Impact Health Regulatory News (IHR)

9 August 2018

Impact Healthcare REIT plc

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

INTERIM RESULTS FOR THE PERIOD TO 30 JUNE 2018

The Board of Impact Healthcare REIT plc (ticker: IHR), the real estate investment trust which gives investors exposure to a diversified portfolio of UK healthcare real estate assets, in particular care homes, today announced the Company's half year results for the six months ended 30 June 2018.

This is the Group's first full six month period to 30 June. Our period to 30 June 2017 related to trading from IPO on 7 March 2017. As a result, we are not comparing trading performance against the prior interim period in these highlights.

Financial highlights

· 3.0p dividend paid or declared for the first half of the year.

· Paid and declared dividends 79.0% covered by adjusted earnings per share of 2.37p for the first half of the year. EPRA earnings per share were 3.23p.

o This 79% dividend cover reflects the fact that rent received from new investments was not received for the full period. We are confident that once we have deployed the £24.6 million of additional capital, which has been committed but not yet invested, the Group's dividends will be covered by adjusted earnings.

· Net asset value ("NAV") of 102.03p per share as at 30 June 2018, an increase of 1.38p per share or 1.4% since 31 December 2017.

· Portfolio independently valued at £184.3 million as at 30 June 2018, representing an uplift on 31 December 2017 valuation of 2.56% on a like-for-like basis.

o After stripping out property additions and capital improvements, the underlying revaluation movement in the period was £4.0 million. This movement was driven by rent increases received during the period and asset management initiatives, rather than relying on yield compression.

· Contracted annual rent of £14.49 million as at 30 June 2018, an increase of £2.63 million or 22.1% since 31 December 2017.

· Profit before taxation in the period to 30 June 2018 was £8.48 million, 4.41p per share.

· The Group signed its first debt facility, a new £50 million five year loan facility with Metro Bank PLC.

· The Group had £25.0 million of debt drawn as at 30 June 2018 representing a gross loan to value ("LTV") of 11.2% of total assets.

o The Group has a conservative gearing policy. Borrowings as a percentage of our gross assets may not exceed 35% LTV at the time of drawdown.

· EPRA NAV total return annualised for the period to 30 June 2018 was 8.84% compared to 1.92% for the FTSE EPRA/NAREIT UK REITs Index.

· The remaining proceeds from the second equity raise secured in November 2017 of £32.6 million have been fully invested or committed.

· £198.0 million market capitalisation as at 29 June 2018.

Operational highlights

· In the period ended 30 June 2018, we acquired six care homes, with 367 beds (a 14.5% increase on the beds as at 31 December 2017), taking our portfolio to 63 homes, adding two additional tenants. We have also exchanged to buy a further home with 77 beds but not yet completed.

· We committed to £5.2 million of capital improvement programmes, which will add a further 58 beds, and to a deferred consideration agreement on a newly acquired home adding a further 38 beds. These will take the total new beds through asset management to 188 since IPO, representing7% of the seed portfolio. 63 of these beds are now operational with a further 21 beds due to be operational in Q3 2018.

· At 30 June 2018, the Group had a contracted rent roll of £14.49 million. The portfolio market value, together with committed capital expenditure at 30 June 2018, was £191.5 million, delivering an investor contracted yield of 7.57% (compared to an EPRA Net Initial Yield of 7.09%).

· We benefit from long leases, with a weighted average unexpired lease term ("WAULT") of 19.2 years as at 30 June 2018.

· £0.46 million increase in rent arose from rent reviews in the period, a 3.95% increase on the associated portfolio.

Post balance sheet highlights

· On 3 August 2018 the Group exchanged contracts to acquire a portfolio of five care homes comprising 218 beds for a total consideration of £12.15 million (including costs). The homes will be managed by Careport Advisory Services, the Group's fourth tenant group.

· With the additional funding secured from our first debt facility raised in the period, we remain positive about our strong investment pipeline including a number of exciting opportunities which we continue to progress with our Investment Adviser.

Rupert Barclay, non-executive Chairman of Impact Healthcare REIT plc, commented:

"We believe our current portfolio gives us stable and secure cash flows that support our dividend policy.

In the second half of 2018, we will continue to develop our asset management projects and pursue acquisition opportunities that will add complementary operators and locations to the portfolio.

The fundamentals of our market are strong, with growing demand for beds and limited supply. Care is an essential service and the government is looking at measures to relieve the pressure on adult social care and hospitals. Residential care homes will be an important part of the solution over the coming years and we see good prospects for the Group.

