RESULTS FROM INCORPORATION TO 31 DECEMBER 2017

RNS Number : 4727G

Triple Point Social Housing REIT

02 March 2018

 

THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

2 March 2018

Triple Point Social Housing REIT plc

(the "Company" or, together with its subsidiaries, the "Group")

RESULTS FOR THE PERIOD FROM INCORPORATION TO 31 DECEMBER 2017

The Board of Triple Point Social Housing REIT plc (ticker: SOHO) is pleased to announce its audited results for the period from incorporation on 12 June 2017 to 31 December 2017.

	31 December 2017
Earnings per share (basic)	3.94p
IFRS NAV per share	100.84p
Total annualised rental income	£7.8m
Value of the portfolio -      IFRS basis -      Portfolio valuation basis	£137.5m £146.9m
Weighted average unexpired lease term	30.6 yrs
Dividend to be declared per share	1.00p

Financial highlights

·        IFRS net asset value per share of 100.84 pence at 31 December 2017, an increase of 2.9% from the 98.0 pence at the time of the Company's initial public offering ("IPO") in August 2017.

·        Portfolio independently valued as at 31 December 2017 at £137.50 million on an IFRS basis, reflecting a valuation uplift of 4.37% against the portfolio's aggregate purchase price (including transaction costs). The properties have been valued on an individual basis.

·        The Group's assets were valued at £146.9 million on a portfolio valuation basis, reflecting a portfolio premium of £9.4 million against the IFRS valuation. A portfolio valuation basis assumes the portfolio of properties is held in a single company holding structure, is sold to a third party on arms-length terms, and attracts purchaser's costs of 2.3%.

·        The portfolio's total annualised rental income was £7.8 million as at 31 December 2017.

·        Operating profit for the period was £5.6 million.

·        Ongoing Charges Ratio of 1.34% as at 31 December 2017.

·        Raised £200 million (£196 million net proceeds) on oversubscribed IPO in August 2017 through the issue of ordinary shares at a price of 100 pence per share.

·        Market capitalisation of £208.75 million as at 31 December 2017.

Operational highlights

·        Acquired 116 properties (828 units) during the period with an aggregate purchase price of £131.8 million (including costs).

·        IFRS blended net initial yield of 5.32% based on the value of the portfolio on an IFRS basis as at 31 December 2017, against the portfolio's blended net initial yield of 5.91%.

·        Created a diversified portfolio across eight regions, under 65 leases with 11 Approved Providers.

·        As at 31 December 2017, the weighted average unexpired lease term ("WAULT") was 30.6 years.

·        100% of the Group's portfolio was fully let or pre-let and income producing during the period.

·        100% of contracted rental income was either CPI or RPI linked.

Post Balance Sheet Activity

·        The Company will declare a dividend of 1.0 pence per share in respect of the period to 31 December 2017. This dividend will be paid on or around 29 March 2018 to shareholders on the register at 16 March 2018.

·        The Company is on track to pay an initial total dividend of 5.0 pence per Ordinary Share (in respect of the Company's first full financial year to 31 December 2018) in line with the Company's stated target at launch.* The Company intends to increase this target dividend thereafter in line with inflation, at a rate reflecting the CPI-based rent reviews typically contained in the Leases of the assets within the Portfolio.*

·        Announced the acquisition of a further 31 supported housing properties (207 units) for an aggregate purchase price of approximately £33.5 million (including costs).

*these are targets only and not a profit forecast and there can be no assurance that they will be met.

Christopher Phillips, Chairman of Triple Point Social Housing REIT plc, commented:

"Since our oversubscribed IPO last year, the Group has made strong progress. We have been busy implementing our strategy of acquiring and managing recently developed Supported Housing properties across the UK so that we can benefit from the compelling supply and demand imbalance that exists in our market.

"The outlook is positive and we expect the strong performance of 2017 to continue into 2018. The Investment Manager has identified a significant future pipeline of Supported Housing properties that are high quality and in line with the Group's yield expectations. We expect to acquire a high percentage of the assets in the pipeline within the next 12 months, however we will continue to turn down these or other investment opportunities if we believe them to be a poor fit for the Group following due diligence based on factors such as asset suitability, lessor covenant, rent sustainability and location.

"The market fundamentals remain strong, epitomised by a stark undersupply and strong central and local government support for Supported Housing. We are therefore optimistic about the performance of our existing portfolio and our ability to deliver on the pipeline of assets that have already been identified for 2018."

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

Triple Point Investment Management LLP (Delegated Investment Manager)	(via Newgate below)
James Cranmer
Ben Beaton
Max Shenkman
Justin Hubble
Akur Limited (Joint Financial Adviser)	Tel: [phone]
Tom Frost
Anthony Richardson
Siobhan Sergeant
Canaccord Genuity Limited (Joint Financial Adviser and Corporate Broker)	Tel: [phone]
Lucy Lewis
Denis Flanagan
Andrew Zychowski
Newgate (PR Adviser)	Tel: [phone]
James Benjamin	Em: [e-mail]
Anna Geffert
Leena Patel

The Company's LEI is 213800BERVBS2HFTBC58.

Further information on the Company can be found on its website at www.triplepointreit.com.

NOTES:

The Company invests in social housing assets in the UK, with a particular focus on supported housing. The assets within the portfolio are subject to inflation-adjusted, long-term (typically from 20 years to 30 years), Fully Repairing and Insuring ("FRI") leases with Approved Providers (being Housing Associations, Local Authorities or other regulated organisations in receipt of direct payment from local government). The portfolio comprises investments into properties which are already subject to an FRI lease with an Approved Provider, as well as forward funding of pre-let developments but does not include any direct development or speculative development.

There is increasing political and financial pressure on Housing Associations to increase their housing delivery and this is creating opportunities for private sector investors to participate in the market. The Group's ability to provide forward financing for new developments not only enables the Company to secure fit for purpose, modern assets for its portfolio but also addresses the chronic undersupply of suitable supported housing properties in the UK at sustainable rents and delivering returns to investors.

Triple Point Investment Management LLP (part of the Triple Point Group) is responsible for management of the Group's portfolio (with such functions having been delegated to it by Langham Hall Fund Management LLP, the Company's alternative investment fund manager).

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 operates as a UK Real Estate Investment Trust.

Meeting for investors and analysts and audio recording of results available

A Company presentation for analysts and investors will take place at 9.00 a.m. today at the offices of Canaccord Genuity, 88 Wood Street, London, EC2V 7QR. The presentation will also be accessible via a live conference call and on-demand via the Company website: https://www.triplepointreit.com/investors/72/.

The Annual Report and Notice of AGM are also available to view and download on the Company's website at www.triplepointreit.com and hard copy will be posted to shareholders on or around 5 March 2018.

In accordance with Listing Rule 9.6.1 copies of the Annual Report and Notice of AGM will be submitted to the UK Listing Authority and will be available for inspection from the National Storage Mechanism at www.morningstar.co.uk/uk/nsm.

CHAIRMAN'S STATEMENT

It is a pleasure to write to you for the first time in our maiden annual report. Since our oversubscribed IPO last year, the Group has made strong progress. We have been busy implementing our strategy of acquiring and managing recently developed Supported Housing properties across the UK so that we can benefit from the compelling supply and demand imbalance that exists in our market.

During the initial financial period, we completed a number of portfolio acquisitions and cemented relationships with a select group of high quality developers. Through these relationships, we were able to successfully deploy funds into a pool of high quality, diversified assets. At the same time, our developer relationships have enabled us to gain large, allocated future pipelines of newly developed and renovated Supported Housing properties. These pipelines provide us with strong deployment prospects in the near future.

As at 31 December 2017, all of our investments had been into completed, leased properties. This included Newall Green Farm, leased to Hilldale Housing Association, which helped house people with complex care needs in Manchester, and Sorogold Close, managed by Inclusion Housing, which assisted in alleviating the undersupply of housing for people complex mental health needs in St. Helens, Merseyside.

We see further opportunities in forward funding pre-let assets. Shortly after the period end, we closed our first forward funding transaction through which we will own the land for and fund the construction of an 18 unit Supported Housing scheme in Bradford, pre-let to Westmoreland Supported Housing. The property will be custom built for tenants with a range of specialised care needs. Since then, we have completed a further forward funding project and we expect this to be a strong source of deal flow over the financial year ending 31 December 2018.

Being able to provide forward funding enables us to acquire new build assets that have been designed in conjunction with Approved Providers and local authorities to meet specified local demand. This gives us a competitive advantage over our peer group, by giving us off-market access to high quality assets while strengthening our relationships with local authorities, Approved Providers and developers.  

Deployment

In 2017 we acquired 116 assets at a total investment value including costs of £131.8 million. This has resulted in a portfolio diversified by geography and Approved Provider. Since the period end, we have acquired a further 31 assets for £33.5 million, including transaction costs, and have now substantially invested the net proceeds from IPO.

The 116 assets we acquired by 31 December 2017 have the capacity to house 828 tenants, are leased to 11 Approved Providers, are located in 51 different local authorities and are serviced by 25 care providers. The portfolio at 31 December 2017 benefitted from a weighted average unexpired lease term of 30.6 years. Since 31 December 2017, the Group has acquired a further 31 properties, housing 207 tenants. A map setting out the location of our properties can be found on page 32 of the Annual Report.

