIMATES:
3.1. INVESTMENT PROPERTIES (NOTE 14)
The Group uses the valuation carried out by its independent
valuers as the fair value of its property portfolio. The valuation is
based upon assumptions including future rental income and the
appropriate discount rate. The valuers also refer to market
evidence of transaction prices for similar properties. Further
information is provided in note 14.
The Group’s properties have been independently valued by
Jones Lang LaSalle Limited (‘JLL’ or the ‘Valuer’) in accordance
with the definitions published by the Royal Institute of Chartered
Surveyors’ (“RICS”) Valuation – Professional Standards, July 2020,
Global and UK Editions (commonly known as the “Red Book”).
JLL is one of the most recognised professional firms within social
housing valuation and has sufficient current local and national
knowledge of both social housing generally and Specialist
Supported Housing and has the skills and understanding to
undertake the valuations competently.
With respect to the Group’s Financial Statements, investment
properties are valued at their fair value at each Statement of
Financial Position date in accordance with IFRS 13 which
recognises a variety of fair value inputs depending upon the
nature of the investment. Specifically:
Level 1 – Unadjusted, quoted prices for identical assets and
liabilities in active (typically quoted) markets;
Level 2 – Quoted prices for similar assets and liabilities in active
markets; and
Level 3 – External inputs are “unobservable”. Value is the
Director’s best estimate, based on advice from relevant
knowledgeable experts, use of recognised valuation techniques
and a determination of which assumptions should be applied in
valuing such assets and with particular focus on the specific
attributes of the investments themselves.
Given the bespoke nature of each of the Group’s investments, all
of the Group’s investment properties are included in Level 3.
3.2. EXPECTED CREDIT LOSSES
(ECL)
The total ECL provision is £2.1 million and relates to rental arrears
for two of the Group’s Approved Providers. A default probability
for each of the two Approved Providers, representing the
estimated percentage likelihood of them paying any outstanding
rent due at 31 December 2022, was determined based on their
latest known financial position and any repayments plans that had
been agreed or discussed. For each provider the estimated
percentage probability of receiving unpaid rent has been
multiplied by the rental arrears for the year. These two figures
have then been aggregated to arrive at the ECL provision.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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124
JUDGEMENTS:
3.3. ASSET ACQUISITIONS
The Group acquires subsidiaries that own investment properties.
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. The Directors consider whether a set of
activities and assets which include an input and a substantive
process that together significantly contribute to the ability to
create outputs has been acquired in determining whether the
acquisition represents the acquisition of a business. An optional
concentration test is also performed which assesses whether
substantially all of the fair value of the gross assets acquired is
concentrated in a single asset or group of similar assets. If such a
concentration exists, the transaction is not viewed as an acquisition
of a business and no further assessment of the business
combination guidance is required. The Group has not purchased,
and does not intend to purchase, any subsidiaries which
incorporate any assets other than investment property.
Where such acquisitions are not judged to be the acquisition of a
business, they are not treated as business combinations. Rather,
the cost to acquire the corporate entity is allocated between the
identifiable assets and liabilities of the entity based upon their
relative fair values at the acquisition date. Accordingly, no goodwill
or deferred tax arises.
All corporate acquisitions during the period have been treated as
asset purchases rather than business combinations because the
optional concentration test has been performed which has
determined that the fair value of the gross asset acquired is
concentrated into a single asset, investment property and
therefore is not a business combination.
3.3. THE GROUP AS LESSOR (NOTE 28)
The Group has determined, based on an evaluation of the terms
and conditions of the arrangements, that it retains all the
significant risks and rewards of ownership of its properties and so
accounts for the leases as operating leases. This evaluation
involves judgement and the key factors considered include
comparing the duration of the lease terms compared to the
economic life of the underlying property asset, or in the case of
sub-leased properties, the remaining life of the right-of-use asset
arising from the headlease, and the present value of minimum
lease payments compared to the fair value of the asset at
acquisition.
3.4. LEASE TERM
Rental income is recognised on a straight-line basis over the
expected lease term. A judgement has to be made by the
Directors as to the expected term of each lease. The judgement
involves determining whether put and call options on certain
leases will be exercised. This judgement impacts the length of
time over which lease incentives are recognised. The key element
of this judgement is whether the Directors can be “reasonably
certain” that any options or breaks in place to extend the lease
term will be exercised at the expiry of the current lease, which is
typically some 20 years in the future. In particular, consideration
was given to the future regulatory environment, government
policy on social housing and future alternative uses for the
property. The Directors concluded that it was impossible to say
with reasonable certainty that an option will be exercised. The
Directors concluded that lease terms should be restricted to the
initial term of the lease, or to the break date, except where
reversionary lease have already been executed or where options
to extend have already been exercised.
The principal accounting policies applied in the preparation of
the financial statements are set out below.
4. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
4.1. BASIS OF CONSOLIDATION
The financial statements comprise the financial information of the
Group as at the year-end date.
Subsidiaries are all entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and
can affect those returns through its power to direct the activities
of the entity. All intra-Group transactions, balances, income and
expenses
are
eliminated
on
consolidation.
The
financial
information of the subsidiaries are included in the financial
statements from the date that control commences until the date
that control ceases.
If an equity interest in a subsidiary is transferred but a controlling
interest continues to be held after the transfer, then the change in
ownership interest is accounted for as an equity transaction.
Accounting policies of the subsidiaries are consistent with the
policies adopted by the Group.
4.2. INVESTMENT PROPERTY
Investment property, which is property held to earn rentals and/or
for capital appreciation, is initially measured at cost, being the fair
value of the consideration given, including expenditure that is
directly attributable to the acquisition of the investment property.
The Group recognises asset acquisitions on completion. After
initial recognition, investment property is stated at its fair value at
the Statement of Financial Position date. Gains and losses arising
from changes in the fair value of investment property are included
in profit or loss for the period in which they arise in the Statement
of Comprehensive Income. Subsequent expenditure is capitalised
only when it is probable that future economic benefits are
associated with the expenditure.
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2023 Annual Report
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An investment property is derecognised upon disposal or when
the investment property is permanently withdrawn from use and
no future economic benefits are expected to be obtained from
the disposal. Any gain or loss arising on de-recognition of the
property (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is recorded in
profit or loss in the period in which the property is derecognised.
Investment properties under construction are financed by the
Group where the Group enters into contracts for the development
of a pre-let property under a forward funding agreement. The
Group does not expose itself to any speculative development risk
as the proposed property is pre-let to a tenant under an agreement
for lease and the Group enters into a fixed price development
agreement with the Developer. Investment properties under
construction are initially recognised in line with stage payments
made to the developer. The properties are revalued at fair value
at each reporting date in the form of a work-in-progress value.
The work-in-progress value of investment properties under
construction is estimated as fair value of the completed asset less
any costs still payable in order to complete, which includes the
Developer’s margin.
During the period between initial investment and the lease
commencement date (practical completion of the works) a
coupon interest due on the funds paid in the range of typically
6-6.75% per annum is payable by the Developer. The accrued
coupon interest is considered as a discount on the fixed contract
price. It does not result in any cash flows during the development
but reduces the outstanding balance payable to the developer on
practical completion. When practical completion is reached, the
completed investment property is transferred to operational
assets at the fair value on the date of completion.
Significant accounting judgements, estimates and assumptions
made for the valuation of investment properties are discussed in
note 3.
4.3. LEASES
LESSOR
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
The Group has determined that it retains all the significant risks
and rewards of ownership of the properties it has acquired to date
and accounts for the contracts as operating leases as discussed in
note 3.
Properties leased out under operating leases are included in
investment property in the Statement of Financial Position. Rental
income from operating leases is recognised on a straight-line
basis over the term of the relevant leases.
LESSEE
As a lessee the Group recognises a right-of-use asset within
investment properties and a lease liability for all leases, which is
included within other payables (note 18). The lease liabilities are
measured at the present value of the remaining lease payments,
discounted using an appropriate discount rate at inception of the
lease or on initial recognition. The discount rate applied by the
Group is the incremental borrowing rate at which a similar
borrowing could be obtained from an independent creditor under
comparable terms and conditions. Subsequent to initial
measurement lease liabilities increase as a result of interest
charged at a constant rate on the balance outstanding and are
reduced for lease payments made.
As leasehold properties meet the definition of investment
property, the right-of-use assets are presented within investment
property (note 14), and after initial recognition are subsequently
measured at fair value.
SUB-LEASES
Leases are classified as finance leases whenever the terms of the
lease transfer substantially all the risks and rewards of ownership
of the underlying property asset to the lessee. Sub-leases of
leasehold properties are classified with reference to the right-of-
use asset arising from the head lease. All other leases are classified
as operating leases.
4.4. RENT AND OTHER RECEIVABLES
Rent and other receivables are amounts due in the ordinary
course of business. If collection is expected in one year or less,
they are classified as current assets.
Rent receivables are initially recognised at fair value plus
transaction costs and are subsequently carried at amortised cost,
less provision for impairment.
Impairment provisions for current and non-current rent receivables
are recognised based on the simplified approach within IFRS 9
using a provision matrix in the determination of the lifetime
expected credit losses. During this process the probability of the
non-payment of the rent receivables is assessed. This probability
is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the rent
receivables. For rent receivables, which are reported net, such
provisions are recorded in a separate provision account with the
loss being recognised in the consolidated statement of
comprehensive income. On confirmation that the rent receivable
will not be collectable, the gross carrying value of the asset is
written off against the associated provision.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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Triple Point Social Housing REIT plc
126
Impairment provisions for all other receivables are recognised
based on a forward-looking expected credit loss model using the
general approach. The methodology used to determine the
amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of the
financial asset. For those where the credit risk has not increased
significantly since initial recognition of the financial asset, twelve
month expected credit losses along with gross interest income
are recognised. For those for which credit risk has increased
significantly, lifetime expected credit losses along with the gross
interest income are recognised. For those that are determined to
be credit impaired, lifetime expected credit losses along with
interest income on a net basis are recognised.
4.5. CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
Cash, cash equivalents and restricted cash include cash in hand,
cash held by lawyers and liquidity funds with a term of no more
than three months that are readily convertible to a known amount
of cash, and which are subject to an insignificant risk of changes
in value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted Cash represents cash held in relation to retentions for
repairs, maintenance and improvement works by the vendors that
is committed on the acquisition of the properties, and restricted
bank borrowings.
4.6. PROVISIONS
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that the Group will be required to settle that obligation
and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
expenditure required to settle the present obligation at the
Statement of Financial Position date, considering the risks and
uncertainties surrounding the obligation.
4.7. TRADE AND OTHER PAYABLES
Trade and other payables are classified as current liabilities if
payment is due within one year or less from the end of the current
accounting period. If not, they are presented as non-current
liabilities. Trade and other payables are recognised initially at their
fair value and subsequently measured at amortised cost using the
effective interest method until settled.
4.8. BANK AND OTHER BORROWINGS
Bank borrowings and the Group’s loan notes are initially
recognised at fair value net of any transaction costs directly
attributable to the issue of the instrument. Such interest-bearing
liabilities are subsequently measured at amortised cost using the
effective interest rate method, which ensure that any interest
expense over the period to repayment is at a constant rate on the
balance of the liability carried in the Group Statement of Financial
Position. For the purposes of each financial liability, interest
expense includes initial transaction costs and any premium
payable on redemption, as well as any interest or coupon payment
while the liability is outstanding.