Our strategy is also to identify new properties and tenants who will diversify our investment base and continue to deliver strong economies of scale, with efficient operations alongside a good quality of care. We remain confident we will identify investments that, under our ownership, will provide value for money to our tenants' customers and residents, while delivering attractive and stable returns to our investors."

FOR FURTHER INFORMATION, PLEASE CONTACT:

The Company's LEI is 213800AX3FHPMJL4IJ53.

Further information on Impact Healthcare REIT is available at www.impactreit.uk.

NOTES:

Impact Healthcare REIT plc is a real estate investment trust ("REIT") which aims to provide shareholders with an attractive return, principally in the form of quarterly income distributions and with the potential for capital and income growth, through exposure to a diversified portfolio of healthcare real estate opportunities, in particular residential care homes. The Group's investment policy is to acquire, renovate, extend and redevelop high quality healthcare real estate assets in the UK and lease those assets primarily to healthcare operators providing residential healthcare services under full repairing and insuring leases.

The Group has paid an aggregate dividend of 6.0 pence per share for the first 12 months from Admission, which equates to a yield of 6 per cent. per annum on the IPO Issue Price, payable in quarterly instalments.

The Group's Ordinary Shares were admitted to trading on the main market of the London Stock Exchange, Specialist Fund Segment, on 7 March 2017.

A Company presentation to analysts and will be held at 11:00am today at:

Newgate

Sky Light City Tower

50 Basinghall Street

London, EC2V 5DE

The presentation will also be accessible via a live conference call and on-demand via the Company website: http://www.impactreit.uk/documents

Those wishing to attend the presentation or access the live conference call are kindly asked to contact Newgate at impact@newgatecomms.com or by telephone on +44 (0) 20 7680 6550.

In addition, a recorded webcast of this meeting and the presentation will also be available to download from the Company's website: www.impactreit.uk.

CHAIRMAN'S STATEMENT

The Group had a positive first half of 2018 delivering on its commitment to secure attractive acquisitions that can deliver long term stable income to investors.

I am pleased to report another busy period for the Company with the addition of a further six homes in the period adding 367 beds and two new tenants, with a further home with 77 beds committed. The portfolio is now delivering a contracted yield of 7.57% with an annualised contracted rent roll of £14.5 million (up from £11.6 million in June 2017). Our portfolio which was independently valued at £184.3 million as at 30 June 2018 delivered like-for-like valuation uplift in the six month period of 2.56%. Dividend cover has fallen in the period to 79% as it has taken time to deploy the additional equity raised in November 2017, which is now fully committed.

Consistent with our approach and focus on encouraging asset management and enhancement on our existing portfolio, I am pleased we have committed a further £5.2 million in the half year on the standing portfolio. This will be invested in a portfolio of eight homes on a variety of refurbishment, enhancement and extension projects.

£4.5 million has been committed on four properties that will add a further 58 beds, while a further £0.7 million has been committed on another four homes in refurbishment and enhancement projects that will improve both the quality of service to residents and the returns to investors. In addition, we have committed to a deferred consideration agreement with one of our new tenants to deliver 38 beds.

With the additional funding secured from our first debt facility raised in the period we remain positive about our strong investment pipeline including a number of exciting opportunities which we continue to progress with our Investment Adviser.

Financial performance

At 30 June 2018, the unaudited Net Asset Value (NAV) was £196.1 million (or 102.03p per share). The NAV benefited from our right to receive the rent due from these assets as if they had been acquired on the day our shares were admitted to trading on the London Stock Exchange (7 March 2017).

Unaudited earnings per share (EPS) was 4.41p (basic diluted) and adjusted EPS was 2.37p, which is supported by cash receipts. Our focus during the period has been on bedding down the portfolio and advancing our asset management and acquisition plans. Looking forward, our priorities will include being as efficient as possible as an important part of generating enhanced returns for shareholders.

More information about our financial performance in the period can be found in the Investment Adviser's report below.

Dividends

For the 12 months following admission, we paid a dividend of 6.0p per share, equating to a yield of 6% on the 100p issue price, on an ungeared basis. Our current focus is on ensuring our annual dividends at the 6.0p level are covered by adjusted earnings and we have a strategy in place to deliver this. Once this is achieved we will review our longer term dividend policy.

Financing

The Group secured its first debt facility in the half year with terms agreed for a five year £50 million facility with Metro Bank at a rate of 2.65% above base rate. £30 million of this was secured in June with a £25 million term facility and a £5 million RCF, with a further £20 million RCF to follow. Consistent with the Group's hedging policy, a cap was put in place at 1% on one month LIBOR for the £25 million term facility for the duration of the loan. The £25 million term element was drawn at the half year, taking our gross LTV to 11.2%.

