Triple Pnt Soc Regulatory News (SOHO)

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

3 September 2021

Triple Point Social Housing REIT plc

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

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

The Board of Triple Point Social Housing REIT plc (ticker: SOHO) is pleased to announce its unaudited results for the six months ended 30 June 2021.

Financial highlights

· EPRA Net Tangible Assets per share (equal to IFRS net asset value per share) of 106.42 pence at 30 June 2021 (31 December 2020: 106.42 pence).

· Portfolio independently valued as at 30 June 2021 at £596.3 million on an IFRS basis (31 December 2020: £571.5 million), reflecting a valuation uplift of 7.7% against total invested funds of £553.6 million2. The properties have been valued on an individual basis.

· The Group's assets were valued at £639.9 million on a portfolio valuation basis (31 December 2020: £611.6 million), reflecting a portfolio premium of 7.3% or a £43.7 million uplift against the IFRS valuation.2 

· The portfolio's total annualised rental income was £33.4 million1 as at 30 June 2021 (31 December 2020: £31.6 million).

· Operating profit for the period ended 30 June 2021 was £13.3 million (30 June 2020: £11.8 million).

· Dividend cover on an EPRA earnings run-rate basis including committed funds for two exchanged properties at 30 June 2021 was 100%

· Ongoing Charges Ratio of 1.53% as at 30 June 2021 (31 December 2020: 1.57%; 30 June 2020: 1.61%).

· During the period, the Group did not draw down further debt from the £160 million revolving credit facility agreement ("RCF") resulting in £130 million of the RCF remaining drawn as at 30 June 2021.

· Market capitalisation of £420.5 million as at 30 June 2021 (31 December 2020: £449.1 million).

Operational highlights

· Acquired 14 properties during the period for an aggregate purchase price of £22.3 million (including acquisition costs) bringing the total investment portfolio to 458 properties3.

· The Group has undertaken a total of 22 forward funding arrangements since IPO (an aggregate commitment of £56.2 million), all of which had reached practical completion by the period end.

· IFRS blended net initial yield of 5.28% based on the value of the portfolio on an IFRS basis as at 30 June 2021, against the portfolio's blended net initial yield on purchase of 5.91%, equal to a yield compression of 63 bps.

· Diversified the portfolio: 

o 11 regions

o 157 local authorities

o 355 leases

o 22 Approved Providers

o 109 care providers

· As at 30 June 2021, the weighted average unexpired lease term ("WAULT") was 25.8 years.

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

Post Balance Sheet Activity

· The dividend to be paid on 30 September 2021 brings the total dividend per Ordinary Share paid or declared by the Company in respect of the six month period to 30 June 2021 to 2.60 pence per share, in line with the Company's stated target for the year to 31 December 2021 of 5.20 pence per share.4

· Acquired a further 3 Supported Housing properties (12 units in total) for an aggregate purchase price of approximately £2.06 million (including acquisition costs).

· Received an Investment Grade Long-Term Issuer Default Rating from Fitch of 'A-' with a Stable Outlook and a senior secured rating of 'A'.

· Secured a £195 million long-term, fixed rate debt facility on attractive terms, enabling the Company to refinance £130 million drawn under its £160 million revolving credit facility with a further £65 million available to deploy into further asset acquistions.

· Launched a strategic programme to bring our entire portfolio up to the government Energy Performance Certificate ('EPC') target of 'C' as soon as possible.

Notes:

1 Excluding ongoing forward funded schemes that are under an agreement for lease

2 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 lower purchaser's costs of 2.30%.

3 One asset within the existing portfolio is currently being held for sale

4 These are targets only and not a profit forecast and there can be no assurance that they will be met

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

"With the worst of the pandemic hopefully behind us, we are redoubling our efforts to meet the other challenges that society faces, above all the desperate lack of housing in this country and the looming challenge of climate change.

