Impact returns to market with inflation-linked 5.6% yield

The smallest but currently best-performing Impact Healthcare real estate investment trust launches its second share issue of the year to fund a ‘significant’ pipeline of acquisitions.

Impact Healthcare (IHR ), the smallest but currently best-performing real estate investment trust in its sub-sector, is launching its second share issue of the year to fund a ‘significant’ pipeline of acquisitions.

The £473m investment company, which like its rivals benefits from inflation-linked rents and strong underlying demand for its residences, is looking to place shares with professional investors at 117p, with a subscription offer of a minimum 1,000 shares for private investors at the same price.

With Impact targeting total quarterly dividends of 6.54p in 2002, this puts the stock on a a 5.6% yield. The trust has generated a total shareholder return of 17.5% in the past year and 57.6% over five years.

The fund-raise is pitched at a 4.6% discount to yesterday’s closing price and a 1.8% premium above its last published net asset value (NAV) at 31 March. The offer closes on 5 July with the new shares qualifying for the next quarterly dividend to be declared in August.

Since Impact raised £40m in its last share issue at 114p  in February, it has spent £60m buying or exchanging on 10 properties and funding refurbishments.

Impact has its sights on six portfolios of 27 new care homes worth £169m on terms similar to its existing properties, which have an average net initial yield of 6.7% and unexpired leases of over 19 years. Two of the operators involved are mainly based in the South-East. 

Although the company has £70m left in its credit facility, it will need more to complete all the purchases. Its debts are currently low, with a loan-to-value ratio of 19.4% compared to a maximum permitted LTV of 35%.  

Chair Rupert Barclay said the portfolio continued to perform well and and benefited from the defensive characteristics of the care home market. ‘Whilst equity capital market conditions remain challenging, this fundraise will allow us to secure a number of attractive investment opportunities and grow our inflation-linked long-leased Reit for the benefit of all stakeholders.’

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