The Group continues to engage with a number of finance providers, to maximise our financing options.

Working with our tenants

As part of our acquisition strategy we have added two new tenants and six new homes and we continue to negotiate with a number more in our future pipeline. Choosing tenants that prioritise delivering a positive environment for residents and support a joint vision for continued asset improvement remains our focus and we are delighted and encouraged with the progress we are making.

We continue to focus on and prioritise further investment in our standing portfolio and the additional approvals in the quarter take our total commitment to over £13 million which will deliver enhanced assets and another 150 beds to our portfolio. With a deferred consideration agreement with one of our new tenants for 38 beds, we have a total of 188 beds to add to our portfolio.

David Brooks

It is with great sadness that we report the death of David Brooks our fellow director and Chairman of the Audit Committee. First and foremost our thoughts are with David's family. I would like to record our appreciation for all David contributed to help shape the Company in its critical formative stages.

Going forward we will seek to appoint an additional member to the Board and will announce this in due course. In the interim Rosemary Boot has agreed to step in as Acting Chair of the Audit Committee.

The Investment Adviser

The board recognises the efforts of our Investment Adviser in delivering the achievements within the first half of 2018 and the strong pipeline of investment opportunities for the future. It has been a busy period with the preparation of our first full financial accounts, the acquisitions as reported, and the securing of new debt facilities.

Carne Global AIFM Solutions (C.I.) Limited is the Company's Alternative Investment Fund Manager.

Outlook

We believe our current portfolio gives us stable and secure cash flows that support our dividend policy.

In the second half of 2018, we will continue to develop our asset management projects and pursue acquisition opportunities that will add complementary operators and locations to the portfolio.

It is impossible to predict the outcome of Brexit. We will continue to monitor its potential impact on our business.

Looking further ahead, the fundamentals of our market are strong, with growing demand for beds and limited supply. Care is an essential service and the government needs to relieve the pressure on adult social care and hospitals. Residential care homes will be an important part of the solution over the coming years and we see good prospects for the Group.

Our strategy is also to identify new properties and tenants who will diversify our investment base and continue to deliver strong economies of scale, with efficient operations alongside a good quality of care. We remain confident we will identify investments that, under our ownership, will provide value for money to our tenants' customers and residents, while delivering attractive and stable returns to our investors.

Rupert Barclay Chairman

9 August 2018

MARKET DRIVERS

Since our IPO in March 2017, we have successfully implemented the Group's investment policy, bedding down a good quality portfolio with a strong tenant group, who provide a high standard of care. This has enabled us to deliver on our target of paying a dividend of 6.0p per share over the Group's first four quarters. The market fundamentals continue to be attractive and we believe the Group is well positioned to continue to add to its existing portfolio, both through further acquisitions and through capital enhancements to existing properties, with the aim of generating attractive and stable returns for shareholders.

A number of drivers influence the demand for, and provision of, care for the elderly making it a potentially attractive market for well-capitalised asset owners working in close partnership with well-managed operators who are committed to providing high standards of care. In particular:

1. People are living longer

The number of people more than 85 years old in the UK is forecast to double by 2040, rising from 1.6 million in 2018 to 3.2 million by 2040. In 2018, 14.7% of people aged over 85 required the kind of care which can only be provided in a residential setting, either a care home or long-stay hospital bed.

2. Capacity has shrunk from its peak

The number of available beds rose rapidly in the 1970s and 1980s, reaching a peak of 563,000 in 1996. It has declined 17% from that level, to 466,000 in 2018. Over that period, there has been a shift from a market dominated by government-provided beds, to beds provided by independent operators.

In the years ending March 2016 and March 2017, the number of available beds fell by 1,700 and 4,300 respectively. However, in the year to March 2018 there was a small net increase of 900 beds.

3. Severe pressure on the NHS

Since the government combined health and social care under one department earlier this year, there appears to have been some encouraging successes in tackling the problem of bed-blocking in the NHS. In the 12 months to March 2018, the NHS in England lost 1,979,260 bed days through delayed transfers, down from 2,254,821 bed days in the 12 months to March 2017. However, pressure on the NHS continues to be intense with Simon Stevens, the CEO of NHS England, stating in June 2018 that 350,000 patients who currently stay in hospital for more than three weeks, most of them elderly, occupy one in five hospital beds, or the equivalent of 36 hospitals.

4. The growing importance of private pay

Approximately equal numbers of residents are now paid for either purely privately, or by a combination of local authorities and the NHS. A growing minority are funded through a combination of funding from local authorities with top-up payments from their families.