As long as we remain focused on the fundamentals, we will continue to achieve the sort of social impact and financial performance that we have achieved over the last four years. Those fundamentals are investing according to local need, thinking for the long-term, and above all ensuring that the needs of our residents inform everything we do. In our investment strategy, the strength of our financial performance and the strength of our social impact go hand in hand."

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

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 primarily newly developed social housing assets in the UK, with a particular focus on supported housing. The assets within the portfolio are subject to inflation-linked, 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 pressure and social need to increase housing supply across the UK which is creating opportunities for private sector investors to help deliver this housing. The Group's ability to provide forward funding 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 as well as delivering returns to investors.

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 was admitted to the premium segment of the Official List of the Financial Conduct Authority and migrated to trading on the premium segment of the Main Market on 27 March 2018. The Company operates as a UK Real Estate Investment Trust ("REIT") and is a constituent of the FTSE EPRA/NAREIT index.

Meeting for analysts and audio recording of results available

The Company presentation for analysts will be held at 9:00am today via live webcast. The presentation will also be accessible on-demand later in the day via the Company website: www.triplepointreit.com.

Those wishing to access the live webcast are kindly asked to contact Luke Cheshire at Hanway Advisory on +44 (0) 20 3909 3519 or luke.cheshire@hanwayadvisory.com.

The Interim Results will also be 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 8 September 2021.

CHAIRMAN'S STATEMENT

Introduction

In previous reports I have told you how we coped with the challenges of Covid-19. I described how our stakeholders rose to the occasion, ensuring that services continued to be provided, that funding continued to flow, and that above all, residents continued to be looked after. There were, of course, challenges in ensuring that our residents remained safe and we could continue to invest to meet much-needed demand. Nonetheless, with everyone pulling together, infection control policies were implemented across our portfolio to protect our residents, and we managed to invest significant sums at a time of growing need. With most of the country now vaccinated, I hope that this chapter of our lives is closing and a new one is beginning.

With the worst of the pandemic hopefully behind us, we are redoubling our efforts to meet the other challenges that society faces, above all the desperate lack of housing in this country and the looming challenge of climate change. The year 2021 marks the 10th anniversary of the Winterbourne Care scandal that accelerated the policy shift towards community-based housing, but there is still so much more to do - particularly after the strain that Covid-19 has put on our healthcare system. Likewise, awareness of, and the effects of, climate change continue to grow around the world. With buildings the second biggest emitter of greenhouse gases in the UK, everyone involved in housing - including us - needs to do more to reduce emissions.1 

As described below, we have worked hard over the first six months of this year to meet these challenges. We have continued to invest in more high-quality housing, providing homes in the community for people moving out of inappropriate alternative accommodation including long-stay hospitals. At the same time, we have focused on driving up our portfolio's environmental performance by "greening" our leases, adding requirements to our work specification to make our properties more resilient to the physical effects of climate change, and above all launching a strategic programme to bring our entire portfolio up to the government Energy Performance Certificate ("EPC") target of "C" as soon as possible. Further details can be found in the Investment Manager's report, but our overall efforts have been reflected in our second Impact Report by specialist impact consultants The Good Economy. The report, available on our website, shows that our portfolio's environmental efficiency is rising, while continuing to generate good health outcomes for our residents and saving significant sums of taxpayer money (£91.8 million in the 12 months to 30 June 2021). More detail can be found in the Investment Manager's Report.

As at 30 June 2021, we have received 100% of rent due and paid all target dividends since IPO, reflecting the resilience and quality of our investments. I am also pleased to report that the Investment Manager's hard work on behalf of our business was given its due recognition when the Investment Manager was named Property Investor of the year at the prestigious LaingBuisson Healthcare Awards in April 2021. The Investment Manager has also been shortlisted in the same category at the HealthInvestor Awards whose ceremony takes place later this month - we are keeping our fingers crossed.

The Investment Manager will describe the state of our business in more detail in its report. In the meantime, I have allowed myself a quick summary of both our financial performance and our social impact performance before finishing with a reflection on the outlook for our business.