Modifications to borrowing terms are assessed when agreed with
the lender to determine if they represent a substantial or non-
substantial modification under IFRS 9. This involves the ‘10% test’
comparing the discounted present value of the revised cash flows
against the carrying value of the loan, as well as a review of any
other qualitative changes to the terms. If the modifications are
deemed substantial, the existing liability is extinguished and a
new liability is recognised, with the difference between the
carrying amount of the existing financial liability and the fair value
of the modified financial liability at modification date being
recognised in the Statement of Comprehensive Income. If the
modification is deemed non-substantial, costs or fees incurred are
adjusted against the liability and are amortised over the remaining
term.
4.9. TAXATION
Taxation on the element of the profit or loss for the period that is
not exempt under UK REIT regulations would be comprised of
current and deferred tax. Tax is recognised in the Statement of
Comprehensive Income except to the extent that it relates to
items recognised as direct movement in equity, in which case it is
recognised as a direct movement in equity. Current tax is the
expected tax payable on any non-REIT taxable income for the
period, using tax rates enacted or substantively enacted at the
Statement of Financial Position date, and any adjustment to tax
payable in respect of previous periods.
4.10. DIVIDENDS PAYABLE TO
SHAREHOLDERS
Dividends to the Company’s shareholders are recognised as a
liability in the Group’s Financial Statements in the period in which
the dividends are approved. Interim dividends are recognised
when paid.
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2023 Annual Report
127
4.11. RENTAL INCOME
Rental income from investment property is recognised on a
straight-line basis over the term of ongoing leases and is shown
gross of any UK income tax. A rental adjustment is recognised
from the rent review date in relation to unsettled rent reviews,
where the Directors are reasonably certain that the rental uplift
will be agreed.
Tenant lease incentives are recognised as a reduction of rental
revenue on a straight-line basis over the term of the lease. These
are recognised within trade and other receivables on the
Statement of Financial Position.
When the Group enters into a forward funded transaction, the
future tenant signs an agreement for lease. No rental income is
recognised under the agreement for lease, but once the practical
completion has taken place the formal lease is signed at which
point rental income commences to be recognised in the Statement
of Comprehensive Income.
4.12. FINANCE INCOME AND FINANCE
COSTS
Finance income is recognised as interest accrues on cash balances
held by the Group. Finance costs consist of interest and other
costs that the Group incurs in connection with bank and other
borrowings. These costs are expensed in the period in which they
occur. Borrowing costs that are separately identifiable and directly
attributable to the acquisition or construction of forward funded
assets that take a substantial period of time to complete are
capitalised as part of the development cost in investment property
(note 14).
4.13. EXPENSES
All expenses are recognised in the Statement of Comprehensive
Income on an accruals basis.
4.14. INVESTMENT MANAGEMENT FEES
Investment advisory fees are recognised in the Statement of
Comprehensive Income on an accruals basis.
4.15. SHARE ISSUE COSTS
The costs of issuing or reacquiring equity instruments (other than
in a business combination) are accounted for as a deduction from
equity.
4.16. TREASURY SHARES
Consideration paid or received for the purchase or sale of treasury
shares is recognised directly in equity. The cost of treasury shares
held is presented as a separate reserve (“the treasury share
reserve”). Any excess of the consideration received on the sale of
treasury shares over the weighted average cost of the shares sold
is credited to retained earnings.
5. RENTAL INCOME
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Rental income – freehold assets
35,087
31,071
Rental income – leasehold assets
2,213
2,046
37,300
33,117
Expected credit loss
2,073
–
The lease agreements between the Group and the Registered
Providers are fully repairing and insuring leases. The Registered
Providers are responsible for the settlement of all present and future
rates, taxes, costs and other impositions payable in respect of the
property. As a result, no direct property expenses were incurred.
All rental income arose within the United Kingdom.
The expected loss rates are based on the Group’s credit losses
which occurred in the year under review for the first time since IPO.
The loss rates are then adjusted for current and forward-looking
information affecting the Group’s tenants. The total ECL provision is
£2.1 million and relates to rental arrears for two of the Group’s
Approved Providers. For each provider the estimated percentage
probability of receiving unpaid rent has been multiplied by the
rental arrears for the period. These two figures have then been
aggregated to arrive at the ECL provision. The residual balance
not provided through the statement of comprehensive income is
£1.0 million.
6. DIRECTORS’ REMUNERATION
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Directors’ fees
275
275
Employer’s National Insurance
Contributions
33
32
308
307
Additional fees paid – capitalised as
share issue costs
–
–
308
307
The Directors are remunerated for their services at such rate as
the Directors shall from time to time determine. The Chairman
receives a Director’s fee of £75,000 per annum (2021: £75,000),
and the other Directors of the Board receive a fee of £50,000 per
annum (2021: £50,000). The Directors are also entitled to an
additional fee of £7,500 in connection with the production of
every prospectus by the Company. Each Director was paid this
additional fee in 2020 following the publication of the prospectus,
but no additional fees were received during 2022 or 2021. A
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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128
summary of the Directors’ emoluments, including the disclosures
required by the Companies Act 2006, is set out in the Directors’
Remuneration Report within the Corporate Governance Report.
None of the Directors received any advances or credits from any
group entity during the year.
7. PARTICULARS OF EMPLOYEES
The Group and Company had no employees during the year
other than the Directors (2021: none).
8. MANAGEMENT FEES
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Management fees
4,704
4,552
4,704
4,552
On 20 July 2017 Triple Point Investment Management LLP ‘TPIM’
was appointed as the delegated investment manager of the
Company by entering into the property management services
and delegated portfolio management agreement. Under this
agreement the delegated investment manager will advise the
Company and provide certain management services in respect of
the property portfolio. A Deed of Variation was signed on 23
August 2018. This defined cash balances in the Net Asset Value
calculation in respect of the management fee as “positive
uncommitted cash balances after deducting any borrowings”.
The management fee is an annual management fee which is
calculated quarterly in arrears based upon a percentage of the
last published Net Asset Value of the Group (not taking into
account uncommitted cash balances after deducting borrowings
as described above) as at 31 March, 30 June, 30 September and
31 December in each year on the following basis with effect from
Admission:
•
on that part of the Net Asset Value up to and including £250
million, an amount equal to 1% of such part of the Net Asset
Value;
•
on that part of the Net Asset Value over £250 million and up to
and including £500 million, an amount equal to 0.9% of such
part of the Net Asset Value;
•
on that part of the Net Asset Value over £500 million and up to
and including £1 billion, an amount equal to 0.8% of such part
of the Net Asset Value; and
•
on that part of the Net Asset Value over £1 billion, an amount
equal to 0.7% of such part of the Net Asset Value.
Management fees of £4,704,000 (2021: £4,552,000) were
chargeable by TPIM during the year. At the year end £1,159,000
(2021: £1,146,000) was due to TPIM.
By two agreements dated 30 June 2020, the Company appointed
TPIM as its Alternative Investment Fund Manager by entering into
an Alternative Investment Fund Management Agreement and
(separately) documented TPIM’s continued appointment as the
provider of portfolio and property management services by
entering into an Investment Management Agreement.
9. GENERAL AND
ADMINISTRATIVE EXPENSES
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Legal and professional fees
829
673
Audit fees
371
256
Administration fees
324
336
Lease transfer costs
151
40
Other administrative expenses
1,179
762
2,854
2,067
On 1 October 2019 Hanway Advisory Limited, who are associated
with Triple Point Investment Management LLP the delegated
investment manager, were appointed to provide Administration
and Company Secretarial Services to the Group. Within
Administration Fees is an amount of £324,000 (2021: £326,000)
for Company Secretarial Services chargeable by Hanway Advisory
Limited.
The audit fees in the table above are inclusive of VAT, and
therefore differ to the fees in note 10 which are reported net of
VAT.
On 30 June 2020 Triple Point Investment Management LLP was
appointed as the fund’s Alternative Investment Fund Manager
(AIFM) to perform certain functions for the Group. During the year
AIFM services of £192,000 (2021: £175,000) were chargeable by
TPIM. At the year end £48,000 (2021: £44,000) was due to TPIM.
Lease transfer costs represent repairs costs incurred in relation to
the transfer of 12 leases from Westmoreland and amortisation
costs in relation to the original transfer costs.
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
2023 Annual Report
129
10. AUDIT FEES
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Group audit fees – current year
242
189
Subsidiary audit fees
31
24
273
213
Non audit fees paid to BDO LLP included £36,000 (2021: £29,000)
in relation to the half year interim review.
The audit fee for the following subsidiaries has been borne by the
Company:
>
TP REIT Super Holdco Limited
>
Norland Estates Limited
>
TP REIT Holdco 1 Limited
>
TP REIT Propco 2 Limited
>
TP REIT Holdco 2 Limited
>
TP REIT Propco 3 Limited
>
TP REIT Holdco 3 Limited
>
TP REIT Propco 4 Limited
>
TP REIT Holdco 4 Limited
>
TP REIT Propco 5 Limited
>
TP REIT Holdco 5 Limited
11. FINANCE INCOME
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Other interest income
56
44
56
44
12. FINANCE COSTS
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Interest payable on bank borrowings
7,217
5,492
Amortisation of loan arrangement fees
1,006
1,279
Written off loan arrangement fees
2,619
–
Head lease interest expense
37
44
Bank charges
9
8
10,889
6,823
Total finance cost for financial liabilities
not at fair value through profit or loss
10,880
6,815
Written off loan arrangement fees relate to the Lloyds and
NatWest loan facility that was reduced and subsequently
cancelled during the year, all remaining unamortised loan
arrangement fees were written off.
13. TAXATION
As a UK REIT, the Group is exempt from corporation tax on the
profits and gains from its property investment business, provided
it meets certain conditions as set out in the UK REIT regulations.
For the current period, the Group did not have any non-qualifying
profits and accordingly there is no tax charge in the period. If
there were any non-qualifying profits and gains, these would be
subject to corporation tax. It is assumed that the Group will
continue to be a group UK REIT for the foreseeable future, such
that deferred tax has not been recognised on temporary
differences relating to the property rental business.
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Current tax
Corporation tax charge for the year
–
–
Total current income tax charge in the
profit or loss
–
–
The tax charge for the period is less than the standard rate of
corporation tax in the UK of 19% (2021: 19%). The differences are
explained below.