5. A growing market

As a result of increasing demand, shrinking supply and a shift from government provision to independent providers, the independent sector has seen sustained and above-inflation growth. Since 2005, the revenues of for-profit independent providers have increased by 4.2% per annum, and for non-profit independent providers by 4.3% per annum. Total revenues of the independent sector grew from £8.9 million in 2005, to £15.2 billion in 2018.

Given the strength of the underlying market drivers, the Investment Adviser expects this growth to be sustainable going forward.

INVESTMENT ADVISER'S REPORT

We remain confident that we have laid firm foundations for the further development of the Group to deliver attractive and sustainable value to shareholders through 2018 and for the longer term.

Investment policy and objectives

The Group's investment policy is to acquire, renovate, extend and redevelop high-quality healthcare real estate assets in the UK, and to lease those assets, under long- term full repairing and insuring leases to operators who are committed to providing high-quality care to their customers. The Group fully complied with this policy during the period and met all its investment objectives, as set out in its IPO prospectus dated January 2017.

Following approval from our board in the first half of 2018, we have added two additional policies to our list of investment policies: the Group aims for dividends to be covered by adjusted earnings; and the Group aims to minimise cash drag. Our progress towards delivering on all our investment policies is discussed opposite.

The Group has not generated any income from non-rental revenue (except interest received on cash balances) or sought alternative investments as permitted by the investment policy set out in the prospectus.

Investment activity

On 1 January 2018 the Group owned 57 properties, offering 2,527 beds, and had the proceeds from the secondary equity offering in November 2017 of £32.6 million to deploy. We have taken a deliberate and very selective approach to this exercise.

During the first six months of the year the Group completed the acquisition of a further 367 beds, increasing the size of the portfolio by 14.5%, and adding two new, high-quality tenants in the process, Prestige Group and Welford. In the period, the Group invested a total of £24.2 million in these acquisitions and made further capital investment into the existing portfolio. In addition, it committed £24.6 million to capital improvements and transactions which have either exchanged but not yet completed during the period, or in the case of the Careport acquisition, were exchanged post balance sheet. Therefore, the proceeds of the secondary share issue are fully committed and we are now starting to deploy the Group's new debt facility.

The new acquisitions have been made on terms which are in line with those on which the Group acquired the seed portfolio in 2017, for which it paid a total of £153.3 million (including purchaser's costs) and achieved a net initial yield of 7.6% (including purchaser's costs). The average net initial yield on the Prestige, Welford and Careport acquisitions is 7.3%. We have also been consistent in putting in place leases which are based on those for the seed portfolio, with minimum fixed terms of 20 years, no tenant break rights, options to extend and annual rent adjustments at RPI with a floor of 2% and a cap of 4%.

Two of the properties which were acquired entered new leases with Minster. This constitutes a smaller related party transaction as defined in LR 11.1.10. The Board was satisfied that this transaction is fully compliant with the Company's related party policy.

We have a strong pipeline of further investment opportunities.

More information about the portfolio can be found below.

Asset management

While under the terms of the leases, tenants are fully responsible for keeping the Group's buildings in good repair through regular repair and maintenance programmes, which we monitor carefully, we are also keen to work with tenants to find ways to invest in the estate in order to add beds and upgrade buildings.

We have planning permissions in place, or applications at an advanced stage, to add further beds across all existing tenant portfolios: 464 new beds at Minster and Croftwood; eight at Welford; and 38 at Prestige.

In 2017, the Group committed £7.9 million to deliver a first phase of 92 new beds across the Minster and Croftwood portfolios. In the six months to 30 June 2018, the Group committed an additional £5.2 million to deliver a further 58 beds, giving a total of £13.2 million capex at 11 homes committed since IPO. In addition, Prestige agreed to reinvest some of the proceeds from the acquisition in creating 38 new beds at Parkville Care Centre. As at 30 June 2018, 63 of these new beds had become operational (38 at Parkville and 25 at Turnpike).

The additional rooms created by this capex, once they are all operational, are expected to increase rent on the 11 homes by £1.1 million from £2.8 million to £3.9 million.

Balance sheet management

The Group was launched in 2017 with a debt-free balance sheet and with the medium term intention of continuing to have a conservative balance sheet with maximum loan- to-value set at 35%.

We put in place the Group's first debt facility with Metro Bank PLC in June 2018. It is a £50 million facility, of which £30 million was secured and available at 30 June 2018. The facility has two elements: an interest-only term loan of £25 million; and a revolving credit facility of £25 million. We have hedged the term element of the facility against rises in the Bank of England base rate above 1.0% through purchasing a five-year cap.