Investment Performance

We benefit from the Investment Manager's strong, growing network, market intelligence and capital discipline. Through its network, we have been able to source the majority of our properties off-market and at attractive yields. The Investment Manager's capital discipline manifests itself through its diligence process. Before completing an acquisition, it scrutinises properties and developers in a comprehensive and timely manner, ensuring the assets we acquire are of high build quality and enjoy robust occupant demand. This means, now and in the longer term, the Group will possess a premium portfolio of attractive, occupied assets.

In the current economic environment, investors have demonstrated that there is appetite for companies that offer reduced risk and secure inflation-linked income. Since IPO, we have deployed funds into property investments that are subject to long leases with upwards-only, inflation-linked rent reviews. The lessees are Approved Providers who receive funding for the rent due directly from local government. We have enjoyed a strong share price performance over the reported period, with our shares trading at a sustained premium against their launch price at IPO.

Financial Results

At the period end, the portfolio of investment property was independently valued at £137.5 million on an IFRS basis, reflecting a valuation uplift of 4.37% against the portfolio's aggregate purchase price (including transaction costs). The valuation reflects a portfolio yield of 5.32%, compared to the portfolio's blended net initial yield of 5.91%. This yield arbitrage of 59 basis points underpins the quality of the Group's asset selection and acquisition process.

The Group's assets were valued at £146.9 million on a portfolio valuation basis, reflecting a portfolio premium of £9.4 million against the IFRS valuation. A portfolio valuation basis assumes the portfolio of properties is held in a single company holding structure, is sold to a third party on arm's length terms, and attracts purchaser's costs of 2.3%.

Earnings per share was 3.94 pence for the period. The audited IFRS NAV per share was 100.84 pence, which has increased since IPO by 2.9%. The Group's EPRA NAV per share was the same as the IFRS NAV per share for the period.

Dividends

The Board shortly plans to declare its maiden dividend of 1.0 pence per share in respect of the period from IPO to 31 December 2017. This dividend will be paid on or around 29 March 2018 to shareholders on the register on 16 March 2018. Going forward, we intend to pay four equally weighted interim dividends in respect of the preceding quarter in each of June, September, December and March.

Further capital raising

It has always been our intention to use prudent amounts of leverage to enhance returns for our investors. The Board remains of the opinion that in the medium term we should be targeting gearing of not more than 40% of the value of our portfolio. As current domestic borrowing rates remain well below our portfolio yields, we intend to take advantage of the positive lending environment. The Group is therefore seeking a bilateral term facility with an institutional lender at a loan-to-value ratio of up to 40%. It is expected that the term debt will have a minimum duration of 10 years and will be on an interest only basis with a fixed all-in coupon.

Furthermore, given the strong pipeline of investment opportunities identified by the Investment Manager, allowing the Group to acquire further high quality assets with a wide geographical spread, the Board believes it would be in shareholders' best interests to grow the Group through a raise of further equity. This will, together with our intentions to raise future debt, enhance our already attractive investment proposition. I am looking forward to updating the market on these developments in the near future.

Investment Manager

The Board and the Investment Manager, Triple Point Investment Management LLP, work closely together, meeting regularly to discuss developments in the Group and the market. We will continue this approach going forward to help maintain the efficient and effective management of the Group. The Board is grateful for the continued hard work and support of the Investment Manager.

Social Impact

In 2016, in order to promote a reduction in reliance on residential and in-patient care, and following on from the 2012 Winterbourne View Scandal and Sir Stephen Bubb's report highlighting systemic issues in the care system, the Department of Health launched the Transforming Care programme. Supported Housing provides housing for vulnerable adults who require care in adapted homes. These homes are based in communities, often near families, and they help promote independence. Supported Housing is therefore fundamental to achieving the system-wide move away from residential and in-patient care promoted by the Transforming Care programme.

Through acquiring newly developed and refurbished Supported Housing properties and providing forward funding to developers, the Group is committed to the important social aim of helping to provide more and appropriate accommodation to some of the most vulnerable in society such that they can aspire to live more autonomously in local communities. At the same time, our consistent, high-quality approach to due diligence and development, combined with significant investment in the sector, is helping to drive quality in constructors and developers of Supported Housing.

Outlook

The outlook is positive and we expect the strong performance of 2017 to continue into 2018. The Investment Manager has identified a significant future pipeline of Supported Housing properties that are high quality and in line with the Group's yield expectations. We expect to acquire a high percentage of the assets in the pipeline within the next 12 months, however we will continue to turn down these or other investment opportunities if we believe them to be a poor fit for the Group following due diligence based on factors such as asset suitability, lessor covenant, rent sustainability and location.

The market fundamentals remain strong and are epitomised by a stark undersupply and strong central and local government support for Supported Housing. We are therefore optimistic about the performance of our existing portfolio and our ability to deliver on the pipeline of assets that have already been identified for 2018.

I would like to take this opportunity to thank my fellow directors for their support and commitment since IPO, and to all shareholders for your continued support.

Chris Phillips

Chairman

1 March 2018

STRATEGY AND BUSINESS MODEL

The Board is responsible for the Group's Investment Objective and Investment Policy and has overall responsibility for the Group's activities (except for any alternative investment fund management functions which are provided by the AIFM). The Group's published Investment Policy and Objective are set out below.

Investment Objective

The Group'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 particular focus on Supported Housing assets. The portfolio comprises investments into operating assets and the forward funding of pre-let development assets, the mix of which the Group seeks to optimise to enable it to pay a covered dividend increasing in line with inflation and so generate an attractive risk-adjusted total return.

Investment Policy

In order 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 special purpose vehicles. Each asset is subject to a lease or occupancy agreement with an Approved Provider for terms primarily ranging from 20 years to 30 years, with the rent payable thereunder subject to adjustment in line with inflation (generally CPI). Title to the assets remains with the Group under the terms of the relevant lease. The Group is not responsible for any management or maintenance obligations under the terms of the lease or occupancy agreement, all of which are serviced by the Approved Provider lessee. The Group is not responsible for the provision of care to occupants of Supported Housing assets.

The social housing assets acquired by the Group are sourced by the Investment Manager.

The Group intends to hold its portfolio over the long term, taking advantage of long-term, upward-only, inflation-linked leases. 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 prior to the commencement of the relevant lease.

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 seeks to use gearing to enhance equity returns. The directors will employ a level of borrowing that they consider to be prudent for the asset class and will seek to achieve a low cost of funds whilst maintaining flexibility in the underlying security requirements and the structure of both the Group's portfolio and the Group itself.

It is the directors' intention 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 utilise 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. Provided that the assets leased to third parties who are not Approved Providers are acquired as part of a portfolio acquisition where no less than 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, such an acquisition will remain within the Investment Policy;

·        at least 80% of the Group's gross asset value will be invested in Supported Housing assets;

·        the unexpired term of any lease or occupancy agreement entered into (or in the case of an acquisition of a portfolio of assets, the average unexpired term of such leases or occupancy agreements) shall not be less than 15 years, unless the Investment Manager reasonably expects the term of such shorter lease or occupancy agreement (or in the case of an acquisition of a portfolio of assets, the average term of such leases or occupancy agreements) to be extended to at least 15 years;

·        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 prior to the entry into the lease. The sum of the total forward financing 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 special purpose vehicles 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.

Investment Strategy

We specialise in investing in UK social housing, with a particular focus on Supported Housing social homes. Our strategy is underpinned by strong local authority demand for more social housing, which is reflected in our focus on acquiring recently developed and refurbished properties across the country. The assets within our portfolio have typically been developed for pre-identified tenants and in response to demand specified by local authorities. On acquisition, the properties are subject to inflation-adjusted, long-term (typically from 20 years to 30 years), fully repairing and insuring leases with expert Approved Providers in receipt of direct payment from local government (usually Registered Providers regulated by the Regulator of Social Housing). The portfolio comprises investments made into properties already subject to a fully repairing and insuring lease as well as forward funding of pre-let developments. Our portfolio will not include any direct development or speculative development investments.

Business Model

The Group owns and manages social housing properties that are leased to expert housing managers (typically Registered Providers, which are often referred to as housing associations) through long-term, inflation-linked, fully repairing and insuring leases. 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 such that care and support can easily be provided to vulnerable tenants who may have mental health issues, learning difficulties or physical disabilities. We are focused on acquiring recently developed properties in order to help local authorities meet increasing demand for suitable accommodation for vulnerable tenants (the drivers of this demand are discussed in the Investment Manager's report on pages 26 to 30 of the Annual Report. The local authorities are responsible for housing these tenants 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 who are usually not-for-profit organisations whose focus is on developing, tenanting and maintaining housing assets in the public (and private) sectors. Approved Providers are approved and regulated by the Government through the Regulator of Social Housing (or in rare instances, where the Group contracts with care providers, the Care Quality Commission). All of the Group's leases with Approved Providers are linked to inflation, may be extended to a total lease length of 20 years or longer (at the Group's discretion) and are 'fully repairing and insuring'. 'Fully repairing and insuring' means that the obligations for management, repair and maintenance of the property are passed on to the Approved Provider and are not borne by the Group. The Approved Provider is also responsible for tenanting its let properties. 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 tenants, the rent and maintenance costs are paid directly from the local authority to the Approved Provider The rent received from the local authority by the Approved Provider is then paid to the Group via the lease. Ultimate funding for the rent and maintenance comes from the Department of Work and Pensions in the form of housing benefit.