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
£’000
£’000
£’000
Profit for the year before tax
24,902
28,410
Tax at UK corporation tax standard rate
of 19%
4,731
5,398
Change in value of investment properties
(2,727)
(1,710)
Disposal of investment property
1,157
–
Exempt REIT income
(3,768)
(4,202)
Amounts not deductible for tax purposes
27
22
Unutilised residual current period tax
losses
580
492
–
–
UK REIT exempt income includes property rental income that is
exempt from UK Corporation Tax in accordance with Part 12 of
CTA 2010.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
Company Overview
Strategic Report
Governance
Financial Statements
Other Information
Triple Point Social Housing REIT plc
130
14. INVESTMENT PROPERTY
Operational
assets
Properties
under
development
Total
£’000
£’000
£’000
As at 1 January 2022
641,293
–
641,293
Acquisitions and additions
19,752
–
19,752
Fair value adjustment*
15,239
–
15,239
Movement in head lease
ground rent liability
(2)
–
(2)
Disposals
(8,569)
–
(8,569)
As at 31 December 202
2
667,713
–
667,713
Operational
assets
Properties
under
development
Total
£’000
£’000
£’000
As at 1 January 2021
565,533
6,568
572,101
Acquisitions and additions
59,114
1,568
60,682
Fair value adjustment*
9,513
–
9,513
Movement in head lease ground
rent liability
5
–
5
Transfer of completed properties
8,136
(8,136)
–
Reclassified to assets held
for sale
(1,008)
–
(1,008)
As at 31 December 2021
641,293
–
641,293
*Additions in the table above differs to the total investment cost of new
properties in the period in the front end due to retentions no longer payable
which were credited to Investment Property additions.
*Gain from fair value adjustment on investment properties in the condensed
Group statement of comprehensive income is net of the loss from fair value
adjustments on assets held for sale of £0.88m (31 December 2021 – £0.51m)
and loss on disposal of three assets of £6.1m (31 December 2021 – £nil).
Reconciliation to independent valuation:
31 December
31 December
202
202
2
2
31 December
2021
£’000
£’000
£’000
Investment property valuation
669,077
642,018
Fair value adjustment – head lease
ground rent
1,460
1,462
Fair value adjustment – lease incentive debtor
(2,824)
(2,187)
667,713
641,293
Properties under development represent contracts for the
development of a pre-let property under a forward funding
agreement. Where the development period is expected to be a
substantial period, the borrowing costs that can be directly
attributed to getting the asset ready for use are capitalised as part
of the investment property value. All properties under
development were completed in 2021. There are no properties
under development as at 31 December 2021 or 2022.
The carrying value of leasehold properties at 31 December 2022
was £40.1 million (2021: £39.36 million).
In accordance with “IAS 40: Investment Property”, the Group’s
investment properties have been independently valued at fair
value by Jones Lang LaSalle Limited (“JLL”), an accredited
external valuer with recognised and relevant professional
qualifications. The independent valuers provide their fair value of
the Group’s investment property portfolio every three months.
JLL were appointed as external valuers by the Board on 11
December 2017. JLL has provided valuations services to the
Group. The proportion of the total fees payable by the Company
to JLL’s total fee income is minimal. Additionally, JLL has a rotation
policy in place whereby the signatories on the valuations rotate
after seven years.
% KEY STATISTIC
The metrics below are in relation to the total investment property
portfolio held as at 31 December 2022.
Portfolio metrics
Portfolio metrics
31 December 202
31 December 202
2
2
31 December 2021
Capital Deployed (£’000)
*
581,647
569,991
Number of Properties
497
488
Number of Tenancies
***
395
382
Number of Approved Providers
***
27
24
Number of Local Authorities
***
153
156
Number of Care Providers
***
123
115
Valuation Net Initial Yield (NIY)
**
5.49%
5.25%
* calculated excluding acquisition costs.
** calculated using IAS 40 valuations (excluding forward funding acquisitions).
*** calculated excluding forward funding acquisitions.
Company Overview
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Financial Statements
Other Information
2023 Annual Report
131
REGIONAL EXPOSURE
31 December 202
31 December 202
2
2
31 December 2021
Region
Region
*Cost
*Cost
£’000
£’000
% of funds
% of funds
invested
invested
*
Cost
£’000
% of funds
invested
North West
115,042
19.8
122,622
21.5
West Midlands
94,790
16.3
92,794
16.3
East Midlands
69,429
11.9
64,595
11.3
London
49,579
8.5
49,526
8.7
North East
51,986
8.9
47,061
8.3
Yorkshire
86,293
14.8
81,034
14.2
South East
54,799
9.4
52,196
9.2
South West
27,466
4.7
27,900
4.9
East
23,703
4.1
23,703
4.2
Scotland
5,900
1.0
5,900
1.0
Wales
2,660
0.6
2,660
0.4
Total
581,647
100
569,991
100
* excluding acquisition costs.
FAIR VALUE HIERARCHY
Date of
Date of
valuation
valuation
Total
Total
£’000
£’000
Quoted
Quoted
prices in
prices in
active
active
markets
markets
(Level 1)
(Level 1)
£’000
£’000
Significant
Significant
observable
observable
inputs
inputs
(Level 2)
(Level 2)
£’000
£’000
Significant
Significant
unobservable
unobservable
inputs
inputs
(Level 3)
(Level 3)
£’000
£’000
Assets measured at
fair value:
Investment
properties
31 December
2022
667,713
–
–
667,713
Investment
properties
31 December
2021
641,293
–
–
641,293
There have been no transfers between Level 1 and Level 2 during
the year, nor have there been any transfers between Level 2 and
Level 3 during the year.
The valuations have been prepared in accordance with the RICS
Valuation – Professional Standards (incorporating the International
Valuation Standards) by JLL, one of the leading professional firms
engaged in the social housing sector.
As noted previously, all of the Group’s investment properties are
reported as Level 3 in accordance with IFRS 13 where external
inputs are “unobservable” and value is the Directors’ best
estimate, based upon advice from relevant knowledgeable
experts.
In this instance, the determination of the fair value of investment
property requires an examination of the specific merits of each
property that are in turn considered pertinent to the valuation.
These include i) the regulated social housing sector and demand
for the facilities offered by each Specialised Supported Housing
property owned by the Group; ii) the particular structure of the
Group’s transactions where vendors, at their own expense,
meet
the majority of the refurbishment costs of each property and
certain purchase costs; iii) detailed financial analysis with discount
rates supporting the carrying value of each property; iv) underlying
rents for each property being subject to independent
benchmarking and adjustment where the Group considers them
too high (resulting in a price reduction for the purchase or
withdrawal from the transaction); and v) a full repairing and
insuring lease with annual indexation based on CPI or CPI+1%
and effectively 25 years outstanding, in most cases with a
Registered Provider itself regulated by the Regulator.
The valuer treats the fair value for forward funded assets as work-
in-progress value whereby the Group forward funds a development
by committing a total sum, the Gross Development Value (“GDV”)
over the development period in order to receive the completed
development at practical completion. The work-in-progress value
of the asset increases during the construction period accordingly
as payments are made by the Group which leads, in turn, to a pro-
rata increase in the valuation in each quarter valuation assuming
there are no material events affecting the GDV adversely. Interest
accrued during construction as well as an estimation of future
interest accrual prior to lease commencement will be deducted
from the balancing payment which is the final payment to be
drawn by the developer prior to the Group receiving the
completed building. All properties under development were
completed in 2021. There were no forward funded assets in the
portfolio as at 31 December 2022.
Descriptions and definitions relating to valuation techniques and
key unobservable inputs made in determining fair values are as
follows:
VALUATION TECHNIQUES: DISCOUNTED
CASH FLOWS
The discounted cash flows model considers the present value of
net cash flows to be generated from the property, taking into
account the expected rental growth rate and lease incentive costs
such as rent-free periods. The expected net cash flows are then
discounted using risk-adjusted discount rates.
There are two main unobservable inputs that determine the fair
value of the Group’s investment property:
1.
the rate of inflation as measured by CPI; it should be noted
that all leases benefit from either CPI or RPI indexation; and
2.
the discount rate applied to the rental flows.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
Company Overview
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Financial Statements
Other Information
Triple Point Social Housing REIT plc
132
Key factors in determining the discount rates to assess the level of
uncertainty applied include: the performance of the regulated
social housing sector and demand for each Specialised Supported
Housing property owned by the Group; costs of acquisition and
refurbishment of each property; the anticipated future underlying
cash flows for each property; benchmarking of each underlying
rent for each property (passing rent); and the fact that all of the
Group’s properties have the benefit of full repairing and insuring
leases entered into by a Housing Association.
All the properties within the Group’s portfolio benefit from leases
with annual indexation based upon CPI or RPI. The fair value
measurement is based on the above items highest and best use,
which does not differ from their actual use.
SENSITIVITIES OF MEASUREMENT OF
SIGNIFICANT UNOBSERVABLE INPUTS
As set out within the significant accounting estimates and
judgements in note 3, the Group’s property portfolio valuation is
open to judgements and is inherently subjective by nature.
As a result, the following sensitivity analysis has been prepared:
AVERAGE DISCOUNT RATE AND
RANGE:
The average discount rate used in the Group’s property portfolio
valuation is 6.82% (2021: 6.63%).
The range of discount rates used in the Group’s property portfolio
valuation is from 6.2% to 8.6% (2021: 6.21% to 8%).
-0.5%
-0.5%
change in
change in
Discount
Discount
Rate
Rate
£’000
£’000
+0.5%
+0.5%
change in
change in
Discount
Discount
Rate
Rate
£’000
£’000
+0.25%
+0.25%
change
change
in CPI
in CPI
£’000
£’000
-0.25%
-0.25%
change
change
in CPI
in CPI
£’000
£’000
Changes in the
IFRS fair value
of investment
properties as at
31 December
2022
40,552
(36,941)
21,037
(20,207)
Changes as at
31 December
2021
26,922
(24,663)
21,190
(20,238)
Given that the factors on which the valuations are based have not
been adversely affected by
COVID
, there has been no direct
impact to the investment property valuation at 31 December
2022. The valuations have also not been influenced by climate
related factors due to there being little measurable impact on
inputs at present.
15. TRADE AND OTHER
RECEIVABLES (NON-CURRENT)
31 December
31 December
202
202
2
2
31 December
2021
£’000
£’000
£’000
Other receivables
172
183
Lease incentive debtor
2,717
2,128
2,889
2,311
The Directors consider that the carrying value of trade and other
receivables approximate their fair value. All amounts are due to
be received in more than one year from the reporting date.
16. TRADE AND OTHER
RECEIVABLES (CURRENT)
31 December
31 December
202
202
2
2
31 December
2021
£’000
£’000
£’000
Rent receivable
3,209
1,971
Prepayments
174
796
Other receivables
782
608
Lease incentive debtor
107
60
4,272
3,435
The Directors consider that the carrying value of trade and other
receivables approximate their fair value. All amounts are due to
be received within one year from the reporting date.
The Group applies the general approach to providing for
expected credit losses under IFRS 9 for other receivables. Where
the credit loss relates to revenue already recognised in the Income
Statement, the expected credit loss allowance is recognised in
the Statement of Comprehensive Income . Expected credit losses
totalling £2,073,000 (2021: nil) were charged to the Statement of
Comprehensive Income in the year.
17. CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
31 December
31 December
202
202
2
2
31 December
2021
£’000
£’000
£’000
Cash held by lawyers
544
8,459
Restricted cash
443
571
Ring-fenced cash
–
4,451
Cash at bank
29,152
38,989
30,139
52,470
Company Overview
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Financial Statements
Other Information
2023 Annual Report
133
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted cash represents retention money (held by lawyers only)
in relation to repair, maintenance and improvement works by the
vendors to bring the properties up to satisfactory standards for
the Group and the tenants. The cash is committed on the
acquisition of the properties. It also includes funds held in an
escrow account in relation to the transfer of leases during 2020.