Valuation

Starting from 1 January 2018 the Group decided to move the independent valuation of the Group's assets from a semi-annual to a quarterly exercise. On this basis, Cushman & Wakefield valued the portfolio as at 30 March 2018 and 30 June 2018, in accordance with the RICS Valuation - Professional Standards (the Red Book).

At 30 June 2018 the portfolio's independent valuation was £184.3 million, up from £156.2 million at 31 December 2017. After stripping out property additions and capital improvements, the underlying revaluation movement in the period was £4.0 million. This movement was driven by rent increases received during the period and asset management initiatives, rather than relying on yield compression.

Financial results

Total net rental income recognised for the period was £7.9 million. After taking into account administrative expenses and changes in the fair value of investment properties, profit before tax was £8.5 million. As a REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business. The small tax charge in the period relates to interest received on the Group's cash position.

This level of profit resulted in EPS for the period of 4.41p, EPRA EPS of 3.23p and adjusted EPS of 2.37p. These are all on a basic and diluted basis.

The board declared two dividends of 1.5p each in the period, the first on 1 February and the second on 27 April, bringing total dividends paid in the Group's first four quarters to 6.0p. On an adjusted earnings basis, dividends paid or declared for in the period were 79% covered. This reflects the fact that rent received from new investments was not received for the full period. We are confident that once the £24.6 million of additional capital which has been committed but not yet invested has been deployed the Group's dividends will be covered by adjusted earnings.

David Brooks

It was with great sadness that we heard of the sudden death of David Brooks in July. As a non-executive director and chairman of the audit committee he was very engaged with the Investment Adviser and we valued his wisdom, attention to detail and experience. He will be missed.

Impact Health Partners LLP Investment Adviser

9 August 2018

WORKING WITH TENANTS TO CREATE VALUE

Littleport Grange

· The improvement works at Littleport Grange are close to completion with the new extension due to open to residents in August 2018.

· The new building will add 21 en-suite rooms to the beautiful Cambridgeshire period residence, bringing the total number of operational beds to 75.

· Set in extensive gardens, the residents of the home benefit from the outdoor space available, which will be further enhanced by the outdoor areas around the new development.

· Within the stunning exterior, Littleport Grange is a highly rated care home offering exceptional care for residents, including those with physical disabilities and dementia.

Parkville Care Centre

· Parkville Care Centre is a modern purpose-built care home in Middlesbrough which houses up to 93 residents in en-suite rooms.

· The home has been recently refurbished to include state-of-the-art specialist dementia care facilities.

· Multi-sensory rooms equipped with fibre optics, lighting and projectors create an interactive and engaging environment for residents.

· Research shows that this type of stimulation often results in improved motor performance and cognitive ability in people living with dementia.

· Parkville is now able to offer a service more acutely tailored to the needs of its residents.

· The home is rated Good by CQC which attests to the high quality of care provided by its staff.

THE PORTFOLIO

At 30 June 2018, the Group owned the assets listed in the table below:

1 May 2017 unless stated

2 Treated as two properties

KEY PERFORMANCE INDICATORS

The Group uses the following measures to assess its strategic progress

EPRA PERFORMANCE MEASURES

We provide these measures to aid comparison with other European real estate businesses

PRINCIPAL RISKS

The board considers the principal risks and uncertainties for the business are presented on pages 22 to 24 of our 2017 annual report and are unchanged during the period. However, the board has considered the recent addition of bank debt and updated the principal risks within financial risks to reflect this.

Property market risks

Investments in property are relatively illiquid. This may affect our ability to vary, dispose of or liquidate part of our portfolio in a timely fashion and at satisfactory prices, in response to changes in economic, real estate market or other conditions. This could have an adverse effect on our financial condition and results of operations, by reducing the profits and proceeds we realise.

Market conditions

Our investment objective allows us to invest in further assets, which may not be available on the terms required to generate our target returns (including the target dividend), or at all. Market conditions may also restrict the availability of investments and reduce our ability to identify and acquire suitable assets that would generate acceptable returns. Any delay in making investments will reduce our returns.

Several factors may affect our cash flows. These include:

· adverse market conditions in the healthcare sector;

· our tenants' local authority clients insisting on more generous payment terms; and

· increased regulatory responsibility and associated costs to tenants.

These may all materially affect our tenants' covenant strength and their ability to pay rent, resulting in a higher risk of default.

Financial risks

An element of our debt facilities is floating rate debt which remains uncapped, and will expose the business to underlying interest rate movements.