Nearly all of the tenants housed in Supported Housing properties require support and care. This is usually provided by a separate care provider regulated by the Care Quality Commission. The agreement for the provision for care for the tenants 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 tenants housed in properties the Group owns. The care provider will often be responsible for nominating tenants into the properties and, as a result, will normally provide some voids cover to the Approved Provider should they be unable to fill the asset (i.e. if occupancy is not 100% it is often the care provider rather than the Registered Provider that will cover the cost).

Many assets that the Investment Manager sources for the Group have been recently developed and are either new build properties or renovated existing houses or apartment blocks that have been adapted for Supported Housing. The benefits of buying recently developed stock is that there can be certainty that it has been planned in response to local authority demand and is designed to meet the specific requirements of the intended tenants. 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 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 that the Group has greater certainty over its pipeline as the Group has 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 completed properties, the Group also has the ability to provide forward funding to developers of new social 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 itself to developers as a single partner for both construction and longer term property (also known as 'take-out') funding. 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. Forward funding also enables us to have a greater portion of new build properties in our portfolio, which is attractive as they typically attract higher valuations, are modern and have been fully custom built to meet the needs of the tenants they house. 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 against construction risk.

Since IPO, we have 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 13 year track record of asset-backed investments, its active involvement 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 a number of different housing associations, care providers and local authorities to help deliver new Supported Housing assets to provide homes to some of the most vulnerable members of society.

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		EXPLANATION
1. Dividend
Dividends paid to shareholders and declared in relation to the period	The dividend reflects the Company's ability to deliver a low risk but growing income stream from the portfolio		The Company will pay a dividend of 1 pence per share in respect of the period to 31 December 2017 calculated based on the weighted average number of shares held during the period		The Company will pay a dividend of 1 pence per share in respect of the period to 31 December 2017, and is targeting a 5 pence per share dividend in respect of its first full financial year to 31 December 2018
2. IFRS NAV per share
The value of our assets attributable to shareholders, based on an independent valuation of our investment properties and the book value of other assets less the book value of our liabilities	The IFRS NAV reflects our ability to grow the portfolio and to add value to it throughout the life cycle of our assets		100.84 pence per share at 31 December 2017		The IFRS NAV per share at IPO was 98.0 pence. This is an increase of 2.90% since IPO driven by growth in the underlying asset value of the investment properties
3. Loan to Group's gross assets
It is envisaged that a proportion of our investment portfolio will be funded by borrowings. Our medium-to-long term target loan-to-GAV is 40%, with a maximum of 50%	The Group will seek to use gearing to enhance equity returns		0.0% at 31 December 2017		Although no gearing is in place as of 31 December 2017, appropriate gearing will be introduced in the financial year 2018
4. Earnings per share
The post-tax earnings generated that are attributable to shareholders	The earnings per share reflect our ability to generate earnings from our portfolio, including valuation increases		3.94 pence per share for the period to 31 December 2017		The outlook remains positive and our priority remains to achieve a fully covered dividend from operations, whilst continuing to invest to generate an attractive total return
5. Weighted average unexpired lease term
The average unexpired lease term of the investment portfolio, weighted by annual passing rents. Our target is a WAULT of at least 15 years	The WAULT is a key measure of the quality of our portfolio. Long lease terms underpin the security of our income stream		30.6 years at 31 December 2017 (assuming exercise of put and call options)		The portfolio's WAULT stood at 30.6 years 31 December 2017 and remains ahead of the Group's minimum term of 15 years

6. Adjusted earnings per share (unaudited)
The post-tax earnings adjusted for the portfolio valuation (including portfolio premium)	The adjusted EPS reflect the application of a valuation on a portfolio basis	10.48 pence per share for the period to 31 December 2017, as shown on page 108 of the Annual Report	The adjusted EPS shows the value per share on a long term basis under the special assumption of a hypothetical sale of the underlying property investment portfolio in one single transaction
7. Portfolio net asset value (unaudited)
The IFRS NAV adjusted for the portfolio valuation (including portfolio premium)	The Portfolio NAV measure highlights the long term fair value of net assets on the basis of a portfolio valuation	The Portfolio NAV of £211 million equates to a Portfolio NAV of 105.5 pence per Ordinary Share, as shown on page 108 of the Annual Report	The Portfolio NAV shows the net asset value on a long term basis under the special assumption of a hypothetical sale of the underlying property investment portfolio in one single transaction
8. 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	20.4%	Our target is lower than 30%. We are substantially below our maximum exposure target with our largest Approved Provider, Inclusion Housing

EPRA PERFORMANCE MEASURES

The table below 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.

KPI AND DEFINITION	PURPOSE	PERFORMANCE
1. EPRA Earnings per share
EPRA earnings per share as defined by EPRA Best Practice Recommendations 2016	A measure of a Group's underlying operating results and an indication of the extent to which current dividend payments are supported by earnings	0.02 pence per share for the period to 31 December 2017. A reconciliation to IFRS earnings per share as shown in note 30
2. EPRA NAV per share
EPRA NAV per share as defined by EPRA Best Practice Recommendations 2016	Provides stakeholders with the most relevant information on the fair value of the assets and liabilities within a true real estate investment company with a long-term investment strategy	£201.7m / 100.84 pence per share as at 31 December 2017. As at 31 December 2017 no adjustments were required resulting in both the EPRA NAV and IFRS NAV being equivalent
3. EPRA Net Initial Yield (NIY)
Annualised rental income based on the cash rents passing at the reporting 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	4.26% at 31 December 2017
4. 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 2017	5.32% at 31 December 2017
5. 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% as at 31 December 2017

INVESTMENT MANAGER'S REPORT

Review of the Business

Since IPO in August 2017, the Group has implemented its strategy of investing in good quality Supported Housing properties. It has now substantially deployed all of the IPO proceeds within the target deployment period of nine months from listing. We are pleased to report strong financial performance of the Group, which at 31 December 2017 had achieved an IFRS NAV per share of 100.84 pence, a 2.9% increase since IPO.

During the period to 31 December 2017, the Group acquired 116 assets. All assets are fit for purpose, sustainable and benefit from strong local authority support. The assets all benefit from inflation-linked, fully repairing and insuring long term leases (typically 20 to 30 years). The properties are leased to a diversified range of 11 specialist Approved Providers, who have different areas of geographical focus and expertise. The portfolio has a good geographical balance, with a slight focus to the Midlands and North of England. We expect the portfolio to retain a geographical balance in 2018, with potential acquisitions in both the North and South of England anticipated. During the period, the Group also rejected a number of potential acquisitions that fell within its investment strategy but were not deemed to be of sufficiently high quality to warrant investment.

As well as acquiring and managing the assets currently owned by the Group, we have successfully established a strong pipeline of deals with a carefully selected pool of high quality developers and private owners of Supported Housing assets. Currently, we have visibility of strong future deal flow, the vast majority of which we expect to be available for purchase in the next 12 months. All potential acquisitions remain subject to our robust due diligence process and pricing analysis to ensure the Group only acquires premium assets that will provide robust returns for shareholders in the longer term.

Market Review

Inherent in the current UK social housing market is a well-documented and sizeable mismatch between supply and demand. An increasing number of people in the UK are finding themselves priced out of both the private rental and property ownership markets which, combined with a growing population, is creating considerable demand for social housing assets.

This substantial increase in demand, labelled the "housing crisis", has been fuelled by the consistent and well-documented domestic inability to meet national (private and public) house building targets. This inability to build houses has been exacerbated by a significant reduction in the number of social housing assets available for rent, the reduction of which began with the public sell-off of social housing stock initiated in 1980 under the "Right to Buy" government scheme. This selling off has since continued under successive UK governments. The reduction in social housing stock has been compounded during this time by the lowering of grant subsidies from government to the sector.

Although there is now an upward trend in new house completions in the UK, and the Government has recently announced that additional funding will be made available to fund new social housing developments, there is still a severe shortage. As of April 2017, there were 1.16 million households on social housing waiting lists. In 2016/17, fewer than 160,000 new homes were built against an estimated 300,000 were required.

The impact of insufficient social housing supply is exacerbated in the Supported Housing market. Alongside structural supply issues, local authorities are facing additional regulatory and downward cost pressures which is creating further housing demand over and above that caused by a growing population. This demand is two-fold; firstly from improvements in healthcare increasing the number of people requiring long-term accommodation adapted to provide care services, and secondly from the recent acceleration of the long-term move away from institutional care homes for those who are able to live a relatively independent life. The acceleration of the move away from institutional care homes began following the 2012 Winterborne View care home scandal and the resultant government policy review. Resulting from this, the Care Act 2014 placed a statutory obligation on local authorities to house people needing care in independent living opportunities based in communities where possible (as opposed to providing in-patient care). In light of these developments, not only do local authorities have more people needing care, but they also have a responsibility to rehouse people already receiving care in more suitable accommodation of the sort provided by the Group's Supported Housing assets.

The increase in local authority demand is to some degree accommodated by specialist Supported Housing Approved Providers. These Approved Providers look to achieve scale through helping home vulnerable people traditionally housed in publicly-owned social housing. However, insufficient grant funding has meant that, increasingly, Approved Providers have to look to the private sector to fund the development of new social housing assets. This has created the opportunity for the Group to deploy funds into newly developed social housing assets leased to Approved Providers with support from local authorities.

Financial Review

As at 31 December 2017, the annualised rental income of the Group was £7.8 million. During the period, the amount of rental income recognised was limited to £1 million due to the short reporting period and the timing of asset acquisitions.