Ring-fenced cash includes retention monies held by Coutts in a
“charged” account which requires lender’s permission to release.
31 December
31 December
202
202
2
2
31 December
2021
£’000
£’000
£’000
Total Cash, cash equivalents and
restricted cash
30,139
52,470
Restricted cash
(443)
(571)
Cash reported on Group Statement of
Cash Flows
29,696
51,899
18. TRADE AND OTHER PAYABLES
31 December
31 December
202
202
2
2
31 December
2021
Current liabilities
£’000
£’000
£’000
Accruals
2,014
2,373
Trade payables
37
48
Head lease ground rent (note 28)
40
39
Other creditors
1,029
1,191
3,120
3,651
The Other Creditors balance consists of retentions due on
completion of outstanding works and on the rebate of SDLT
refunds. The Directors consider that the carrying value of trade
and other payables approximate their fair value. All amounts are
due for payment within one year from the reporting date.
19. OTHER PAYABLES
31 December
31 December
202
202
2
2
31 December
2021
Non-current liabilities
£’000
£’000
£’000
Head lease ground rent (note 28)
1,420
1,423
Rent deposit
100
100
1,520
1,523
20. BANK AND OTHER
BORROWINGS
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Bank and other borrowings drawn at year end
263,500
263,500
Unamortised costs at beginning of period
(4,798)
(3,573)
Less: loan issue costs incurred
(131)
(2,390)
Add: loan issue costs amortised
433
1,165
Add: loan issue costs written off
2,085
–
Unamortised costs at end of the year
(2,412)
(4,798)
Balance at year end
261,088
258,702
The amount of loan arrangement fees written off and amortised in
note 12, and loan issue costs in the Statement of cash flows differs
to the amounts in the table above as this excludes amounts in
relation to the undrawn cancelled RCF which amount to £534k,
£573k and £468k respectively.
At 31 December 2022 there were undrawn bank borrowings of
£NIL (2021: £160 million).
As at 31 December 2022, the Group’s borrowings comprised two
debt facilities:
•
a long dated, fixed rate, interest only financing arrangement in
the form of a private placement of loan notes in an amount of
£68.5 million with MetLife Investment Management (and
affiliated funds) and
•
£195 million long dated, fixed rate, interest only sustainability-
linked loan notes through a private placement with MetLife
Investment Management clients and Barings
The Group also had access to £160m Revolving Credit Facility
(RCF) with Lloyds and NatWest during the year which was
cancelled in December 2022. Prior to being cancelled, the facility
was undrawn.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
Company Overview
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Financial Statements
Other Information
Triple Point Social Housing REIT plc
134
LOAN NOTES
The Loan Notes of £68.5 million are secured against a portfolio of
Specialised Supported Housing assets throughout the UK, worth
approximately £189 million (31 December 2021 - £188 million).
The Loan Notes represent a loan-to-value of 40% of the value of
the secured pool of assets and are split into two tranches:
Tranche-A, is an amount of £41.5 million, has a term of 10 years
from utilisation and is priced at an all-in coupon of 2.94% pa; and
Tranche-B, is an amount of £27 million, has a term of 15 years
from utilisation and is priced at an all-in coupon of 3.215% pa. On
a blended basis, the weighted average term is 12 years carrying a
weighted average fixed rate coupon of 3.04% pa. At 31 December
2022, the Loan Notes have been independently valued at £55.8
million which has been used to calculate the Group’s EPRA Net
Disposal Value in note 36 of the Unaudited Performance Measures.
The fair value is determined by comparing the discounted future
cash flows using the contracted yields with the reference gilts plus
the margin implied. The reference gilts used were the Treasury
3.687% 2028 Gilt (Tranche A) and Treasury 3.665% 2033 Gilt
(Tranche B), with an implied margin that is unchanged since the
date of fixing.
In August 2021, the Group put in place Loan Notes of £195
million which enabled the Group to refinance the full £130 million
previously drawn under its £160 million RCF with Lloyds and
Natwest. The Loan Notes are secured against a portfolio of
Specialised Supported Housing assets throughout the UK, worth
approximately £410 million. The Loan Notes represent a loan-to-
value of 40% of the value of the secured pool of assets and are
split into two tranches: Tranche-A, is an amount of £77.5 million,
has a term of 10 years from utilisation and is priced at an all-in
coupon of 2.403% pa; and Tranche-B, is an amount of £117.5
million, has a term of 15 years from utilisation and is priced at an
all-in coupon of 2.786% pa. On a blended basis, the weighted
average term is 13 years carrying a weighted average fixed rate
coupon of 2.634% pa. At 31 December 2022, the Loan Notes
have been independently valued at £134.6 million which has
been used to calculate the Group’s EPRA Net Disposal Value in
note 36 of the Unaudited Performance Measures. The fair value is
determined by comparing the discounted future cash flows using
the contracted yields with the reference gilts plus the margin
implied. The reference gilts used were the Treasury 3.598% 2031
Gilt (Tranche A) and Treasury 3.929% 2036 Gilt (Tranche B), with
an implied margin that is unchanged since the date of fixing.
The loans are considered a Level 2 fair value measurement.
The Group has met all compliance with its financial covenants on
the above loans throughout the year.
Undrawn committed bank
Undrawn committed bank
facilities – maturity profile
facilities – maturity profile
Total
Total
£’000
£’000
< 1 year
< 1 year
£’000
£’000
1 to 2
1 to 2
years
years
£’000
£’000
3 to 5
3 to 5
years
years
£’000
£’000
> 5
> 5
years
years
£’000
£’000
At 31 December 2022
–
–
–
–
–
At 31 December 2021
160,000
–
– 160,000
–
21. NOTES SUPPORTING
STATEMENT OF CASH FLOWS
Reconciliation of liabilities to cash flows from financing activities:
Bank
Bank
borrowings
borrowings
£’000
£’000
(note 20)
(note 20)
Head lease
Head lease
£’000
£’000
(note 18,19)
(note 18,19)
Total
Total
£’000
£’000
At 1 January 2022
258,702
1,463
260,165
Cash flows:
Repayment of principal on head
lease liabilities
–
(40)
(40)
Loan arrangement fees paid
(131)
–
(131)
Non-cash flows:
– Amortisation of loan
arrangement fees
433
–
433
–
Loan arrangement fees written
off
2,084
–
2,084
– Head lease additions
–
–
–
– Accrued interest on head
lease liabilities
–
37
37
At 31 December 2022
261,088
1,460
262,548
Bank
Bank
borrowings
borrowings
£’000
£’000
(note 20)
(note 20)
Head lease
Head lease
£’000
£’000
(note 18,19)
(note 18,19)
Total
Total
£’000
£’000
At 1 January 2021
194,927
1,456
196,383
Cash flows:
Bank borrowings drawn
195,000
–
195,000
Bank borrowings repaid
(130,000)
–
(130,000)
Repayment of principal on head
lease liabilities
–
(39)
(39)
Loan arrangement fees paid
(2,728)
–
(2,728)
Non-cash flows:
– Amortisation of loan
arrangement fees
1,278
–
1,278
– Loan arrangement fees paid
in advance recognised in
prepayments
225
–
225
– Head lease additions
–
2
2
– Accrued interest on head
lease liabilities
–
44
44
At 31 December 2021
258,702
1,463
260,165
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2023 Annual Report
135
22. SHARE CAPITAL
Issued and
fully paid
Issued and
fully paid
Number
£’000
At 1 January 2022
403,239,002
4,033
At 31 December 202
2
403,239,002
4,033
Issued and
Issued and
fully paid
fully paid
Issued and
Issued and
fully paid
fully paid
Number
Number
£’000
£’000
At 1 January 2021
403,239,002
4,033
At 31 December 2021
403,239,002
4,033
The Company achieved admission to the specialist fund segment
of the main market of the London Stock Exchange on 8 August
2017, raising £200 million. As a result of the IPO, at 8 August
2017, 200,000,000 shares at one pence each were issued and
fully paid. The Company was admitted to the premium segment
of the Official List of the Financial Conduct Authority and migrated
to trading on the premium segment of the Main Market on 27
March 2018.
Following a fourth public offer on 21 October 2020, a further
51,886,792 Ordinary Shares of one pence each were issued and
fully paid.
Rights, preferences and restrictions on shares: All Ordinary Shares
carry equal rights, and no privileges are attached to any shares in
the Company. All the shares are freely transferable, except as
otherwise provided by law. The holders of Ordinary Shares are
entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All
shares rank equally with regard to the Company’s residual assets.
The table above includes 450,000 treasury shares (note 24).
Treasury shares do not hold any voting rights.
23. SHARE PREMIUM RESERVE
The share premium relates to amounts subscribed for share
capital in excess of nominal value.
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Balance at beginning of year
203,753
203,776
Share premium arising on Ordinary
Shares issue
–
–
Share issue costs capitalised
–
(23)
Balance at end of year
203,753
203,753
24. TREASURY SHARES RESERVE
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Balance at beginning of year
(378)
(378)
Own shares repurchased
–
–
Balance at end of year
(378)
(378)
The treasury shares reserve relates to the value of shares purchased
by the Company in excess of nominal value. No treasury shares
were purchased during the current or prior year. During the year
ended 31 December 2019, the Company purchased 450,000 of
its own 1p Ordinary Shares at a total gross cost of £377,706
(£374,668 cost of shares and £3,038 associated costs). As at 31
December 2022 and 31 December 2021, 450,000 1p Ordinary
Shares were held by the Company.
25. CAPITAL REDUCTION
RESERVE
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Balance at beginning of year
160,394
166,154
Dividends paid
–
(5,760)
Balance at end of year
160,394
160,394
The capital reduction reserve relates to the distributable reserve
established on cancellation of the share premium reserve.
Dividends have been distributed out of Retained Earnings and
the Capital Reduction Reserve in the year ended 31 December
2022.
26. RETAINED EARNINGS
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Balance at beginning of year
68,311
55,066
Total comprehensive income for the year
24,902
28,410
Dividends paid
(21,730)
(15,165)
Balance at end of year
71,483
68,311
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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136
27. DIVIDENDS
Year ended
Year ended
31 December
31 December
202
202
2
2
£’000
£’000
Year ended
31 December
2021
£’000
1.295p for the 3 months to 31 December
2020 paid on 26 March 2021
–
5,217
1.3p for the 3 months to 31 March 2021
paid on 25 June 2021
–
5,236
1.3p for the 3 months to 30 June 2021
paid on 30 September 2021
–
5,236
1.3p for the 3 months to 30 September
2021 paid on 17 December 2021
–
5,236
1.3p for the 3 months to 31 December
2021 paid on 25 March 2022
5,236
–
1.365p for the 3 months to 31 March
2022 paid on 24 June 2022
5,498
–
1.365p for the 3 months to 30 June 2022
paid on 30 September 2022
5,498
–
1.365p for the 3 months to 30
September 2022 paid on 16
December 2022
5,498
–
21,730
20,925
On 2 March 2023, the Company declared an interim dividend of
1.365 pence per Ordinary Share for the period 1 October 2022 to
31 December 2022. The total dividend of £5,498,070 will be paid
on 31 March 2023 to Ordinary shareholders on the register on
17 March 2023.
The Company intends to pay dividends to shareholders on a
quarterly basis and in accordance with the REIT regime.