Financial performance

During the period, we invested £22.3 million on 14 new properties providing 99 new units, at acquisition yields in line with previous yields. Covid-19 restrictions caused delays at times, but the fundamental need for our housing drove continued activity. In the first half of this year, our final two (of 22) forward funding projects successfully completed. Overall, we have invested £56.2 million in these construction projects which are providing 320 homes of the highest quality for our residents.

Our acquisitions during the period were funded using the £55.0 million of gross equity proceeds (£53.3 million net of costs) we raised in October 2020. As described in detail by the Investment Manager, we are delighted to that, after the period end, we completed the successful refinancing of our revolving credit facility with a long-term debt facility, which will lock in competitive interest rates for between 10 to 15 years at a time of rising inflation. The refinancing also provides £65.0 million of further capital for investment and enables us to consider forward funding projects. We are also delighted that, as part of the refinancing, the Company received an Investment Grade Long-Term Issuer Default Rating (IDR) from Fitch of 'A-' with a Stable Outlook and a senior secured rating of 'A' . Further detail can be found in the Investment Manager's Report.

At the period end, we owned 458 properties, providing 3,214 units of accommodation, after deploying £553.6 million since IPO in August 2017. The Interim Report contains a map of all our properties. At the period end, we had 22 Approved Providers, and a portfolio weighted average unexpired lease term of 25.8 years. The portfolio was valued at £596.3 million on an IFRS basis, which is 7.7% above our total investment cost and reflects a blended valuation yield of 5.28%.

As mentioned, we have paid all target dividends in full since inception. Our target dividend for 2021 is 5.20 pence per share. Following continued deployment, on 30 June 2021 our dividend cover on a look through EPRA run rate basis was 100%.

Our EPRA earnings per share was 2.30 pence in the half-year while IFRS earnings per share was 2.60 pence. Finally, the EPRA NTA and audited IFRS NAV per share was 106.42 pence.

All in all, we are pleased with another set of strong financial results.

Social Impact

A lot has changed in the world of social impact investing over the last four years. When we launched the Company back in 2017, impact investing was relatively unknown. People's perception was fraught with misconception. Some saw it as operating in a middle ground between true financial investing and philanthropy. We have been delighted to see the true value of social impact investing emerge in the time since we launched. To us, the best form of investment is not investment which only achieves a financial return. Nor is it investment which delivers a financial return at the same time as delivering a social return. Instead, it is investment which delivers a financial return precisely because it delivers a social return. The strength of our financial returns derive from the social impact that we deliver. Commissioners refer residents to our homes because they are located in areas with unmet demand, which in turn generates the sustainable rental income that we receive on behalf of our investors.

Despite our work, there is always more that we can do to maximise our social impact. For this reason, we assess each investment against our bespoke set of ESG and impact metrics to ensure that we are maintaining our own high standards with each and every investment. Likewise, our six-monthly impact audits by The Good Economy provide an independent set of eyes to verify the quality of our portfolio across a range of measures. Finally, we are group members of the newly-published Equity Impact Project that is piloting a sector-wide framework for equity investors in social housing to report against impact metrics in a standardised, comparable way. We believe this will be a powerful way to increase accountability and elevate the social value that our sector as a whole delivers. As mentioned, the Investment Manager's report describes other socially-impactful projects that are being carried out, particularly to drive environmental efficiency.

Outlook

As Chairman, it is customary to finish my statement with an attempt to read the tea leaves. After describing all that we have done over the reporting period, I try to divine our collective future. This is the most difficult part of my statement, but it is also the most enjoyable. Nothing is more challenging - and interesting - than trying to extrapolate existing trends while anticipating unexpected events.

No forecast will ever be entirely accurate - as Covid-19 reminded us, if we needed reminding at all. But what makes my job as Forecaster-in-Chief easier is the nature of our investment strategy. We are not investing in highly disruptive new technologies. Nor are we investing in revolutionary business models. Instead, we are investing in much-needed, high-quality housing around the country in line with government policy and at the request of local health Commissioners. We invest in and fund the development of properties that will endure for many years to come. We create long-term homes for our residents. We seek long-dated, sustainable income streams for our investors through our leases.