Our debt is secured over a security pool of properties and will rank ahead of shareholders' entitlements. This means that if the Group were wound up, shareholders might not recover their initial investment.

If debt or equity are not available on acceptable terms, we may be unable to progress investment opportunities as they arise or continue to grow in line with our strategy.

Corporate risk

As an externally managed company, we rely on the Investment Adviser's services and reputation to execute our strategy and support our day-to-day relationships. As a result, our performance will depend to some extent on the Investment Adviser's ability and the retention of its key staff.

Taxation risk

If we breach any of the REIT regulations, we could lose our REIT status and become subject to UK corporation tax.

Political and economic risk

The vote to leave the EU in June 2016 has resulted in continuing political and economic uncertainty, which could have a negative effect on our performance.

A potential impact of Brexit relates to the recruitment of staff within our tenants' operations and we continue to monitor and discuss this with our tenants.

DIRECTORS' RESPONSIBILITIES

The directors confirm that to the best of their knowledge, this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and that the operating and financial review includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 of the Disclosure and Transparency rules of the United Kingdom's Financial Conduct Authority, namely:

· an indication of important events that have occurred during the first period of the financial year and their impact on the condensed financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

· material related party transactions in the first period of the financial year and any material changes in the related party transactions disclosed in the 2017 Annual Report as disclosed in note 14.

A list of the directors is shown below.

Shareholder information is as disclosed on the Impact Healthcare REIT plc website.

For and on behalf of the board

Rupert Barclay Chairman

9 August 2018

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2018

No operations were discontinued in the period.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2018

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Six months ended 30 June 2018 (unaudited)

From 7 November 2016 to 30 June 2017 (unaudited)

From 7 November 2016 to 31 December 2017 (audited)

Notes to the condensed consolidated financial statements

1. Basis of Preparation

General information

These unaudited condensed consolidated financial statements for the six month period ended 30 June 2018, are prepared in accordance with International Financial Reporting Standards ("IFRS") and interpretations issued by the International Accounting Standards Board ("IASB") and IAS34 "Interim Financial Reporting" as adopted by the European Union, including the comparative information for the period from incorporation on 7 November 2016 to 30 June 2017 and for the period from incorporation on 7 November 2016 to 31 December 2017.

The condensed consolidated financial statements have been prepared on a historical cost basis, except for investment properties and derivative financial instruments which have been measured at fair value.

The Company is a public listed company incorporated and domiciled in England and Wales. The Company's Ordinary Shares are listed on the main market of the London Stock Exchange, in the Specialist Fund Segment. The registered address of the Company is disclosed in the Corporate Information.

The condensed consolidated financial statements presented herein for the year to 31 December 2017 does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006.The Group's annual report and accounts for the year to 31 December 2017 have been delivered to the Registrar of Companies. The Group's independent auditor's report on those accounts was unqualified, did not include references 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(2) or 498(3) of the Companies Act 2016.

Convention

The consolidated condensed financial statements are presented in Sterling and all values are rounded to the nearest thousand (£'000), except when otherwise indicated.

Going concern

The directors have considered the Group's financial position as well as the principal risks of the Group. These risks are set out below. During the period the Group entered into an agreement to obtain a loan facility of £50 million of which £30 million is secured and available. £25 million is drawn and held in cash deposits and £5 million of this remains undrawn at 30 June 2018. Refer to note 10 for further details.

All of the Group's property assets are let to tenants on long leases with annual rent reviews linked to RPI with a 2% floor and a 4% cap, providing a stable and long term income stream. This coupled with a visible and relatively stable cost base provide additional security when assessing the Group's financial position.

The directors have also considered the capital commitments of the Group and the post balance sheet investments.

The directors believe that there are currently no material uncertainties in relation to the Company's ability to continue for a period of at least 12 months from the date of the Company's financial statements. The board is, therefore, of the opinion that the going concern basis adopted in the preparation of the Interim Report is appropriate.

2. Significant accounting judgements, estimates and assumptions

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts recognised in the financial statements and disclosures. However, uncertainty about these assumptions and estimates could result in outcomes that could require material adjustment to the carrying amount of the assets or liabilities in future periods.

Judgements

Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are disclosed below.

Fair valuation of investment property

The value of investment property is determined by independent real estate valuation experts, to be the estimated amount for which a property should exchange on the date of the valuation in an arm's length transaction. Each property has been valued on an individual basis. The valuation experts use recognised valuation techniques in accordance with those recommended by the International Valuation Standard Committee and are compliant with IFRS 13.