Dividends are not payable in respect of its Treasury shares held.
28. LEASES
A. LEASES AS LESSEE
The following table sets out a maturity analysis of lease payments,
showing the undiscounted lease payments to be paid after the
reporting date:
< 1 year
< 1 year
£’000
£’000
1
1
-
-
2
2
years
years
£’000
£’000
2-3
2-3
years
years
£’000
£’000
Lease payables
31 December 2022
40
40
40
31 December 2021
40
40
40
3-4
3-4
years
years
£’000
£’000
4-5
4-5
years
years
£’000
£’000
> 5 years
> 5 years
£’000
£’000
Total
Total
£’000
£’000
Lease payables
31 December 2022
40
40
13,024
13,224
31 December 2021
40
40
13,126
13,326
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Current liabilities (note 18)
40
40
Non-current liabilities (note 19)
1,420
1,423
Balance at end of year
1,460
1,463
The above is in respect of properties held by the Group under
leasehold. There are 23 properties (2021: 24) held under leasehold
with lease ranges from 125 years to 999 years.
The Group’s leasing arrangements with lessors are headlease
arrangements on land and buildings that have been sub-let under
the Group’s normal leasing arrangements (see above) to tenants.
The Group carries its interest in these headlease arrangements as
long leasehold investment property (note 14).
B. LEASES AS LESSOR
The Group leases out its investment properties (see note 14).
The future minimum lease payments receivable by the Group
under non-cancellable operating leases are as follows:
< 1 year
< 1 year
£’000
£’000
1-2
1-2
years
years
£’000
£’000
2-3
2-3
years
years
£’000
£’000
Lease receivables
31 December 2022
38,975
38,975
38,975
31 December 2021
35,771
35,800
35,800
3-4
3-4
years
years
£’000
£’000
4-5
4-5
years
years
£’000
£’000
> 5 years
> 5 years
£’000
£’000
Total
Total
£’000
£’000
Lease receivables
31 December 2022
38,975
38,975
462,374
657,248
31 December 2021
35,800
35,800
461,561
640,532
Leases are direct-let agreements with Registered Providers for a
term of at least 15 years and usually between 20 to 25 years with
rent linked to CPI or RPI. All leases are full repairing and insuring
(FRI) leases, the tenants are therefore obliged to repair, maintain
and renew the properties back to the original conditions.
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2023 Annual Report
137
The following table gives details of the percentage of annual
rental income per Registered Provider with 10% or more than
10% share in any year presented:
Registered Provider
Registered Provider
31 December
31 December
202
202
2
2
% of total
% of total
annual rent
annual rent
31 December
2021
% of total
annual rent
Inclusion Housing CIC
29
30
Falcon Housing Association CIC
8
10
Parasol Homes (previously 28A
Supported Living)
10
10
Other disclosures about leases are provided in notes 5, 14, 18, 21
and 33.
29. CONTROLLING PARTIES
As at 31 December 2022 there is no ultimate controlling party of
the Company.
30. SEGMENTAL INFORMATION
IFRS 8 Operating Segments requires operating segments to be
identified based on internal financial reports about components
of the Group that are regularly reviewed by the Chief Operating
Decision Maker (which in the Group’s case is delegated to the
Delegated Investment Adviser TPIM).
The internal financial reports received by TPIM contain financial
information at a Group level as a whole and there are no
reconciling items between the results contained in these reports
and the amounts reported in the financial statements.
The Group’s property portfolio comprised 497 (2021: 488) Social
Housing properties as at 31 December 2022 in England, Wales
and Scotland. The Directors consider that these properties
represent a coherent and diversified portfolio with similar
economic characteristics and, as a result, these individual
properties have been aggregated into a single operating
segment.
In the view of the Directors there is accordingly one
reportable segment under the provisions of IFRS 8. All the Group’s
properties are engaged in a single segment business with all
revenue, assets and liabilities arising in the UK, therefore, no
geographical segmental analysis is required by IFRS 8.
31. RELATED PARTY DISCLOSURE
Directors are remunerated for their services at such rate as the
Directors shall from time to time determine. The Chairman
receives a Director’s fee of £75,000 per annum (2021: £75,000),
and the other directors of the Board receive a fee of £50,000 per
annum (2021: £50,000). The Directors are also entitled to an
additional fee of £7,500 in connection with the production of
every prospectus by the Company (including the Issue), This was
received by the Directors in 2020 but not in the current year as no
prospectus was produced.
Dividends of the following amounts were paid to the Directors
during the year:
Chris Phillips: £2,960 (2021: £2,850)
Peter Coward: £4,266 (2021: £4,031)
Paul Oliver: £4,206 (2021: £4,050)
Tracey Fletcher-Ray: £2,036 (2021: £1,960)
No shares were held by Ian Reeves as at 31 December 2022
(31 December 2021: nil).
32. CONSOLIDATED ENTITIES
The Group consists of a parent Company, Triple Point Social
Housing REIT PLC, incorporated in the UK and a number of
subsidiaries held directly by the Company, which operate and are
incorporated in the UK. The principal place of business of each
subsidiary is the same as their place of incorporation.
The Group owns 100% of the equity shares of all subsidiaries
listed below and has the power to appoint and remove the
majority of the Board of those subsidiaries. The relevant activities
of the below subsidiaries are determined by the Board based on
simple majority votes. Therefore, the Directors of the Company
concluded that the Company has control over all these entities
and all these entities have been consolidated within the financial
statements. The principal activity of all the subsidiaries relates to
property investment.
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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138
The subsidiaries listed below were held as at 31 December 2022:
Name of Entity
Name of Entity
Registered Office
Registered Office
Country of
Country of
Incorporation
Incorporation
Ownership %
Ownership %
TP REIT Super HoldCo Limited*
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT HoldCo 1 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT HoldCo 2 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT HoldCo 3 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT HoldCo 4 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT HoldCo 5 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT PropCo 2 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT PropCo 3 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT PropCo 4 Limited
1 King William Street, London, EC4N 7AF
UK
100%
TP REIT PropCo 5 Limited
1 King William Street, London, EC4N 7AF
UK
100%
Norland Estates Limited
1 King William Street, London, EC4N 7AF
UK
100%
Henderson Court 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
Lawrence Hotel 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
The Glebe 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
Sunny Retford 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
*
indicates entity is a direct subsidiary of Triple Point Social Housing REIT plc.
The subsidiaries listed below were acquired in the year to 31 December 2022:
Name of Entity
Name of Entity
Registered Office
Registered Office
Country of
Country of
Incorporation
Incorporation
Ownership %
Ownership %
New Road 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
My House 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
Henderson Court 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
Lawrence Hotel 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
The Glebe 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
Sunny Retford 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
The subsidiaries listed below have been struck off since 31 December 2022:
Name of Entity
Name of Entity
Registered Office
Registered Office
Country of
Country of
Incorporation
Incorporation
Ownership %
Ownership %
My House 1 Ltd
1 King William Street, London, EC4N 7AF
UK
100%
33. FINANCIAL RISK
MANAGEMENT
The Group is exposed to market risk, interest rate risk, credit risk
and liquidity risk in the current and future periods. The Board
oversees the management of these risks. The Board’s policies for
managing each of these risks are summarised below.
33.1. MARKET RISK
The Group’s activities will expose it primarily to the market risks
associated with changes in property values.
RISK RELATING TO INVESTMENT IN
PROPERTY
Investment in property is subject to varying degrees of risk. Some
factors that affect the value of the investment in property include:
•
changes in the general economic climate;
•
competition for available properties;
•
obsolescence; and
•
Government regulations, including planning, environmental
and tax laws.
Variations in the above factors can affect the valuation of assets
held by the Group and as a result can influence the financial
performance of the Group.
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139
The factors mentioned above have not had a material impact on
the valuations of the investment properties as at 31 December
2022, and are not expected to in the immediate future, but will
continue to be monitored closely.
Please refer to the Corporate Social Responsibility Report on
pages 42 to 43 for further information on Environmental Policy
which may affect the investment property valuations going
forward.
There was no impact on the valuations in the year ended
31 December 2022 from climate change factors, given that there
is little measurable impact on inputs at present.
33.2. INTEREST RATE RISK
The Group’s debt at 31 December 2022 does not have any
exposure to interest rate risk.
33.3. CREDIT RISK
Credit risk is the risk that a counterparty will not meet its
obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risks
from both its leasing activities and financing activities, including
deposits with banks and other institutions as detailed in notes 16
and 19.
CREDIT RISK RELATED TO FINANCIAL
INSTRUMENTS AND CASH DEPOSITS
One of the principal credit risks facing the Group arises with the
funds it holds with banks and other institutions. The Board
believes that the credit risk on short-term deposits and current
account cash balances is limited because the counterparties are
banks and institutions with high credit ratings.
In August this year, Fitch has assigned the Company an Investment
Grade Long-Term Issuer Default Rating of ‘A-’ with a stable
outlook, and a senior secured rating of ‘A’ for the Group’s new
Loan Notes.
CREDIT RISK RELATED TO LEASING
ACTIVITIES
In respect of property investments, in the event of a default by a
tenant, the Group will suffer a rental shortfall and additional costs
concerning re-letting the property to another Social Housing
Registered Provider. Credit risk is primarily managed by testing
the strength of covenant of a tenant prior to acquisition and on an
ongoing basis. The Investment Manager also monitors the rent
collection in order to anticipate and minimise the impact of
defaults by occupational tenants. Outstanding rent receivables
are regularly monitored. The maximum exposure to credit risk at
the reporting date is the carrying value of each class of financial
asset.
The Group has leases in place with ten Registered Providers that
have been deemed non-compliant by the Regulator. We continue
to conduct ongoing due diligence on all Registered Providers and
all rents payable under these leases have been paid. We continue
to monitor and maintain a dialogue with the Registered Providers
as they work with advisers and the Regulator to implement a
financial and governance improvement action plan in order to
address the Regulator’s concerns.
The Board believes that the
credit risk associated with the non-compliant rating is limited.
33.4. LIQUIDITY RISK
The Group manages its liquidity and funding risks by considering
cash flow forecasts and ensuring sufficient cash balances are held
within the Group to meet future needs. Prudent liquidity risk
management implies maintaining sufficient cash and marketable
securities, the availability of financing through appropriate and
adequate credit lines, and the ability of customers to settle
obligations within normal terms of credit. The Group ensures,
through forecasting of capital requirements, that adequate cash is
available to fund the Group’s operating activities on a weekly
basis. Upcoming cash requirements are compared to existing
cash reserves available, followed by discussions around optimal
cash management opportunities in order to best manage liquidity
risk.