Earnings per share was 3.94 pence for the period. Adjusted earnings per share were 10.48 pence for the period, where post-tax earnings were adjusted for a valuation on a portfolio basis (as opposed to an individual asset basis). The audited IFRS NAV per share was 100.84 pence, which has increased since IPO by 2.9%. The Group's EPRA NAV per share and the IFRS NAV per share were equivalent for the period. The IFRS NAV adjusted for the portfolio valuation (including portfolio premium) was £211 million, which equates to a Portfolio NAV of 105.5 pence per share.

The Group has a low cost base, with an Association of Investment Companies ongoing charges ratio of 1.34%. A gain of £5.6 million on revaluation of the Group's properties was recognised in the period.

The Group is a UK REIT for tax purposes and is exempt from corporation tax on its property rental business.

At the period end, the portfolio was independently valued at £137.5 million on an IFRS basis, reflecting a valuation uplift of 4.37% against the portfolio's aggregate purchase price (including transaction costs). The valuation reflects a portfolio yield of 5.32%, against the portfolio's blended net initial yield of 5.91%. This yield arbitrage of 59 basis points reflects the quality of the Group's rigorous asset selection process.

The Group's properties were valued at £146.9 million on a portfolio valuation basis, reflecting a portfolio premium of £9.4 million against the IFRS valuation. A portfolio valuation basis assumes the portfolio of properties is held in a single company holding structure, is sold to a third party on arm's length terms, and attracts purchaser's costs of 2.3%.

Strategic Alignment and Asset Selection

Between IPO and 31 December 2017, the Group was focused on deploying the IPO net proceeds of £196 million in line with its Investment Policy. It was, in this time, able to create a geographically diverse portfolio of Supported Housing assets in the UK. The Group purchased properties with an aggregate net purchase price of £128.5 million which, including acquisition costs for the properties, totalled £131.8 million of invested capital as at 31 December 2017.

The properties are all let to carefully selected Approved Providers on fully repairing and insuring leases, with a weighted average unexpired lease term of 30.6 years, exceeding the Group's target WAULT of 15 years by a multiple of more than 2.

During the investment period ending 31 December 2017, the Group analysed properties in excess of £350 million in order to filter out the best suitable stock in line with the Investment Policy. Assets with a potential net purchase price of over £140 million were withdrawn from and not presented to the Board as they did not pass the Group's due diligence process.

After completion, properties are immediately handed over to our in-house asset management team, who monitor and maintain the Group's portfolio. No forward funding deals were undertaken up to 31 December 2017, nor any disposals considered. This was to be expected, as the work required to forward fund a property can necessitate a longer execution timeline than that required for new build properties or refurbishments.

Property Portfolio

As at 31 December 2017, the property portfolio comprised of 116 properties with 828 units and showed a broad geographic diversification across the UK. The portfolio has a focus to the North West (39%), North East (19%) and West Midlands (15%). The average property value in the portfolio was £1.2 million.

Market Value by Region

The property portfolio at 31 December 2017 was fully let with the assets either being let or pre-let on completion. The portfolio comprised of 65 fully repairing and insuring leases with 11 Approved Providers with a total annualised rental income of £7.8 million. The aggregate level of rent across the portfolio represented an average of £180 per bed space per week. The top three Approved Providers by rental income were Inclusion Housing (29%), My Space Housing Solutions (22%) and Hilldale Housing (12%). The top three Approved Providers by units were My Space Housing Solutions (205), Inclusion Housing (174) and Falcon Rural Housing (117). As a percentage of the Group's total gross assets, the top three Approved Providers were Inclusion Housing (20%), My Space Housing Solutions (15%) and Hilldale Housing (8%).

The property portfolio had a WAULT of 30.6 years, with 74% of the portfolio having an unexpired lease term between 21 and 30 years. If the seed portfolio acquired soon after IPO is excluded (as it had a WAULT of 59.1 years on acquisition), the WAULT of the remaining portfolio was 25.9 years. The WAULT includes the initial lease term upon completion as well as any reversionary leases and put and call options available to the and tenant at expiry.

The long term income stream of the property portfolio is indexed to inflation-linked rent reviews against either CPI (76% of the 31 December 2017 portfolio) or RPI (24% of the 31 December 2017 portfolio), which provides investors the security that the rental income is in line with inflation. For the purposes of the portfolio valuation, Jones Lang LaSalle assumed CPI and RPI to increase at 2.00% per annum and 2.50% per annum respectively over the term of the relevant leases.

Between IPO and 31 December 2017, there were five leases showing a rental uplift linked into RPI equating to a total rental value increase of £20,000 more than the initially contracted rent.

The combination of strong lessee covenants and long fully repairing and insuring leases should make the portfolio attractive to lenders and will allow the Group to implement a prudent debt strategy from 2018 onwards, using modest gearing levels to achieve a low cost of funds to enhance equity returns.

Pipeline and Outlook

Since IPO, the Group has benefited from demand for new Supported Housing assets and the reliance of specialist Supported Housing Approved Providers on private funders such as the Group. This has enabled us to build up a strong pipeline for the Group that we expect to acquire in the next 12 months. The pipeline has principally been developed through our relationships with a number of high quality developers of Supported Housing assets. The developers, in conjunction with local authorities, care providers and housing associations, have identified where the need for more Supported Housing assets is most acute and have begun to develop new Supported Housing assets in these areas. It is these assets that make up the majority of the pipeline.

The properties in the pipeline are at various stages of development. For example, some may require planning permission, some are still at the design stage and some are nearly ready to be acquired by the Group. It is important to note that we will only acquire an asset when a lease with an Approved Provider, such as a housing association, is in place or, in the case of forward funding, when the assets are pre-let so as to prevent us taking planning or design risk. All properties that we plan to acquire from developers in 2018 are off-market transactions, as they are sold directly to us and are not marketed to other funds.

Whilst our focus has been on working with developers, we have also acquired portfolios of assets for the Group. Some of these portfolios were off-market and some were marketed to a limited number of funders. We do not tend to participate in large auction processes. We expect to continue to acquire portfolios in 2018, however we have not included any in our Group pipeline calculations. This is because portfolio acquisitions tend to be more opportunistic (and therefore harder to predict) and if they become competitive processes the probability of successfully completing the acquisition is considerably lower than for deals that come through our developer pipelines.

The Group's future pipeline, like its current portfolio, has a good geographical spread. This makes us confident that the Group will maintain a balanced, diverse portfolio into the future. In addition, the pipeline should enable the Group to broaden the range of Approved Providers that it works with. This, in turn, should lead to additional opportunities to fund Supported Housing assets in 2018 and further in the longer term.

THE INVESTMENT MANAGER

James Cranmer

Co-Managing Partner

James joined Triple Point 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.

Ben Beaton

Co-Managing Partner

Ben joined Triple Point 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.

Max Shenkman

Head of Investment

Max joined Triple Point 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 £150 million of investment into Supporting Housing assets for the Group. Prior to joining Triple Point, 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.

Ralph Weichelt

Investment Director

Ralph joined Triple Point in 2017 as a member of the Investment Team. Prior to joining Triple Point, Ralph was a partner in Chalkhill Partners LLP, a debt advisory firm focusing on commercial real estate debt origination via institutions and debt capital markets. Prior to this, he held a number of positions in pan- European real estate entities spanning fund management, transactional work (sourcing/ underwriting/execution) and advisory. His over 20 years' experience spans across all investment strategies, ranging from core, value added to opportunistic. Ralph is also a qualified Chartered Surveyor.

Isobel Gunn-Brown

Head of Fund Management Services

Isobel joined Triple Point in 2010 and leads the financial reporting responsibilities of the Group in conjunction with the AIFM. At Triple Point, Isobel is head of the Fund Management Services 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 eight listed venture capital trusts, managing Triple Point's FCA regulation and reporting requirements and monitoring investee company compliance with HMRC regulation.

CORPORATE SOCIAL RESPONSIBILITY

Sustainable Business

Acting in a sustainable and responsible manner is fundamental to the achievement of our long-term financial objectives. Our business model seeks to ensure that not only are our properties suitable for individuals with complex living needs but our portfolio continues to meet occupiers' evolving needs in the future. With ethical objectives in mind, we strive to provide value for investors and the wider community at the same time.

Environment

We always seek to ensure that our properties maximise shareholder value, improve the lives of occupiers and have a minimal detrimental impact on the local and wider environment.

Offering occupiers resource-efficient and adapted living areas is critical to ensure our investments are fit for purpose and sustain their value over the long term. As a landlord, we have the opportunity to help reduce running costs for our lessees and occupiers, increase occupier well-being and contribute to the prosperity of a location through supporting new building design and development.

Ignoring these issues when considering asset management and investments would risk the erosion of income and value as well as missing opportunities to enhance investment returns. Through construction, long-term use and eventual demolition, the built-up environment accounts for over a third of global energy consumption. 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. This is especially the case now, when issues such as climate change are in the public eye, meaning the property sector remains a prime target for policy action.

Policy presents new challenges and opportunities for the real estate industry and the social housing market, with potentially profound implications for both owners and occupiers. A good investment strategy must incorporate environmental and social issues alongside traditional economic considerations.