The valuations have been prepared in accordance with the RICS Valuation - Global Standards 2017 incorporating the IVSC International Valuation Standards ("the Red Book"). Factors reflected include current market conditions, annual rentals, lease lengths, and location.

Gains or losses arising from changes in the fair values are included in the consolidated statement of comprehensive income in the period in which they arise. In order to avoid double accounting, the assessed fair value may be increased or reduced by the carrying amount of any accrued income resulting from the spreading of lease incentives and/or lease income straight-lining assets or liabilities to the statement of comprehensive income.

Operating lease contracts - the Group as lessor

The Group has acquired investment properties that are subject to commercial property leases with tenants. 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.

The leases when signed, are for between 20 and 25 years with a tenant only option to extend for one or two periods of 10 years. It has been assumed at this stage that the tenants do not exercise the option to extend.

Business combinations

The Group acquires subsidiaries that own property. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. 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 acquisitions in the period have been judged not to be acquisitions of a business.

3. Summary of significant accounting policies

The accounting policies adopted in this report are consistent with those applied in the Group's statutory accounts for the period ended 31 December 2017 and are expected to be consistently applied during the year ended 31 December 2018.

In addition, the following accounting policies will apply for the year ended 31 December 2018 and therefore the current six month period ended 30 June 2018:

Borrowings:

All bank borrowings are initially recognised at fair value net of attributable transaction costs. After initial recognition, all bank borrowings are measured at amortised cost, using the effective interest method. The effective interest rate is calculated to include all associated transaction costs.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. The fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates within finance costs in the consolidated statement of comprehensive income.

Interest rate derivatives:

Derivative financial instruments, comprising interest rate caps for hedging purposes, are initially recognised at fair value and are subsequently measured at fair value, being the estimated amount that the Group would receive or pay to terminate the agreement at the period end date, taking into account current interest rate expectations and the current credit rating of the Group and its counterparties. Premiums payable under such arrangements are initially capitalised into the Condensed Group Statement of Financial Position.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs significant to the fair value measurement as a whole. Changes in fair value of interest rate derivatives are recognised within the Condensed Group Statement of Comprehensive Income in the period in which they occur.

The Company does not apply hedge accounting in accordance with IFRS 9.

IFRS 9 'Financial Instruments'

The IFRS 9 'Financial Instruments' standard which is effective for annual periods beginning on or after 1 January 2018 represents a change from the previous requirements under IAS 39 'Financial Instruments: Recognition and Measurement' in respect of financial assets. The standard contains two primary measurement categories for financial assets: amortised cost and fair value. A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset's contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value. The standard eliminates the existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.

The Group's financial assets and liabilities comprise of derivatives (which are classified and measured at fair value), as well as trade and other receivables, cash and cash equivalents, borrowings and trade and other payables.

Under IFRS 9 financial instruments, trade and other receivables, trade and other payables and borrowings would be classified and measured at amortised cost. This is in line with the existing accounting policies already adopted for these financial instruments as IFRS 9 largely carries forward without substantive amendment the guidance on classification and measurement from IAS 39.

Accordingly, no adjustments have been made with regards to the measurement and classification of these financial instruments.

The Group's assessment in applying the new impairment approach to financial assets at amortised cost as required under IFRS 9 for expected credit losses has not resulted in any material changes given the Group's requirement for tenants to pay rental payments in advance. Therefore there is no restatement in the current period after the standard was adopted and becomes effective.

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 is based on the principle that revenue is recognised when control passes to a customer. The majority of the Group's income is from tenant leases and is outside the scope of the new standard except for related insurance or service charges which are recovered from the tenants. The main impact of IFRS 15 has been to show service charge income and the related service charge expenses gross within rental income. The comparatives have not been restated as the transitional provisions within the standard have been used to retrospectively apply the standard with the cumulative effect before initial application of the standard being recognised at the date of initial application. This cumulative effect is £nil.

4. Standards issued but not yet effective

IFRS 16: Leases (effective 1 January 2019).

An analysis on the impact of this standard has been included in the Group's statutory accounts for the period ended 31 December 2017.

The Group is still assessing the full impact of the new guidance under IFRS 16 on variable lease payments (including rental uplifts), lease modifications (including renewal options and breaks) and lease incentives. It is not anticipated that this standard will result in restatement in the current period once the standard is adopted and becomes effective.