The following table details the Group’s liquidity analysis:
31 December 202
31 December 202
2
2
£’000
£’000
< 3
< 3
months
months
£’000
£’000
3-12
3-12
months
months
£’000
£’000
1-5
1-5
years
years
£’000
£’000
> 5
> 5
years
years
£’000
£’000
Headleases (note 28)
13,223
10
30
159
13,024
Trade and other
payables
Bank and other
borrowings (note 20):
– Fixed interest rate
263,500
–
–
–
263,500
– Variable interest rate
–
–
–
–
–
Interest payable on
bank and other
borrowings:
– Fixed interest rate
76,609
1,804
5,413
28,869
40,523
– Variable interest rate
–
–
–
–
–
353,332
1,814
5,443
29,028 317,047
Financial Statements
Notes to the Group Financial Statements
for the year ended 31 December 2022
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140
31 December 2021
31 December 2021
£’000
£’000
< 3
< 3
months
months
£’000
£’000
3-12
3-12
months
months
£’000
£’000
1-5
1-5
years
years
£’000
£’000
> 5
> 5
years
years
£’000
£’000
Headleases (note 28)
13,325
10
30
159
13,126
Trade and other
payables
Bank and other
borrowings (note 20):
– Fixed interest rate
263,500
–
–
– 263,500
– Variable interest rate
–
–
–
–
–
Interest payable on
bank and other
borrowings:
– Fixed interest rate
83,827
1,804
5,413
28,869
47,741
– Variable interest rate
–
–
–
–
–
360,652
1,814
5,443
29,028 324,367
33.5. FINANCIAL INSTRUMENTS
The Group’s principal financial assets and liabilities, which are all
held at amortised cost, are those that arise directly from its
operation: trade and other receivables, trade and other payables,
headleases, borrowings and cash held at bank.
Set out below is a comparison by class of the carrying amounts
and fair value of the Group’s financial instruments that are included
in the financial statements:
Book value
Book value
31 December
31 December
202
202
2
2
£’000
£’000
Fair value
Fair value
31 December
31 December
202
202
2
2
£’000
£’000
Book value
31 December
2021
£’000
Fair value
31 December
2021
£’000
Financial assets:
Trade and other
receivables
6,804
6,804
4,739
4,739
Cash, cash
equivalents and
restricted cash
30,139
30,139
52,470
52,470
Financial liabilities:
Trade and other
payables
3,080
3,080
3,606
3,606
Borrowings
261,088
190,314
258,702
260,761
34. POST BALANCE SHEET EVENTS
There were no post balance sheet events subsequent to the end
of the period
35. CAPITAL COMMITMENTS
The Group had capital commitments of £NIL million (2021: £4.2
million) in relation to the assets exchanged but not completed at
31 December 2022.
36. EARNINGS PER SHARE
Earnings per share (“EPS”) amounts are calculated by dividing
profit for the period attributable to ordinary equity holders of the
Company by the weighted average number of Ordinary Shares in
issue during the period. As there are no dilutive instruments
outstanding, both basic and diluted earnings per share are the
same.
The calculation of basic and diluted earnings per share is based on
the following:
Year ended
Year ended
31 December
31 December
202
202
2
2
Year ended
31 December
2021
Calculation of Basic Earnings per share
Net profit attributable to Ordinary
Shareholders (£’000)
24,902
28,410
Weighted average number of Ordinary
Shares (excluding treasury shares)
402,789,002
402,789,002
IFRS Earnings per share – basic and diluted
6.18p
7.05p
Calculation of EPRA Earnings per share
Net profit attributable to Ordinary
Shareholders (£’000)
24,902
28,410
Changes in fair value of investment property
(£’000)
(8,264)
(8,998)
One-off amortisation of arrangement fees
on the cancelled RCF
2,619
–
EPRA earnings (£’000)
19,257
19,412
Non cash adjustments to include:
Amortisation of loan arrangement fees
1,006
1,279
Adjusted earnings (£’000)
20,263
20,691
Weighted average number of Ordinary
Shares (excluding treasury shares)
402,789,002
402,789,002
EPRA earnings per share
– basic and diluted
4.78p
4.82p
Adjusted earnings per share
– basic and diluted
5.03p
5.14p
Adjusted earnings is a performance measure used by the Board to
assess the Group’s dividend payments. The metric adjusts EPRA
earnings for interest paid to service debt that was capitalised, and
the amortisation of ongoing loan arrangement fees. The Board
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2023 Annual Report
141
sees these adjustments as a reflection of actual cashflows which
are supportive of dividend payments. The Board compares the
Adjusted earnings to the available distributable reserves when
considering the level of dividend to pay.
37. NET ASSET VALUE PER SHARE
Basic Net Asset Value (“NAV”) per share is calculated by dividing
net assets in the Group Statement of Financial Position attributable
to Ordinary Shareholders of the parent by the number of Ordinary
Shares outstanding at the end of the period. Although there are
no dilutive instruments outstanding, both basic and diluted NAV
per share are disclosed below.
Net asset values have been calculated as follows:
31 December
31 December
202
202
2
2
£’000
£’000
31 December
2021
£’000
Net assets at end of the year
439,285
436,113
Shares in issue at end of the year
(excluding treasury shares)
402,789,002
402,789,002
Dilutive shares in issue
–
–
IFRS NAV per share – basic and dilutive
109.06p
108.27p
38. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to safeguard
the Group’s ability to continue as a going concern in order to
provide returns for shareholders and to maintain an optimal
capital structure to minimise the cost of capital.
The Group considers proceeds from share issuance, bank and
other borrowings and retained earnings as capital.
Until the Group is fully invested and pending re-investment or
distribution of cash receipts, the Group will invest in cash
equivalents, near cash instruments and money market instruments.
The level of borrowing will be on a prudent basis for the asset
class and will seek to achieve a low cost of funds, whilst maintaining
the flexibility in the underlying security requirements and the
structure of both the investment property portfolio and the
Group.
The Directors currently intend that the Group should target a level
of aggregate borrowings over the medium term equal to
approximately 40% of the Group’s Gross Asset Value. The
aggregate borrowings will always be subject to an absolute
maximum, calculated at the time of drawdown, of 50% of the
Gross Asset Value.
The initial fixed rate facility with MetLife requires an asset cover
ratio of x2.00 (amended from previous covenant of x2.25 in
August 2021 to bring more in line with the ACR covenant in the
new Note Purchase Agreement with Metlife and Barings) and an
interest cover ratio of x1.75. At 31 December 2022, the Group
was fully compliant with both covenants with an asset cover ratio
of x2.77 (2021: x2.75) and an interest cover ratio of x5.02 (2021:
x4.90). The subsequent facility with Metlife and Barings requires
an asset cover ratio of x1.67 and an interest cover ratio of x1.75.
At 31 December 2022, the Group was fully compliant with both
covenants with an asset cover ratio of x2.10 and an interest cover
ratio of x4.41.
Financial Statements
Company Statement of Financial Position
as at 31 December 2022
Company Overview
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Governance
Financial Statements
Other Information
Triple Point Social Housing REIT plc
142
31 December 2022
31 December 2021
Note
£’000
£’000
Assets
Non-current assets
Investment in subsidiaries
4
395,213
382,318
Total non-current assets
395,213
382,318
Current assets
Trade and other receivables
5
1,149
3,700
Cash, cash equivalents and restricted cash
6
14,209
12,561
Total current assets
15,358
16,261
Total assets
410,571
398,579
Liabilities
Current liabilities
Trade and other payables
7
2,036
1,831
Total current liabilities
2,036
1,831
Total liabilities
2,036
1,831
Total net assets
408,535
396,748
Equity
Share capital
8
4,033
4,033
Share premium reserve
9
203,753
203,753
Treasury shares reserve
10
(378)
(378)
Capital reduction reserve
11
160,394
160,394
Retained earnings
13
40,733
28,946
Total Equity
408,535
396,748
Net asset value per share – basic and diluted
14
101.43p
98.50p
The Company has taken advantage of the exemption allowed under Section 408 of the Companies Act 2006 and has not presented its
own Statement of Comprehensive Income in these financial statements. The profit of the Company for the year was £33,517.000 (2021:
£22,463,000).
The Company Financial Statements were approved and authorised for issue by the Board on 2 March 2023 and signed on its behalf by:
Chris Phillips
Chair
2 March 2023
The accompanying notes on pages 144 to 147 form an integral part of these Company Financial Statements.
Company Registration Number: 10814022
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2023 Annual Report
143
Company Statement of Changes in Equity
for the year ended 31 December 2022
Share
capital
£’000
Share
premium
reserve
£’000
Treasury
shares
reserve
£’000
Capital
reduction
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Note
Balance at 1 January 2022
4,033
203,753
(378)
160,394
28,946
396,748
Total comprehensive income for the year
–
–
–
–
33,517
33,517
Transaction with Owners
Dividends paid
12
–
–
–
–
(21,730)
(21,730)
Balance at 31 December 2022
4,033
203,753
(378)
160,394
40,733
408,535
Share
capital
£’000
Share
premium
reserve
£’000
Treasury
shares
reserve
£’000
Capital
reduction
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Note
Balance at 1 January 2021
4,033
203,776
(378)
166,154
21,648
395,233
Total comprehensive income for the year
–
–
–
–
22,463
22,463
Transaction with Owners
Issue costs capitalised
9
–
(23)
–
–
–
(23)
Dividends paid
12
–
–
–
(5,760)
(15,165)
(20,925)
Balance at 31 December 2021
4,033
203,753
(378)
160,394
28,946
396,748
The accompanying notes on pages 144 to 147 form an integral part of these Company Financial Statements.
Financial Statements
Notes to the Company Accounts
for the year ended 31 December 2022
Company Overview
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Governance
Financial Statements
Other Information
Triple Point Social Housing REIT plc
144
1. BASIS OF PREPARATION
The financial statements have been prepared in accordance with
Financial Reporting Standard 100 Application of Financial
Reporting Requirements (“FRS 100”) and Financial Reporting
Standard 101 Reduced Disclosure Framework (“FRS 101”) and in
accordance with the Companies Act 2006.
1.1. DISCLOSURE EXEMPTIONS ADOPTED
In preparing these financial statements the Company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore, these financial statements do not include:
•
certain disclosures regarding the Company’s capital;
•
a statement of cash flows;
•
the effect of future accounting standards not yet adopted;
•
the disclosure of the remuneration of key management
personnel; and
•
disclosure of related party transactions with other wholly-
owned members of the Group.
In addition, and in accordance with FRS 101 further disclosure
exemptions have been adopted because equivalent disclosures
are included in the Group Financial Statements. These financial
statements do not include certain disclosures in respect of:
•
financial instruments; and
•
fair value measurement other than certain disclosures required
as a result of recording financial instruments at fair value.
The principal accounting policies applied in the preparation of
the financial statements are set out below.
2. PRINCIPAL ACCOUNTING
POLICIES
2.1. CURRENCY
The Company financial information is presented in Sterling which
is also the Company’s functional currency.
2.2. INVESTMENT IN SUBSIDIARIES
Investment in subsidiaries is included in the Company’s Statement of
Financial Position at cost less provision for impairment. Investments
are subject to impairment tests whenever events or changes in
circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its
recoverable amount, the asset is written down accordingly.