When acquiring assets, we look closely at their environmental impact, and encourage a sustainable approach for new development as well as the maintenance and upgrading of existing properties. Through our rigorous due diligence process, the high standards we expect from developers and significant investment in the Supported housing sector, we have been able to provide capital and expertise that has enabled parties in the industry to professionalise. This increased professionalisation in the industry will lead to further high quality housing being made available, alleviate the issue of low supply and enable us and the Approved Providers to support vulnerable occupants further.

The Board has considered the requirements to disclose the annual quantity of emissions in tonnes of carbon dioxide equivalent for activities for which the Group is responsible. The Board has considered the requirement and believes that the Group has no reportable emissions for the period ended 31 December 2017, and therefore has not included the information or methodologies for the calculation of emissions, for the following reasons:

·        emissions from the Group's properties were the lessees' responsibility rather than that of the Group;

·        emissions produced from either the registered office of the Group or from the offices of other service providers are deemed to fall under the responsibility of other parties; and

·        the Group has not leased or owned any vehicles which fall inside the scope of the GHG Protocol Corporate Standard.

Community and Employees

Our assets provide multiple benefits to their local communities. They provide occupiers with safe and secure accommodation, tailored to meet their individual care needs, and Approved Provider lessees with a sustainable finance option, allowing them to expand the number of individual lives they can support and improve. In a circumstance where carers are needed - which is the case for the majority of our occupiers - this can stimulate local economies by moving jobs to the area. In development and refurbishment, we help create employment. At the same time, our assets contribute a solution to the critical housing shortage in the UK.

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.

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 58 of the Annual Report.

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 is satisfied that, to the best of its knowledge, the Group's principal advisers, which are listed in the Shareholder Information section on page 110 of the Annual Report, comply with the provisions of the UK Modern Slavery Act 2015.

The Group's business is solely in the UK and therefore we consider there is a low risk of human rights abuses.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board has overall responsibility for the Group's risk management and internal controls, with the audit committee reviewing the effectiveness of the Group's risk management process on its behalf.

We aim to operate in a low-risk environment, focusing on a single sub-sector of the UK real estate market to deliver an attractive, growing and secure income for shareholders. The Board recognises that effective risk management is key to the Group's success. Risk management ensures a defined approach to decision making that decreases uncertainty surrounding anticipated outcomes, balanced against the objective of creating value for shareholders.

Managing risk

Our risk management process is designed to identify, evaluate and mitigate (rather than eliminate) the significant risks we face. The process can therefore only provide reasonable, and not absolute, assurance. As an externally managed investment company, we outsource key services to the Investment Manager and other service providers and rely on their systems and controls.

The Board will undertake a formal risk review, with the assistance of the audit committee, twice a year to assess the effectiveness of our risk management and internal control systems. A description of the process in place for identifying, evaluating and managing the principal risks faced by the Group can be found on pages 54 to 55 of the Annual Report. As yet, the Board has not identified or been advised of any failings or weaknesses which it has determined to be material.

Risk appetite

Our risk appetite is low. Accordingly, we do not undertake speculative development. Furthermore, we have high-quality tenants in our properties and we possess a portfolio of high quality assets with a robust WAULT.

We have a specific Investment Policy, as outlined on pages 16 to 17 of the Annual Report, which we adhere to and for which the Board has overall responsibility.

Principal risks and uncertainties

Further details of our principal risks and uncertainties are set out below. The identified risks have the potential to materially affect our business, either favourably or unfavourably. Some risks may currently be unknown, while others that we currently regard as immaterial, and have therefore not been included here, may turn out to be material in the future.

Risk Category	Risk Description	Risk Impact	Risk Mitigation	Impact	Likelihood
Financial	Expensive or lack of debt finance may limit our ability to grow	Without sufficient debt funding at sustainable rates, we will be unable to pursue suitable investments in line with our Investment Policy. This would significantly impair our ability to pay dividends to shareholders at the targeted rate.	When raising debt finance the Investment Manager adopts a flexible approach involving speaking to multiple funders offering various rates, structures and tenors. Doing this allows the Investment Manager to maintain maximum competitive tension between funders. After selecting a funder, the Investment Manager will agree heads of terms early in the process to ensure a streamlined, transparent fund raising process. The Board also keeps our liquidity under constant review and we will always aim to have headroom in our debt facilities ensuring that we have a level of protection in the event of adverse fund raising conditions.	Moderate	Low
Financial	Property valuations may be subject to change over time	Property valuations are inherently subjective and uncertain. Market conditions, which may impact the creditworthiness of lessees, may adversely affect 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 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 the assets in the portfolio may be negatively affected. Any changes could affect the Group's net asset value and the share price of the Company.	All of the Group's property assets are independently valued quarterly by Jones Lang LaSalle Limited, 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.	Moderate	Moderate
Property	Default of one or more Approved Provider lessees	The default of one or more of our lessees could impact the revenue gained from relevant assets. If the lessee cannot remedy the default or no support is offered to the lessee by the Regulator of Social Housing, we may have to terminate or negotiate the lease, meaning a sustained reduction in revenues while a replacement is found.	Under the terms of our Investment Policy and restrictions, no more than 30% of the Group's gross asset value may be exposed to one lessee, meaning the risk of significant rent loss is low. The lessees are predominantly regulated by the Regulator of Social Housing, meaning that, if a lessee was to suffer financial difficulty, it is likely that the Regulator of Social Housing would assist in making alternative arrangements to ensure continuity for residents who are vulnerable members of the community.	Low to Moderate	Low
Property	Forward-funding properties involves a higher degree of risk than that associated with completed investments	Our forward funded developments are likely to involve a higher degree of risk than is associated with standing investments. This could include general construction risks, delays in the development or the development not being completed, cost overruns or developer/ contractor default. If any of the risks associated with our forward funded developments materialised, this could reduce the value of these assets and our portfolio.	Before entering into any forward funding arrangements the Investment Manager undertakes substantial due diligence on developers and their main subcontractors, ensuring they have a strong track record. We enter into contracts on a fixed price basis and then, during the development work, we defer development profit until work has been completed and audited by a chartered surveyor. No forward funding transactions were completed by the period end, and less than 10% of our portfolio is forward funded as at the date of signing the financial statements. by period end, and less than 10% of our portfolio is forward-funded at present. We are limited by our Investment Policy, which once our IPO proceeds and any external debt are fully invested restricts us to forward funding a maximum of 20% of the Group's net asset value at any one time. Ultimately, with these mitigants in place, the flexibility to forward fund allows us to acquire high quality assets which will provide resilient revenues in future years.	Low to Moderate	Low to moderate
Regulatory	Risk of changes to the Social Housing regulatory regime	Future Governments may take a different approach to the social housing regulatory regime, resulting in changes to the law and other regulation or practices of the Government with regard to social housing.	As demand for social housing remains high relative to supply, the Group is confident there will continue to be a viable market within which to operate, notwithstanding any future change of government. Even if government funding was to reduce, the nature of the rental agreements the Group has in place means that the Group will enjoy continued lessee rent commitment for the term of the agreed leases.	High	Low to Moderate
Regulatory	Risk of not being qualified as REIT	If the Group and Company fail to remain in compliance with the REIT conditions, the members of the Group will be subject to UK corporation tax on some or all of their property rental income and chargeable gains on the sale of properties which would reduce the funds available to distribute to investors.	The Group and Company intend to stay as a REIT and work within its Investment Objective and Policy. The Investment Manager will retain legal and regulatory advisers and consult with them on a regular basis to ensure it understands and complies with the requirements. In addition the Board oversees adherence to the REIT regime, maintaining close dialogue with the Investment Manager to ensure we remain compliant with legislation.	High	Low
Corporate	Reliance on the Investment Manager	We continue to rely on the Investment Manager's services and its reputation in the social housing market. As a result, our performance will, to a large extent, depend on the Investment Manager's abilities in the property market. Termination of the Investment Management Agreement would severely affect our ability to effectively manage our operations and may have a negative impact on the share price of the Company.	Unless there is a default, either party may terminate the Investment Management Agreement by giving not less than 12 months' written notice, which may not expire before August 2020. The Board regularly reviews and monitors the Investment Manager's performance. In addition, the Board meets regularly with the Investment Manager to ensure that we maintain a positive working relationship.	High	Low

GOING CONCERN AND VIABILITY

Going concern

The strategic report and financial statements set out the current financial position of the Group and parent Company and the Board have regularly reviewed the position of the Company and its ability to continue as a going concern in Board meetings throughout the period. The Company 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.

In the period, the Group has invested £131.8 million up to 31 December 2017, and £33.5 million since the period end. The cash balance of the Group at period end was £58.2 million, of which £54.8 million was readily available for use. As stated in the strategic report, the Investment Manager has identified a pipeline of over £400 million of attractive investment opportunities for acquisition over the next twelve months. The Board has evaluated the financial position of the Company and the Group and plan to raise both debt and equity capital in order to fund the Company's investments for the next 12 months and to facilitate the payment of dividends to shareholders at the targeted rate. Based on this, the Board believes that the Group is in a position to manage its financial risks for the foreseeable future.

The Board believes that there are currently no material uncertainties in relation to the Group's ability to continue in operation for a period of at least 12 months from the date of approval of the Group and parent Company's financial statements and therefore have adopted the going concern basis in the preparation of the financial statements.

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 2022, 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 the length of time 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 social housing assets which are intended to be held for the duration of the viability period

·        The length of the service level agreements between housing associations and the care providers is typically five years

·        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 30.6 years to expiry, representing a secure income stream for the period under consideration

In assessing the Group's viability, the Board has carried out a robust assessment of the 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 summarised on pages 39 to 41 of the Annual Report and how they could impact the prospects of the Group both individually and in aggregate.