Our country suffers a chronic shortage of housing. The need for further investment in housing will not disappear anytime soon. And so my prediction is that, as long as we remain focused on the fundamentals, we will continue to achieve the sort of social impact and financial performance that we have achieved over the last four years. Those fundamentals are investing according to local need, thinking for the long-term, and above all ensuring that the needs of our residents inform everything we do. In our investment strategy, the strength of our financial performance and the strength of our social impact go hand in hand.

As ever, I would like to thank all our advisers, and the Investment Manager, for their continued hard work. Our corporate broker and joint financial adviser, Stifel Nicolaus Europe Limited, and our joint financial adviser, Akur Limited, have always provided the high-quality advice and services that we as a Board look for. Likewise, the Investment Manager continues to expand and strengthen its relationships across the sector, as well as bolster its due diligence processes, enabling it to add yet more properties to our portfolio that deliver the financial and social performance that lies at the heart of what we do.

Finally, I would like to thank our shareholders for their continued support, as well as my fellow Board members for their ongoing help and commitment over the last six months.

Chris Phillips

Chairman

2 September 2021

Notes:

1 HM Government, Energy White Paper: Powering our Net Zero Future, 2020, p.98

INVESTMENT MANAGER'S REPORT

Introduction

The Annual Report published in March 2021 described in some detail how the Group and its business model coped with the challenges of Covid-19. Six months later, we are pleased to report that the same analysis holds true, with the Group remaining resilient in the context of an ongoing pandemic. Needless to say, none of this would have been possible without the tireless work and collaboration of our stakeholders who have always prioritised the needs of the Group's residents. This is reflected in the Group's financial results which are set out later in the report alongside our review of the market, an update on the Group's debt facilities, an update on the Group's portfolio and an assessment of the Group's outlook (including its pipeline).

Before that, we want to re-iterate our commitment to expanding our team and evolving our investment processes. Of particular note is our new Director of Housing, who joined us in August and was previously an Executive Director of Housing & Customer Services of a large Registered Provider that provides over 20,000 high-quality social homes mostly in the South-East. She brings a wealth of experience and knowledge, particularly for resident wellbeing, and will bolster our ability to provide the best possible social housing for our residents. Beyond this, our investment criteria continue to strengthen and we are adopting further technology platforms to improve the speed and quality of our due diligence.

We would also like to highlight the Group's second Impact Report, available separately. This report was commissioned to independently verify the Group's ability to benefit society at the same time as generating sustainable returns for its investors. The report shows that, in the 12 months to 30 June 2021, the Group's portfolio delivered £91.8 million of direct fiscal savings and £60.3 million of social value by improving resident wellbeing. Similarly, the report shows that, for every £1 invested, the Group generates £3.93 in social value over the duration of the investment. Turning to environmental impact, the report also highlights that the portion of the Company's portfolio that is above the government EPC target of "C" has increased from 69% to 71% during the six months since the end of 2020 (in advance of the retrofit programme described below). For further information, please see the Company's website for the full report.

Market Review

Previous reports have described the high level of demand for the Group's housing as underpinned by both legislation (the Care Act 2014) and policy (the Transforming Care Programme 2015). Demand has been steadily rising as a result of a growing UK population and medical advances increasing the number of people living to adulthood with long-term care needs. In our experience, the pandemic has only exacerbated the demand for more community-based housing as hospitals have struggled to cope first with a flood of Covid-19 patients then with a backlog of medical operations. Conversations with Commissioners around the country only reinforce the continuing unmet demand, and the requirement for new homes.

The momentum to maximise social value is growing across the sector. The sector-wide ESG metrics proposed in the May 2020 White Paper, Building a Sector Standard Approach for ESG Reporting, is now being piloted by housing associations who have signed up as early adopters. Likewise, we are group members of the Equity Impact Project being run by The Good Economy and Big Society Capital, which recently published its own White Paper to standardise impact metrics for equity investors in social housing. These metrics, which are also being piloted, should drive up comparability for investors looking to invest in social housing funds. We look forward to publishing in due course our first impact results in accordance with the Equity Impact Project.