5. Net rental income

Rental income arising from recognising guaranteed rent uplifts and initial lease rental payment includes the adjustments to rental receipts for the period to reflect the total minimum income recognised over the expected lease terms on a straight line basis. During the prior period ended 31 December 2017, the Group benefited from an upfront premium to reflect a rent calculation from the date of admission. For accounting purposes, this premium is being reflected over the term of the lease. In addition, the Group benefits from a minimum annual rental uplift of 2% on all leases. For accounting purposes these uplifts are also incorporated to recognise income on a straight line basis.

The elements are reported in the table below.

6. Taxation

As a REIT, the Group is exempt from corporation tax on the profits and gains from its property investment business, provided it continues to meet certain conditions as per REIT regulations. For the period ending 30 June 2018 and 30 June 2017, the Group did not have any non-qualifying profits except interest income on bank deposits.

7. Earnings per share

Earnings per share (EPS) amounts are calculated by dividing profit for the period attributable to ordinary equity holders of the Company by the time weighted average number of Ordinary Shares outstanding during the period. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical.

1 There is no difference between basic and diluted earnings per share

The European Public Real Estate Association ("EPRA") publishes guidelines for calculating adjusted earnings designed to represent core operational activities.

The EPRA earnings are arrived at by adjusting for the revaluation movements on investment properties and interest rate derivatives.

EPRA earnings have been adjusted to exclude the effect of straight lining of rental income in order for the board to consider the level of cash covered dividend.

8. Dividends

No dividends were declared and paid as distribution to equity shareholders during the period from 7 November to 30 June 2017.

On 1 February 2018, the Company declared an interim dividend of 1.50 pence per Ordinary Share for the period from 30 September 2017 to 31 December 2017 and was paid in February 2018.

On 27 April 2018, the Company declared an interim dividend of 1.50 pence per Ordinary Share for the period from 31 December 2017 to 31 March 2018 and was paid in May 2018.

On 9 August 2018, the Company declared an interim dividend of 1.5 pence per share for the period from 1 April 2018 to 30 June 2018 payable in September 2018.

9. Investment property

In accordance with IAS 40: Investment Property, the properties have been independently fair valued by Cushman & Wakefield, an accredited independent valuer with a recognised and relevant professional qualification and with recent experience in the locations and categories of the investment property being valued. The valuations have been prepared in accordance with the RICS Valuation - Global Standards 2017 incorporating the IVSC International Valuation Standards ("the Red Book"). The valuers have sufficient current local and national knowledge of the particular property markets involved, and have the skills and understanding to undertake the valuations competently.

The valuation models prepared in accordance with those recommended by the International Valuation Standards Committee have been applied and are consistent with the principles in IFRS 13.

The valuations are the ultimate responsibility of the Directors. Accordingly, the critical assumptions used in establishing the independent valuation are reviewed by the Board.

All corporate acquisitions during the year have been treated as asset purchases rather than business combinations because they are considered to be acquisitions of properties rather than businesses.

Change in fair value of investment properties

The following elements are included in the change in fair value of investment properties reported in the condensed consolidated statements:

10. Bank borrowings

A summary of the bank borrowings drawn in the period are shown below:

During the period, the Group signed a £50 million five year loan facility with Metro Bank PLC (the "Loan Facility") of which £30 million is secured and available at 30 June 2018. The Loan Facility has two elements: an interest only term loan of £25 million (the "Term Loan") which was fully drawn at 30 June 2018, and a revolving credit facility of £25 million (the "RCF"), £5 million of which was secured and available at 30 June 2018. This is the Group's first debt facility.

The Loan Facility has a margin of 265 basis points over Metro Bank PLC's published Base Lending Rate. The five year Term Loan is repayable without penalty after two years, and with a 1% penalty if prepaid within the first two years. Amounts drawn under the RCF can be repaid at any time without penalty. £25 million of the Term Loan and £5 million of the RCF are secured over a portfolio of 30 care homes held in a wholly-owned Group company.

The Group drew down £25 million of the Term Loan facility on 21 June 2018.

As at 30 June 2018, the Group remains within its maximum loan to value ("LTV") which is 35% of gross asset value of the Group as a whole.

Any fees associated with arranging the bank borrowings unamortised as at the period end are offset against amounts drawn on the facilities as shown in the table below:

Included in the condensed consolidated statement of comprehensive income is loan finance costs of £27,375 which includes loan arrangement fees of £5,800.

11. Share capital

The Company had 192,206,831 shares of nominal value of 1 pence each in issue at the end of the period (30 June 2017: 160,172,360, 31 December 2017: 192,206,831).

There were no shares issued during the six month period ended 30 June 2018.

12. Share premium

Share premium comprises share capital subscribed for in excess of nominal value less costs directly attributed to share issuances.