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 severe but plausible scenarios, taking full account of mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks outlined below:

·        Approved Providers defaulting under a lease

·        lack of availability to debt financing or other capital

·        deterioration in economic outlook which could impact the fundamentals of the social housing sector, including a negative impact on valuations and rental uplifts

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.

BOARD APPROVAL OF THE STRATEGIC REPORT

The Strategic Report was approved by the Board and signed on its behalf by:

Chris Phillips

Chairman

1 March 2018

GROUP FINANCIAL STATEMENTS

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the period from 12 June 2017 to 31 December 2017

		Period 12 June 2017
		to 31 December 2017
	Note	£'000
Income
Rental income	5	1,027
Total income		1,027
Expenses
Directors' remuneration	6	(147)
General and administrative expenses	9	(446)
Management fees	8	(472)
Total expenses		(1,065)
Gain from fair value adjustment on investment property	14	5,639
Operating profit		5,601
Finance income	11	79
Finance costs	12	(8)
Profit for the period before tax		5,672
Taxation	13	-
Profit being total comprehensive income attributable to shareholders for the period		5,672
Earnings per share - basic and diluted	30	3.94p

All amounts reported in the Group Statement of Comprehensive Income for the period ended 31 December 2017 relate to continuing operations.

GROUP STATEMENT OF FINANCIAL POSITION

As at 31 December 2017

			31 December 2017
		Note	£'000
Assets
Non-current assets
Investment properties		14	138,512
Total non-current assets			138,512
Current assets
Trade and other receivables		15	12,002
Cash and cash equivalents		16	58,185
Total current assets			70,187
Total assets			208,699
Liabilities Current liabilities
Trade and other payables		17	5,876
Total current liabilities			5,876
Non-current liabilities
Other payables		18	1,151
Total non-current liabilities			1,151
Total liabilities			7,027
Total net assets			201,672
Equity
Share capital		19	2,000
Share premium reserve		20	-
Capital reduction reserve		21	194,000
Retained earnings		22	5,672
Total Equity			201,672
Net asset value per share - basic and diluted		31	100.84p

The Group financial statements were approved and authorised for issue by the Board of Directors on 1 March 2018 and signed on its behalf by:

Chris Phillips

Chairman

1 March 2018

GROUP STATEMENT OF CHANGES IN EQUITY

For the period from 12 June 2017 to 31 December 2017

	Note	Share capital	Share premium reserve	Capital reduction reserve	Retained earnings	Total equity
		£'000	£'000	£'000	£'000	£'000
Balance at 12 June 2017		-	-	-	-	-
Total comprehensive income for the period		-	-	-	5,672	5,672
Issue of Ordinary Shares
Ordinary Shares issued in the period at a period	19,20	2,000	198,000	-	-	200,000
Share issue costs capitalised	20	-	(4,000)	-	-	(4,000)
Cancellation of share premium	20,21	-	(194,000)	194,000	-	-
Balance at 31 December 2017		2,000	-	194,000	5,672	201,672

GROUP STATEMENT OF CASH FLOWS

For the period from 12 June 2017 to 31 December 2017

		Period 12 June 2017
		to 31 December 2017
	Note	£'000
Cash flows from operating activities
Profit before income tax		5,672
Adjustments for:
Less: Net gain from fair value adjustment on investment property	14	(5,639)
Finance income	11	(79)
Finance costs	12	8
Operating results before working capital changes		(38)
(Increase) in trade and other receivables		(722)
Increase in trade and other payables		1,555
Net cash flow generated from operating activities		795
Cash flows from investing activities
Purchase of investment properties	14	(127,401)
Prepaid acquisition costs	15	(11,280)
Restricted cash held as retention money		(3,427)
Net cash flow used in investing activities		(142,108)
Cash flows from financing activities
Proceeds from issue of Ordinary Shares at a premium	19	200,000
Share issue costs capitalised	20	(4,000)
Interest received		73
Interest paid		(2)
Net cash flow generated from financing activities		196,071
Net increase in cash and cash equivalents		54,758
Cash and cash equivalents at the beginning of the period		-
Cash and cash equivalents at the end of the period	16	54,758

NOTES TO THE GROUP FINANCIAL STATEMENTS

For the period from 12 June 2017 to 31 December 2017

1.    CORPORATE INFORMATION

Triple Point Social Housing REIT PLC (the "Company") is a Real Estate Investment Trust ("REIT") incorporated in England and Wales under the Companies Act 2006 as a public company limited by shares on 12 June 2017. The address of the registered office is 18 St. Swithin's Lane, London, United Kingdom, EC4N 8AD. The Company is registered as an investment company under section 833 of the Companies Act 2006 and is domiciled in the United Kingdom.

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 information does not constitute the Group's statutory accounts for the period ended 31 December 2017, but is derived from those accounts. Statutory accounts for the period ended 31 December 2017 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Auditor's report on the 2017 accounts was unmodified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 of the Companies Act 2006.

The financial statements have been prepared in accordance with the requirements of International Financial Reporting Standards as adopted by the European Union ("IFRS"), IFRIC interpretations, and with those parts of the Companies Act 2006 as applicable to companies reporting under IFRS. All accounting policies have been applied consistently. These are the Group's first financial statements prepared under IFRS.

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.

The following are new standards, interpretations and amendments, which are not yet effective and have not been early adopted in these financial statements, that will or may have an effect on the Group's future financial statements:

·        IFRS 9 Financial Instruments (effective for annual periods beginning on or after 1 January 2018).

·        IFRS 15 Revenue From Contracts With Customers (effective for annual periods beginning on or after 1 January 2018).

·        IFRS 16 Leases (effective for annual periods beginning on or after 1 January 2019).

The Group's only revenue is currently generated from rental income from leases that do not contain any service components. As such the Group currently has no revenue that falls within the scope of IFRS 15.

The directors are of the opinion that IFRS 9 and IFRS 16 will not have a material impact on the financial statements. However, the assessment of the potential impact of these standards on the financial statements is ongoing and the final conclusions of the directors will be disclosed in the interim financial statements to 30 June 2018.

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 forecasts which show the expected annualised rental income exceeds the expected operating costs of the Group. This is explained further within the Going Concern and Viability section included in the Strategic Report.

As a result, the directors believe that the Group is well placed to manage its financing and other business risks and that the Group will remain viable, continuing to operate and meets its liabilities as they fall due.

The directors believe that there are currently no material uncertainties in relation to the Group's ability to continue in operation for the period of at least 12 months from the date of approval of the Group's Financial Statements. The Board is, therefore, of the opinion that the going concern basis adopted in the preparation of the financial state-ments is appropriate.

2.2.  Reporting period

The financial statements have been prepared for the period from the Company's incorporation on 12 June 2017 to 31 December 2017 with no prior period information therefore being applicable.

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

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 make reference 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 2017, 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 ("SSH") 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;

Level 3 - External inputs are "unobservable". Value is the Directors' 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.

Judgements:

3.2.  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 the substance of the assets and activities of the acquired entity in determining whether the acquisition represents the acquisition of a business. The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the 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 no integrated set of activities were acquired.

3.3.  the Group as lessor

The Group has acquired investment properties that are subject to commercial property leases with Registered Providers. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, particularly the duration of the lease terms and minimum lease payments, that it retains all the significant risks and rewards of ownership of these properties and so accounts for the leases as operating leases.

3.4.  the Group as lessee

Leases where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group are accounted for as finance leases. The asset is treated as if it had been purchased outright and held within the Group's investment properties. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the Statement of Comprehensive Income over the period of the lease. The capital element reduces the balance owed to the lessor.

4.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of the financial statements are set out below.

4.1.  Basis of consolidation

The financial statements comprise the financial information of the Group as at the period 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 has the ability to 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 Company.

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. 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.

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.

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.

4.4.  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. If not, they are presented as non-current assets.

Trade and other receivables are initially recognised at fair value, and subsequently where necessary re-measured at amortised cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due in accordance with the original terms of the receivables.

4.5.  Cash and cash equivalents

Cash and cash equivalents 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.

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 consideration required to settle the present obligation at the Statement of Financial Position date, taking into account 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 until settled.

4.8.  Taxation

Taxation on the element of the profit or loss for the period that is not exempt under the 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.

4.9.  Dividend 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. In the UK, interim dividends are recognised when paid.

4.10.      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.

Rental income is invoiced in advance and any rental income that relates to a future period is deferred and appears within current liabilities on the Statement of Financial Position.

Tenant lease incentives are recognised as a reduction of rental revenue on a straight-line basis over the term of the lease.

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.

4.11.      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.

4.12.      Expenses

All expenses are recognised in the Statement of Comprehensive Income on an accruals basis.

4.13.      Investment management fees

Investment advisory fees are recognised in the Statement of Comprehensive Income on an accruals basis.

4.14.      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.

4.15.      Impairment of financial assets

All financial assets not carried at fair value through profit or loss are assessed at each reporting date to determine whether there is evidence that they are impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

5.    RENTAL INCOME

	Period 12 June 2017
	to 31 December 2017
	£'000
	1,027
	1,027

The lease agreements between the Group and the Registered Providers are full 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.