The market is becoming increasingly aware of housing's role in combating climate change. Emissions from homes and commercial and public sector buildings account for 19% of total UK greenhouse gas emissions.1 As a long-term responsible investor in housing, we are ramping up the Group's commitment to reduce emissions in a number of ways. Our template lease now contains a number of "green" clauses which will inform and drive environmental efficiency. Our works guidance document specifies a number of increasingly-stringent environmental standards, not least an EPC minimum of 'C' for renovated properties and 'B' for new-builds. We are working with consultants to calculate the embodied carbon of our investments and how to reduce this. Finally, we are embarking on a strategic, sector-first initiative to fund the capital upgrade of all properties within the portfolio to a minimum EPC rating of 'C' over the next few years well ahead of increasingly stringent government regulations.

There is a lot more to do, but we are pleased that over 71% of our portfolio already meets the government's target EPC level of 'C'. This proportion should rise steadily in light of the initiatives above, but already compares favourably to the national proportion - with only 56% of socially rented homes across the UK rated 'C' or above.2 Methods for tackling climate change are rapidly evolving. To stay on top of the latest thinking and standards, we are actively engaging a number of environmental consultants and we are members of the Green Finance Institute's Green Lease Working Group. To prepare for the physical impact of climate change, our work specification now includes various improvements to help make our properties resilient against the effects of climate change, including storms, flooding, and heatwaves. Finally, we have started working with consultants to analyse flood and subsidence risk for the portfolio in various climate scenarios.

In terms of regulation, during the first lockdown last year the Regulator of Social Housing paused its In-Depth Assessments to enable Registered Providers to focus on operations. With lockdown lifting, full regulatory engagement has resumed. During the six-month reporting period, the Regulator continued to review Registered Providers which focus on managing specialised supported housing. As part of the review, Pivotal Housing Association (0.6% of the Group's rent roll as at 30 June 2021) and Hilldale Housing Association Limited (9.0% of the Group's rent roll as at 30 June 2021) received non-compliant regulatory notices. The reasons for the notices generally concerned the Economic Standards. Both organisations are addressing these concerns and there has been no impact on valuations. Post the period, on 13 August 2021, Auckland Home Solutions C.I.C. (5.0% of the Group's rent roll as at 30 June 2021) received a non-compliant notice for similar reasons to the other notices. We continue to speak to the Regulator to ensure our investments reflect the latest regulatory guidance, but as a whole our lessees continue to perform well, with growing financial strength and operational depth.

Financial Review

We are pleased to present a strong set of financial results underpinned by an increase of annualised rental income leading to a fully covered dividend on a look through basis at the period end.

The annualised rental income of the Group was £33.4 million as at 30 June 2021. The rental income of the Group for the first half of 2021 was £15.9 million, compared to £13.4 million in the same period in 2020. The Group is a UK REIT for tax purposes and is exempt from corporation tax on its property rental business.

A fair value gain of £0.7 million was recognised during the period on the revaluation of the Group's properties.

IFRS earnings per share was 2.60 pence for the period, compared to 2.55 pence in the same period in 2020 and 6.82 pence for the whole of 2020. EPS is measured on the weighted average number of shares in issue during the period which for 2020 was lower due to the share issue in October 2020.

The EPRA earnings per share (EPRA EPS) excludes the fair value gain on investment property and is measured on the weighted average number of shares in issue during the period. EPRA EPS was 2.30 pence for the period, compared to 2.12 pence for the same period in 2020 and 4.61 pence for the whole of 2020.

The adjusted EPS excludes non-cash items and as at 30 June 2021 was 2.42 pence for the period compared to 2.25 pence for the same period in 2020 and 4.90 pence for the whole of 2020.