Impairment charges are included in profit or loss, except to the extent
they reverse gains previously recognised in other comprehensive
income. Where assets have been transferred within the Group, a
capital reduction in the originating Company is performed, and a
dividend is declared to the Triple Point Social Housing REIT PLC. This
results in an impairment to investments in subsidiaries.
2.3. TRADE AND OTHER RECEIVABLES
Trade and other receivables are amounts due in the ordinary
course of business. If collection is expected in one year or less,
they are classified as current assets.
Rent receivables are initially recognised at fair value plus
transaction costs and are subsequently carried at amortised cost,
less provision for impairment.
Impairment provisions for amounts due from subsidiaries are
recognised based on a forward-looking expected credit loss
model using the general approach. The methodology used to
determine the amount of the provision is based on whether there
has been a significant increase in credit risk since initial recognition
of the financial asset. For those where the credit risk has not
increased significantly since initial recognition of the financial
asset, twelve month expected credit losses along with gross
interest income are recognised. For those for which credit risk has
increased significantly, lifetime expected credit losses along with
the gross interest income are recognised. For those that are
determined to be credit impaired, lifetime expected credit losses
along with interest income on a net basis are recognised.
2.4. CASH, CASH EQUIVALENTS AND
RESTRICTED CASH
Cash, cash equivalents and restricted cash include cash in hand,
cash held by lawyers and liquidity funds with a term of no more
than three months that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in
value.
Cash held by lawyers is money held in escrow for expenses
expected to be incurred in relation to investment properties
pending completion. These funds are available immediately on
demand.
Restricted Cash represents monies held in escrow in relation to
the on-boarding of the lease transfer.
2.5. TRADE AND OTHER PAYABLES
Trade and other payables are classified as current liabilities if
payment is due within one year or less from the end of the current
accounting period. If not, they are presented as non-current
liabilities. Trade and other payables are recognised initially at their
fair value and subsequently measured at amortised cost using the
effective interest method until settled.
2.6. DIVIDEND PAYABLE TO SHAREHOLDERS
Dividends to the Company’s shareholders are recognised as a
liability in the Company’s financial statements in the period in
which the dividends are approved. Interim dividends are
recognised when paid.
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2023 Annual Report
145
2.7. FINANCE INCOME AND FINANCE COSTS
Finance income is recognised as interest accrues on cash balances
held by the Company. Finance costs consist of interest and other
costs that the Company incurs in connection with bank and other
borrowings. These costs are expensed in the period in which they
occur.
2.8. EXPENSES
All expenses are recognised in the Statement of Comprehensive
Income on an accruals basis.
2.9. INVESTMENT MANAGEMENT FEES
Investment advisory fees are recognised in the Statement of
Comprehensive Income on an accruals basis.
2.10. SHARE ISSUE COSTS
The costs of issuing or reacquiring equity instruments (other than
in a business combination) are accounted for as a deduction from
equity.
2.11. TREASURY SHARES
Consideration paid or received for the purchase or sale of treasury
shares is recognised directly in equity. The cost of treasury shares
held is presented as a separate reserve (the “treasury share
reserve”). Any excess of the consideration received on the sale of
treasury shares over the weighted average cost of the shares sold
is credited to retained earnings.
3. SIGNIFICANT ACCOUNTING
JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the Company’s Financial Statements requires
the Directors to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets
and liabilities and the disclosure of contingent liabilities at the
reporting date. However, uncertainty about these assumptions
and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected
in future periods.
The estimate and associated assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial
year is as follows:
INVESTMENTS
Investments held as fixed assets are stated at cost less any
provision for impairment. The Directors assess the recoverability
of investments made and economic benefit of the investments
based on market conditions, economic forecasts and cash flow
estimates.
4. INVESTMENT IN
SUBSIDIARIES
31 December
2022
31 December
2021
£’000
£’000
Balance at beginning of year
382,318
366,641
Reversal of Impairment
2,334
–
Acquisitions
10,561
86,851
Impairments
–
(71,174)
Balance at end of year
395,213
382,318
Investment in subsidiaries are included in the Company’s
Statement of Financial Position at cost less provision for
impairment.
The reversal of impairment in the year is due to the underlying net
asset value of the subsidiary increasing due to the valuations of
the underlying property, requiring a reversal of the original
impairment.
5. TRADE AND OTHER
RECEIVABLES
31 December
2022
31 December
2021
£’000
£’000
Amounts due from subsidiaries
1,003
3,561
Prepayments
144
125
Other receivables
2
14
1,149
3,700
Included in Prepayments are prepaid acquisition costs which
include the cost of acquiring assets not completed at the year
end.
The directors consider that the carrying value of trade and other
receivables approximate their fair value. All amounts are due to
be received within one year from the reporting date.
The Group applies the general approach to providing for
expected credit losses under IFRS 9 for other receivables and
amounts due from subsidiaries. Both the expected credit loss and
the incurred loss provision in the current and prior year are
immaterial.
Financial Statements
Notes to the Company Accounts
for the year ended 31 December 2022
Company Overview
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Financial Statements
Other Information
Triple Point Social Housing REIT plc
146
6. CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
31 December
2022
31 December
2021
£’000
£’000
Restricted cash
538
564
Cash at Bank
13,671
11,997
14,209
12,561
Restricted cash represents monies held in escrow in relation to the
transfer of leases during 2020.
7. TRADE AND OTHER PAYABLES
CURRENT LIABILITIES
31 December
2022
31 December
2021
£’000
£’000
Other creditors
20
20
Amounts due to subsidiaries
–
–
Accruals
1,979
1,763
Trade and other payables
37
48
2,036
1,831
The Directors consider that the carrying value of trade and other
payables approximate their fair value. All amounts are due for
payment within one year from the reporting date.
8. SHARE CAPITAL
Issued and
fully paid
Issued and
fully paid
Number
£’000
At 1 January 2022
403,239,002
4,033
At 31 December 2022
403,239,002
4,033
Issued and
fully paid
Issued and
fully paid
Number
£’000
At 1 January 2021
403,239,002
4,033
At 31 December 2021
403,239,002
4,033
The Company achieved admission to the specialist fund segment
of the main market of the London Stock Exchange on 8 August
2017, raising £200 million. As a result of the IPO, at 8 August
2017, 200,000,000 shares at one pence per share have been
issued and fully paid. The Company was admitted to the premium
segment of the Official List of the Financial Conduct Authority
and migrated to trading on the premium segment of the Main
Market on 27 March 2018.
Following a fourth public offer on 21 October 2020 the Company
issued 51,886,792 new Ordinary Shares of one pence each which
were fully paid.
The Company was admitted to the premium segment of the
Official List of the Financial Conduct Authority and migrated to
trading on the premium segment of the Main Market on 27 March
2018.
The table above includes 450,000 treasury shares (note 10).
Treasury shares do not hold any voting rights.
9. SHARE PREMIUM RESERVE
The share premium relates to amounts subscribed for share
capital in excess of nominal value.
31 December
2022
31 December
2021
£’000
£’000
Balance at beginning of year
203,753
203,776
Share premium arising on new Ordinary
Shares
–
–
Share issue costs capitalised
–
(23)
Balance at end of year
203,753
203,753
10. TREASURY SHARES RESERVE
31 December
2022
31 December
2021
£’000
£’000
Balance at beginning of year
(378)
(378)
Own shares repurchased
–
–
Balance at end of year
(378)
(378)
The treasury shares reserve relates to the value of shares purchased
by the Company in excess of nominal value. During the period
ended 31 December 2020, the Company purchased 450,000 of
its own 1p Ordinary Shares at a total gross cost of £377,706
(£374,668 cost of shares and £3,038 associated costs). As at 31
December 2022, 450,000 1p Ordinary Shares are held by the
Company (31 December 2021 – 450,000 1p Ordinary Shares).
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2023 Annual Report
147
11. CAPITAL REDUCTION RESERVE
31 December
2022
31 December
2021
£’000
£’000
Balance at beginning of year
160,394
166,154
Dividends paid
–
(5,760)
Balance at end of year
160,394
160,394
The capital reduction reserve relates to the distributable reserve
established on cancellation of the share premium reserve.
Dividends have been distributed out of Retained Earnings and the
Capital Reduction Reserve in the year ended 31 December 2022.
During the Board meeting on 3 August 2017 a resolution was
passed authorising the cancellation of the share premium account.
The amount standing to the credit of the share premium account
of the Company following completion of the Issue (less any issue
expenses set off against the share premium reserve) was, as a
result, credited as a distributable reserve to be established in the
Company’s books of account which shall be capable of being
applied in any manner in which the Company’s profits available for
distribution (as determined in accordance with the CA 2006) are
able to be applied.
In order to cancel the share premium reserve the Company
needed to obtain a court order, which was received on
15 November 2017. An SH19 form was filed at Companies House
with a copy of the court order and the certificate of cancellation
was issued by Companies House on 15 November 2017.
12. DIVIDENDS
Year ended
31 December
2022
Year ended
31 December
2021
£’000
£’000
1.295p for the 3 months to 31 December
2020 paid on 26 March 2021
–
5,217
1.3p for the 3 months to 31 March 2021
paid on 25 June 2021
–
5,236
1.3p for the 3 months to 30 June 2021 paid
on 30 September 2021
–
5,236
1.3p for the 3 months to 30 September
2021 paid on 17 December 2021
–
5,326
1.3p for the 3 months to 31 December
2021 paid on 25 March 2022
5,236
–
1.365p for the 3 months to 31 March 2022
paid on 24 June 2022
5,498
–
1.365p for the 3 months to 30 June 2022
paid on 30 September 2022
5,498
–
1.365p for the 3 months to 30 September
2022 paid on 16 December 2022
5,498
–
21,730
20,925
On 2 March 2023, the Company declared an interim dividend of
1.365 pence per Ordinary share for the period 1 October 2022 to
31 December 2022. The total dividend of £5.498 million will be
paid on 31 March 2023 to Ordinary shareholders on the register on
17 March 2023.
The Company intends to pay dividends to shareholders on a
quarterly basis and in accordance with the REIT regime.
Dividends are not payable in respect of its treasury shares held.
13. RETAINED EARNINGS
31 December
2022
31 December
2021
£’000
£’000
Balance at beginning of year
28,946
21,648
Total comprehensive profit for the year
33,517
22,463
Dividends paid
(21,730)
(15,165)
Balance at end of year
40,733
28,946
14. NET ASSET VALUE PER SHARE
Net Asset Value per share is calculated by dividing net assets in
the Company Statement of Financial Position attributable to
ordinary equity holders of the parent by the number of Ordinary
Shares outstanding at the end of the year. Although there are no
dilutive instruments outstanding, both basic and diluted NAV per
share are disclosed below.
Net asset values have been calculated as follows:
31 December
2022
31 December
2021
£’000
£’000
Net assets at end of period
408,535
396,748
Shares in issue at end of period
(excluding treasury shares)
402,789,002
402,789,002
Dilutive shares in issue
–
–
Basic and dilutive per share
101.43p
98.50p
15. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption not to disclose
transactions with other members of the Group as the Company
Financial Statements are presented together with the Group Financial
Statements.