6.    DIRECTORS' REMUNERATION

	Period 12 June 2017
	to 31 December 2017
	£'000
Directors' fees	132
Employer's National Insurance Contributions	15
	147

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, and the other directors of the Board receive a fee of £50,000 per annum. 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 initial Issue).

A 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 period.

7.    PARTICULARS OF EMPLOYEES

The Group had no employees during the period other than the directors.

8.    MANAGEMENT FEES

	Period 12 June 2017
	to 31 December 2017
	£'000
Management fees	472
	472

On 20 July 2017 Triple Point Investment Management LLP 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.

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 cash balances) as at 31 March, 30 June, 30 September and 31 December in each year on the following basis with effect from Admission:

(a)       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;

(b)       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;

(c)       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;

(d)       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.

9.    GENERAL AND ADMINISTRATIVE EXPENSES

	Period 12 June 2017
	to 31 December 2017
	£'000
Legal and professional fees	201
Audit fees	114
Administration fees	88
Other administrative expenses	43
	446

10.  AUDIT FEES

	Period 12 June 2017
	to 31 December 2017
	£'000
Audit fees	95
	95

BDO LLP has also received £53,000 for its role as reporting accountant upon admission of the Company to the specialist fund segment of the main market of the London Stock Exchange. The fees relating to the share issuance have been treated as share issue costs and offset against share premium arising on the issue of these shares.

BDO LLP has in addition received £25,000 for corporate finance services related to the acquisition of Sorogold Street Limited. These have been capitalised in the cost of the investment property.

The audit fee for Norland Estates Limited, a subsidiary, has been borne by the Company.

11.  FINANCE INCOME

	Period 12 June 2017
	to 31 December 2017
	£'000
Head lease interest income	6
Interest on liquidity funds	73
	79

12.  FINANCE COSTS

	Period 12 June 2017
	to 31 December 2017
	£'000
Head lease interest expense	6
Bank charges	2
	8

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.

	Period 12 June 2017
	to 31 December 2017
	£'000
Current tax
Corporation tax charge for the period	-
Total current income tax charge in the profit or loss	-

The tax charge for the year is less than the standard rate of corporation tax in the UK of 19%. The differences are explained below.

	Period 12 June 2017
	to 31 December 2017
	£'000
Profit  before tax	5,672
Tax at UK corporation tax standard rate of 19%	1,078
Change in value of investment properties	(1,071)
Exempt REIT income	(50)
Amounts not deductible for tax purposes	4
Unutilised residual current year tax losses	39
	-

The Government has announced that the corporation tax standard rate is to be reduced from 19% to 17% with effective date from 1 April 2020.

UK REIT exempt income includes property rental income that is exempt from UK Corporation Tax in accordance with Part 12 of CTA 2010.

14.  INVESTMENT PROPERTY

	31 December 2017
	£'000
Balance at beginning of period	-
Property acquisitions at cost	131,382
Subsequent expenditure on properties	411
Head lease ground rent	1,080
Change in fair value during the period	5,639
Balance at end of period	138,512

Valuation provided by Jones Lang LaSalle Limited	137,546
Adjustment to fair value head lease ground rent	1,080
Adjustment to fair value rent free debtors	(114)
Total investment property	138,512

The carrying value of leasehold properties at 31 December 2017 was £24.1 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 six months.

JLL were appointed as external valuers by the Board on 11 December 2017. JLL has provided valuation 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 7 years.

In order to achieve its Investment Objective, the Company will invest in a diversified portfolio of freehold or long leasehold Social Housing assets in the UK. Supported Housing assets will account for at least 80 per cent of Gross Asset Value (once fully invested). The Company will acquire portfolios of Social Housing assets and single Social Housing assets to be acquired and/or held, either directly or via an SPV. Each asset will be subject to a Lease or occupancy agreement with an Approved Provider for terms primarily ranging from 20 years to 25 years, with the rent payable thereunder sub-ject to adjustment in line with inflation (generally CPI). Title to the assets will remain with the Group under the terms of the relevant lease. The Group will not be responsible for any management or maintenance obligations under the terms of the lease or occupancy agreement, all of which will be serviced by the Approved Provider lessee. The Group will not be responsible for the provision of care to occupants of Supported Housing assets.

The Group intends to hold its investment property portfolio over the long term, taking advantage of long-term upward only inflation linked leases. The Group will not be actively seeking to dispose of any of its assets, although it may dispose of investments should an opportunity arise that would enhance the value of the Group as a whole.

% Key Statistics

The metrics below are in relation to the total investment property portfolio held as at 31 December 2017.

Portfolio metrics
Capital Deployed*			£128,525,090
Number of Properties			116
Number of Tenancies			65
Number of Registered Providers			11
Number of Local Authorities			51
Number of Care Providers			25
Average NIY*			5.32%

*calculated excluding acquisition costs

Regional exposure

Region	*Cost £'000	% of portfolio
North West	£49,664	38.6%
North East	£24,037	18.7%
West Midlands	£18,912	14.7%
East Midlands	£11,374	8.8%
Yorkshire	£10,140	7.9%
South	£6,245	4.9%
South East	£4,732	3.7%
London	£3,421	2.7%
Total	£128,525	100.0%

*excluding acquisition costs

Fair value hierarchy

	Date of valuation	Total	Quoted prices in active markets    (Level 1)	Significant observable inputs   (Level 2)	Significant unobservable inputs    (Level 3)
		£'000	£'000	£'000	£'000
Assets measured at fair value: Investment properties	31 December 2017	138,512	-	-	138,512

There have been no transfers between Level 1 and Level 2 during the period, nor have there been any transfers between Level 2 and Level 3 during the period.

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 six months.  

JLL were appointed as external valuers by the Board on 11 December 2017. JLL has provided valuation 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 7 years.

In order to achieve its Investment Objective, the Company will invest in a diversified portfolio of freehold or long leasehold Social Housing assets in the UK. Supported Housing assets will account for at least 80 per cent of Gross Asset Value (once fully invested). The Company will acquire portfolios of Social Housing assets and single Social Housing assets to be acquired and/or held, either directly or via an SPV. Each asset will be subject to a Lease or occupancy agreement with an Approved Provider for terms primarily ranging from 20 years to 25 years, with the rent payable thereunder sub-ject to adjustment in line with inflation (generally CPI). Title to the assets will remain with the Group under the terms of the relevant lease. The Group will not be responsible for any management or maintenance obligations under the terms of the lease or occupancy agreement, all of which will be serviced by the Approved Provider lessee. The Group will not be responsible for the provision of care to occupants of Supported Housing assets.

The Group intends to hold its investment property portfolio over the long term, taking advantage of long-term upward only inflation linked leases. The Group will not be actively seeking to dispose of any of its assets, although it may dispose of investments should an opportunity arise that would enhance the value of the Group as a whole.

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 flow model considers present value of net cash flows to be generated from a 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.

2.         The discount rate applied to the rental flows.

Key factors in determining the discount rates applied include the performance of the regulated social housing sector and demand for each specialist 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 of 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 6.9%.

The range of discount rates used in the Group's property portfolio valuation is from 6.4 to 7.5%.

	-0.5% change in	+0.5% change in	+0.25% change in	-0.25% change in
	Discount Rate	Discount Rate	CPI	CPI
	£'000	£'000	£'000	£'000
Change in the IFRS fair value of investment properties as at 31 December 2017	9,360	(8,415)	4,796	(4,561)

15.  TRADE AND OTHER RECEIVABLES

	31 December 2017
	£'000
Prepayments and other receivables	11,530
Rent receivable	472
	12,002

Prepaid acquisition costs include the cost of acquiring FPI Co 211 Limited (£4,030,000) and a PUMA pipeline deposit (£7,213,552), both of which were not completed as at 31 December 2017.

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.

16.  CASH AND CASH EQUIVALENTS

	31 December 2017
	£'000
Cash held by lawyers	38,496
Liquidity funds	15,872
Restricted cash	3,427
Cash at Bank	390
	58,185

Liquidity funds refer to money placed in money market funds. These are highly liquid funds with accessibility within 24 hours and subject to insignificant risk of changes in value. Interest at a market rate of 0.01% per annum is earned on these deposits.

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 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. Currently that amount of cash is held in escrow by the lawyers. The cash is committed on the acquisition of the properties.

Cash and cash equivalent reported in the Statement of Cash Flows totalled £54.76 million as at the period end, which excludes restricted cash totalling £3.4 million. 

17.  TRADE AND OTHER PAYABLES

Current liabilities	31 December 2017
	£'000
Other creditors	3,427
Accruals	2,031
Trade payables	380
Head lease ground rent	29
Deferred income	9
	5,876

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.

18.  OTHER PAYABLES

Non current liabilities	31 December 2017
	£'000
Head lease ground rent	1,051
Rent deposit	100
	1,151

19.  SHARE CAPITAL

	31 December 2017
	£'000
Authorised:
200 million Ordinary Shares of £0.01 each	2,000
Issued and fully paid:
200 million Ordinary Shares of £0.01 each	2,000

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 have been issued and fully paid.

19.  SHARE PREMIUM RESERVE

The share premium relates to amounts subscribed for share capital in excess of nominal value.

	31 December 2017
	£'000
Balance at beginning of period	-
Share premium arising on Ordinary Shares issued during the period	198,000
Share issue costs capitalised	(4,000)
Transfer to capital reduction reserve	(194,000)
Balance at end of period	-

During the board meeting on 3 August 2017 a resolution was passed authorising the cancellation of the share premium reserve. The amount standing to the credit of the share premium reserve 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.

21.  CAPITAL REDUCTION RESERVE

	31 December 2017
	£'000
Balance at beginning of period	-
Transfer from share premium reserve	194,000
Balance at end of period	194,000

The capital reduction reserve relates to the distributable reserve established on cancellation of the share premium reserve.

22.  RETAINED EARNINGS

	31 December 2017
	£'000
Balance at beginning of period	-
Total comprehensive income for the period	5,672
Balance at end of period	5,672

23.  OPERATING LEASES

A.  Leases as lessee

The Group leases a number of properties under finance leases.

At 31 December 2017, the future minimum lease payments under non-cancellable finance leases were payable by the Group as follows:

		< 1 year		2-5 years		> 5 years		Total
		£'000		£'000		£'000		£'000
Minimum lease payments		33		114		6,023		6,170
Interest		(4)		(16)		(5,070)		(5,090)
Present value at 31 December 2017		29		98		953		1,080
								£'000
Current liabilities (Note 17)								29
Non-current liabilities (Note 18)								1,051

The above is in respect of properties held by the Group under leasehold. There are 18 properties held under leasehold with lease ranges from 125 years to 999 years.

B.  Leases as lessor

The Group leases out its investments properties (see Note 14)

At 31 December 2017, the future minimum lease payments under non-cancellable operating leases were receivable by the Group as follows:

		< 1 year		2-5 years		> 5 years		Total
		£'000		£'000		£'000		£'000
31 December 2017		7,315		29,484		113,463		150,262

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.

The lease payments were calculated using the Weighted Average Unexpired Lease Term ("WAULT"). WAULT is the average unexpired lease term across the property investment portfolio, weighted by the contracted rental income. The WAULT includes all parts of the lease term, including additional leases which are triggered by landlords' put options, but not those triggered by Tenants' call options unless the options are mutual.

The following table gives details of the percentage of annual rental income per Registered Provider:

Registered Provider	% of total annual rent
Inclusion Housing CIC	29%
My Space	22%
Hilldale	12%
Falcon Housing Association CIC	10%
Auckland Home Solutions	10%

24.  CONTROLLING PARTIES

As at 31 December 2017 there is no ultimate controlling party of the Company.

25.  SEGMENTAL INFORMATION

IFRS 8 Operating Segments requires operating segments to be identified on the basis of 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 Advisor 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 116 Social Housing properties as at 31 December 2017 in England and Wales. 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 of the Group's properties are engaged in a single segment business with all revenue, assets and liabilities arose in the UK, therefore, no geographical segmental analysis is required by IFRS 8.

26.  RELATED PARTY DISCLOSURE

Directors

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, and the other directors of the Board receive a fee of £50,000 per annum. 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).

Upon admission of the Company to the specialist fund segment of the main market of the London Stock Exchange on 8 August 2017, the directors purchased the following number of £0.01 nominal Ordinary Shares of £1.00 each of the Company:

Chris Phillips (Chairman) - 50,000 Ordinary Shares

Peter Coward - Director - 75,000 Ordinary Shares

For the period from 12 June 2017 to 31 December 2017, fees of £147,000 were incurred and payable to the directors.

Chris Philips is also chairman for Places for People, an investor in the Company, details are provided under the Conflicts of Interest within the Corporate Governance section of the report.

Triple Point Investment Management LLP ("TPIM")

On 20 July 2017 TPIM was appointed as the delegated investment advisor of the Company (Note 8).

For the period from 12 June 2017 to 31 December 2017, fees of £472,000 were incurred and due to TPIM. Information on how the management fee is calculated is provided in Note 8.

Pantechnicon Capital Limited

The Group acquired 5 assets for a purchase price of £17.9 million, as part of a single transaction, from Pantechnicon Capital Limited during the period. Ben Beaton, James Cramner and Claire Ainsworth are all directors of Pantechnicon Capital Limited and they are also all partners of TPIM, the delegated investment advisor.

The Board reviewed the transaction and concluded it was conducted on an arm's length basis.

Redemption of Redeemable Preference Shares

On 12 June 2017 the Company issued 50,000 £1 redeemable preference shares to TPIM in order to ensure that the Company had sufficient share capital to enable it to be registered as a Public Listed Company. These preference shares were redeemed on 9 August 2017 out of the net proceeds of the Ordinary Shares issued by the Company on 8 August 2017.

27.  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 and Guernsey. 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 the 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.

Name of Entity	Registered Office	Country of Incorporation	Ownership %
Bloxwich Developments Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Court Developments Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Rushden Developments Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Supported Developments Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Stoke Central Developments Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Soho SPV 3 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Soho SPV 4 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Soho SPV 5 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Soho SPV 6 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 153 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (21) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (28) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (30) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (42) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (25) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
MSL (37) Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 150 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 159 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 173 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 22 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 110 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
FPI Co 175 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
TP REIT Super HoldCo Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
TP REIT HoldCo 1 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
TP REIT HoldCo 2 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
TP REIT PropCo 2 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Norland Estates Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Soho SPV 1 Limited	5 Old Bailey, London, EC4M 7BA	UK	100%
Soho SPV 8 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Allerton SPV 1 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Allerton SPV 2 Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Sorogold Street Limited	18 St. Swithin's Lane, London, EC4N 8AD	UK	100%
Puma Properties UK (Elm Place) Limited	Bond Street House, London, W1S 4JU	UK	100%
Puma Properties UK (Barnsley) Limited	Bond Street House, London, W1S 4JU	UK	100%
Puma Properties UK (Eskdale) Limited	1 Le Truchot St Peter Port, GY1 1WD	Guernsey	100%
Puma Properties UK (Workington) Limited	1 Le Truchot St Peter Port, GY1 1WD	Guernsey	100%
Puma Properties UK (CTP 1) Limited	1 Le Truchot St Peter Port, GY1 1WD	Guernsey	100%
Puma Properties UK (CTP 2) Limited	1 Le Truchot St Peter Port, GY1 1WD	Guernsey	100%
Puma Properties UK (Prescott Court) Limited	Bond Street House, London, W1S 4JU	UK	100%
Puma Properties (Springside) Limited	1 Le Truchot St Peter Port, GY1 1WD	Guernsey	100%
HB Villages St Helens Limited	Bond Street House, London, W1S 4JU	UK	100%
SL Boathouse Limited	42-50 Hersham Road, Surrey, KT12 1RZ	UK	100%

28.  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 oversee the management of these risks. The Board's policies for managing each of these risks are summarised below.

28.1.      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.

28.2.      Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Group has funds invested in liquidity funds and the Board has assessed that there was no significant exposure to the interest income from the fluctuation in market interest rates.

28.3.      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 note 16.

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 with high credit ratings.

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. The Board also monitors the rent collection in order to anticipate and minimise the impact of defaults by occupational tenants.

28.4.      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.

The following table details the Group's liquidity analysis:

31 December 2017			< 3 months		3-12 months		1-5 years		> 5 years
	£'000		£'000		£'000		£'000		£'000
Loans and other receivables	655		655		-		-		-
	655		655		-		-		-
Headleases	6,170		8		25		114		6,023
Trade and other payables	5,938		2,433		3,405		100		-
	12,108		2,441		3,430		214		6,023

28.5.      Financial instruments

The Group's principal financial assets and liabilities are those that arise directly from its operations: trade and other receivables, trade and other payables 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 31 December 2017		Fair value 31 December 2017
		£'000		£'000
	Financial assets:
	Trade and other receivables	655		655
	Cash held at bank	58,185		58,185
	Financial liabilities:
	Headleases	5,938		5,938
	Trade and other payables	1,080		1,080

29.  POST BALANCE SHEET EVENTS

Property acquisitions

Subsequent to the end of the period, the Group has acquired portfolios of 31 supported Social Housing properties deploying £33.5 million (including acquisition costs).

Forward Funding Arrangements

Since the 31 December 2017 the Group has entered into two forward funding agreements at a total project cost of £5.94 million. In both cases the land has been acquired by the Group and a developer has been contracted to carry out the construction. Jones Lang LaSalle Limited have been appointed as the fund monitor for both sites and will be overseeing the projects on behalf of the Group.

30.  EARNINGS PER SHARE

Earnings per share (EPS) amounts are calculated by dividing the 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, basic and diluted earnings per share are the same.

The calculation of basic and diluted earnings per share is based on the following:

	Net Profit attributable to Ordinary Shareholders	Weighted average number of Ordinary Shares	Earnings per share
For the period from 12 June 2017 to 31 December 2017	£'000	Number	Pence
Basic earnings per share	5,672	143,842,365	3.94
Adjustment for dilutive shares to be issued	-	-	-
Diluted earnings per share	5,672	143,842,365	3.94
Adjustments to:
Changes in fair value of investments properties (note 14)	(5,639)	-	-
EPRA* basic and diluted earnings per share	33	143,842,365	0.02
* European Public Real Estate Association

31.  NET ASSET VALUE PER SHARE

Basic Net Asset Value ("NAV") per share is calculated by dividing the net assets in the Group Statement of Financial Position attributable to ordinary equity holders 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 2017
	£'000
Net assets at the end of the period	201,672
Shares in issue at the end of the period	200,000,000
Dilutive shares in issue	-
Basic and diluted NAV per share	100.84p
Basic and diluted NAV per share (EPRA)	100.84p

32.  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 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 directors may use gearing to enhance equity returns. 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.

 

END

 

 

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