Note 31 of the Notes to the Group Financial Statements includes
details of other related party transactions undertaken by the
Company and its subsidiaries.
16. POST BALANCE SHEET EVENTS
There were no post balance sheet events subsequent to the end
of the period.
Company Overview
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Triple Point Social Housing REIT plc
Financial Statements
148
Other Information
Unaudited Performance Measures
for the year ended 31 December 2022
Other Information
1. PORTFOLIO NET ASSET VALUE
The objective of the Portfolio Net Asset Value “Portfolio NAV”
measure is to highlight the fair value of the net assets on an
ongoing, long-term basis, which aligns with the Group’s business
strategy as an ongoing REIT with a long-term investment outlook.
This Portfolio NAV is made available on a quarterly basis on the
Company’s website and announced via RNS.
In order to arrive at Portfolio NAV, two adjustments are made to
the IFRS Net Asset Value (“IFRS NAV”) reported in the consolidated
financial statements such that:
i.
The hypothetical sale of properties will take place based on
a sale of a corporate vehicle rather than a sale of underlying
property assets. This assumption reflects the basis upon
which the Company’s assets have been assembled within
specific SPVs.
ii.
The hypothetical sale will take place in the form of a single
portfolio disposal.
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Net asset value per the consolidated
financial statements
439,285
436,113
Value of Asset pools
439,285
436,113
Effects of the adoption to the assumed,
hypothetical sale of properties as a
portfolio and on the basis of sale of a
corporate vehicle
62,682
49,975
Portfolio Net Asset Value
501,967
486,088
After reflecting these amendments, the movement in net assets is
as follows:
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Opening reserves
486,088
468,788
Net issue proceeds
–
(23)
Operating profits
27,471
26,192
Capital appreciation
21,856
19,350
Loss on fair value adjustment on assets
held for sale
(885)
(515)
Finance income
56
44
Finance costs
(10,889)
(6,823)
Dividends paid
(21,730)
(20,925)
Portfolio Net Assets
501,967
486,088
Number of shares in issue at the year
end (excluding treasury shares)
402,789,002
402,789,002
Portfolio net asset value per share
124.62p
120.68p
2.
ADJUSTED EARNINGS PER
SHARE – PORTFOLIO NAV BASIS
Summary Consolidated Statement
Summary Consolidated Statement
of Comprehensive Income
of Comprehensive Income
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Net rental income
35,227
33,117
Other income
110
–
Expenses
(7,866)
(6,926)
Fair value gains on investment property
71,830
58,973
Loss on fair value adjustment on assets
held for sale
(885)
(515)
Finance income
56
44
Finance costs
(10,889)
(6,823)
Value of each pool
87,583
77,870
Weighted average number of shares
(excluding treasury shares)
402,789,002
402,789,002
Adjusted earnings per share – basic
21.74p
19.46p
3. EPRA NET REINSTATEMENT
VALUE
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
IFRS NAV/EPRA NAV (£’000)
439,285
436,113
Include:
Real Estate Transfer Tax* (£’000)
41,283
39,492
EPRA Net Reinstatement Value (£’000)
480,568
475,605
Fully diluted number of shares
402,789,002
402,789,002
EPRA Net Reinstatement value per
share
119.31p
118.07p
* Purchaser’s costs
4. EPRA NET DISPOSAL VALUE
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
IFRS NAV/EPRA NAV (£’000)
439,285
436,113
Include:
Fair value of debt* (£’000)
70,774
(2,059)
EPRA Net Disposal Value (£’000)
510,059
434,054
Fully diluted number of shares
402,789,002
402,789,002
EPRA Net Disposal Value**
126.63p
107.76p
* Difference between interest-bearing loans and borrowings included in balance
sheet at amortised cost, and the fair value of interest-bearing loans and
borrowings.
**Equal to the EPRA NNNAV disclosed in previous reporting periods.
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2023 Annual Report
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149
5. EPRA NET TANGIBLE ASSETS
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
IFRS NAV/EPRA NAV (£’000)
439,285
436,113
EPRA Net Tangible Assets (£’000)
439,285
436,113
Fully diluted number of shares
402,789,002
402,789,002
EPRA Net Tangible Assets*
109.06p
108.27p
*equal to IFRS NAV and previous EPRA NAV metric as none of the EPRA Net
Tangible Asset adjustments are applicable as at 31 December 2022 or 31
December 2021.
6.
EPRA NET INITIAL YIELD
(NIY) AND EPRA
“TOPPED UP” NIY
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Investment Property – wholly-owned
(excluding head lease ground rents)
666,253
639,831
Less: development properties
–
–
Completed property portfolio
666,253
639,831
Allowance for estimated purchasers’
costs
41,283
39,492
Gross up completed property portfolio
valuation
707,536
679,322
Annualised passing rental income
38,626
35,343
Property outgoings
–
–
Annualised net rents
38,626
35,343
Contractual increases for lease incentives
349
443
Topped up annualised net rents
38,975
35,785
EPRA NIY
5.46%
5.20%
EPRA Topped Up NIY
5.51%
5.27%
7. ONGOING CHARGES RATIO
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Annualised ongoing charges
7,018
6,671
Average undiluted net assets
437,699
432,382
Ongoing charges
1.60%
1.54%
8. EPRA VACANCY RATE
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Estimated Market Rental Value (ERV) of
vacant spaces
–
93
Estimated Market Rental Value (ERV) of
whole portfolio
38,975
35,785
EPRA Vacancy Rate
0%
0.26%
9. EPRA COST RATIO
31 December
31 December
2022
2022
31 December
2021
£’000
£’000
£’000
Total administrative and operating costs
7,866
6,926
Gross rental income
37,300
33,117
EPRA cost ratio
21.09%
20.91%
Company Overview
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Triple Point Social Housing REIT plc
Financial Statements
150
Other Information
Glossary and Definitions
“AIC CODE”
AIC Code of Corporate Governance produced by the Association of Investment Companies;
“AIC GUIDE”
AIC Corporate Governance Guide for Investment Companies produced by the Association of
Investment Companies;
“AIFM”
the alternative investment fund manager of the Company being Triple Point Investment
Management LLP;
“AIFMD”
the EU Alternative Investment Fund Managers Directive 2011/61/EU;
“APPROVED
PROVIDER”
a housing association, Local Authority or other regulated organisation in receipt of direct payment
from local government including a care provider;
“BASIC NAV”
the value, as at any date, of the assets of the Company after deduction of all liabilities determined
in accordance with the accounting policies adopted by the Company from time to time;
“BOARD”
the Directors of the Company from time to time;
“COMPANY”
Triple Point Social Housing REIT plc (company number 10814022);
“DTR”
the Disclosure Guidance and Transparency Rules sourcebook containing the Disclosure Guidance,
Transparency Rules, corporate governance rules and the rules relating to primary information
providers;
“EPRA”
the European Public Real Estate Association;
“GAV”
the gross assets of the Company in accordance with applicable accounting rules from time to time;
“GROUP”
the Company and any subsidiary undertakings from time to time;
“INVESTMENT
MANAGER”
Triple Point Investment Management LLP (partnership number OC321250);
“IPO”
the admission by the Company of 200 million Ordinary Shares to trading on the Specialist Fund
Segment of the Main Market, which were the subject of the Company's initial public offering on 8
August 2017;
“NAV”
the net assets of the Company in accordance with applicable accounting rules from time to time;
“NIY”
net initial yield, being the annual rent generated under a lease in respect of a
property divided by the combined total of that property’s acquisition price and acquisition costs;
“ORDINARY
SHARES”
ordinary shares of £0.01 each in the capital of the Company;
Company Overview
Strategic Report
Governance
2023 Annual Report
Financial Statements
Other Information
151
“REGISTERED
PROVIDER”
a housing association or Local Authority;
“REGULATOR OF
SOCIAL HOUSING”
The Regulator of Social Housing is an executive non-departmental public body, sponsored by the
Department for Levelling Up, Housing and Communities responsible for promoting a viable,
efficient and well-governed social housing sector.
“REIT”
means
a
qualifying
real
estate
investment
trust
in
accordance
with
the
UK
REIT
Regime introduced by the UK Finance Act 2006 and subsequently re-written into Part 12 of the
Corporation Tax Act 2010;
“SUPPORTED
HOUSING”
accommodation that is suitable, or adapted, for residents with special needs, which may (but does
not necessarily): (a) include some form of personal care provided by a supported
housing care provider; and/or (b) that enable those tenants to live independently in the
community;
“SPECIALISED
SUPPORTED
HOUSING”
accommodation which is designed, structurally altered, refurbished or designated for occupation
by, and made available to, residents who require specialised services or support in order to enable
them to live, or to adjust to living, independently within the community;
“TOTAL RETURN”
the percentage increase in net asset value plus dividends paid since IPO; and
“WAULT”
the weighted average unexpired lease term certain across the portfolio, weighted by contracted
rental
income.
We
have
included
all
parts
of
the
term
certain,
including additional leases which are triggered by landlords’ put options, but not those triggered
by lessees’ call options unless the options were mutual.
Company Overview
Strategic Report
Governance
Triple Point Social Housing REIT plc
Financial Statements
152
Other Information
Shareholder Information
NON-EXECUTIVE DIRECTORS
REGISTERED OFFICE
Chris Phillips (Chairman)
Ian Reeves CBE (Senior Independent Director)
Peter Coward (Non-executive director)
Paul Oliver (Non-executive director)
Tracey Fletcher-Ray (Non-executive director)
1 King William Street
London
EC4N 7AF
ALTERNATIVE INVESTMENT FUND MANAGER
(“INVESTMENT MANAGER”)
JOINT FINANCIAL ADVISER
Akur Limited
66 St James’s Street
London
SW1A 1NE
Triple Point Investment Management LLP
1 King William Street
London
EC4N 7AF
JOINT FINANCIAL ADVISER AND
CORPORATE BROKER
LEGAL ADVISER
Taylor Wessing LLP
5 New Street Square
London
EC4A 3TW
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
TAX ADVISER
DEPOSITARY
Deloitte LLP
1 New Street Square
London
EC4A 3BZ
INDOS Financial Limited
The Scalpel
52 Lime Street
London
EC3M 7AF
ADMINISTRATOR AND COMPANY
SECRETARY
REGISTRAR
Hanway Advisory Limited
1 King William Street
London
EC4N 7AF
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
AUDITOR
VALUER
BDO LLP
55 Baker Street
London
W1U 7EU
Jones Lang LaSalle Limited
30 Warwick Street
London
W1B 5NH
1 King William Street | London | EC4N 7AF
For further information about the Triple Point
please call
020 7201 8990
or send an email to
contact@triplepoint.co.uk
Triple Point is the trading name for the Triple Point Group which includes the following companies and associated entities: Triple
Point Investment Management LLP registered in England & Wales no. OC321250, authorised and regulated by the Financial
Conduct Authority no. 456597, Triple Point Administration LLP registered in England & Wales no. OC391352 and authorised and
regulated by the Financial Conduct Authority no. 618187, and TP Nominees Limited registered in England & Wales no.07839571,
all of 1 King William Street, London, EC4N 7AF, UK.
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