Adjusted portfolio earnings per share were 13.44 pence for the period, where post-tax earnings were adjusted for a valuation on a portfolio basis (as opposed to individual property IFRS basis).

From the beginning of 2020, the EPRA NAV has been replaced by three EPRA NAV metrics which are shown in the Financial Statements. The metric most comparable to the previously reported EPRA NAV measure is EPRA Net Tangible Asset (NTA), which the Group has therefore adopted as its primary reporting metric. The EPRA NTA per share as at the period end was 106.42 pence per share, the same as the IFRS NAV per share., essentially unchanged from the audited IFRS NAV per share as at 31 December 2020. The net increase in the overall value of the Group's property portfolio over the period was £0.7 million, which principally reflects the low CPI figure in February 2021 (which is the basis for the majority of the Group's annual rent reviews) as well as slower than expected deployment. However, a small portion of the dividends paid in respect of the period were uncovered following the equity raise at the end of 2020, which has led to the NAV remaining unchanged. The IFRS NAV adjusted for the portfolio valuation (including portfolio premium) was £472.3 million, which equates to a Portfolio NAV of 117.26 pence per share.

The EPRA ongoing charges ratio is calculated as a percentage of the average net asset value for the period under review. The ongoing charges ratio for the period was 1.53% compared to 1.57% at 31 December 2020.

At the period end, the portfolio was independently valued at £596.3 million on an IFRS basis, reflecting a valuation uplift of 7.7% against the portfolio's aggregate purchase price (including acquisition costs). The valuation reflects a portfolio yield of 5.28%, against the portfolio's blended net initial yield of 5.91% at the point of acquisition. This equates to a yield compression of 63 basis points, reflecting the quality of the Group's asset selection and off-market acquisition process.

The Group's properties were valued at £640.0 million on a portfolio valuation basis, reflecting a portfolio premium of 7.3%, or £43.7 million, against the IFRS valuation. The portfolio valuation assumes a single sale of the property-holding SPVs to a third-party on an arm's length basis with purchaser's costs of 2.30%.

The Group held cash and cash equivalents of £28.2 million at 30 June 2021 of which £0.7 million was restricted, leaving available cash of £27.5 million. During the year cash from operating activities increased by £12.8 million.

Debt Financing

On 26 August 2021, the Group secured £195.0 million of long-term, fixed-rate, interest only, sustainability linked loan notes through a private placement with Barings and MetLife Investment Management clients. The loan notes are divided into two tranches. Tranche-A has a value of £77.5 million, a term of 10 years and an all-in coupon of 2.403%. Tranche-B has a value of £117.5 million, a term of 15 years and an all-in coupon of 2.786%. Across both tranches the weighted average term is 13 years and the weighted average coupon is 2.634%. The loan notes require the Group to maintain an asset cover ratio of 1.67x and an interest cover ratio of 1.75x.

The loan notes have enabled the Group to refinance the full £130.0 million of debt that had been drawn under its existing £160.0 million revolving credit facility provided by NatWest and Lloyds. This means that all of the Group's drawn debt is now fixed price (at attractive rates) and long-term, and so offers strong protection against the risk of rising inflation and interest rates. In addition the loan notes have been secured against a portfolio of properties at a Day-1 LTV of 50% (compared to the 40% Day-1 LTV of the revolving credit facility) which has enabled the Group to draw an additional £65.0 million of capital which will be deployed into its current pipeline (in excess of £150.0 million). Following the refinancing, the Group's gearing will increase from 31.3% to 37.7%.

The debt providers required the new loan notes to be rated and so as part of the refinancing process the Group obtained a first-time Investment Grade Long-Term IDR from Fitch of 'A-' with a Stable Outlook and a senior secured rating of 'A'. This is a great endorsement of the Group's strategy and financial position.

Following the refinancing the revolving credit facility will remain in place. The unhedged, floating rate facility runs until 21 December 2023 and has a margin in respect of drawn amounts of 1.85% per annum over SONIA. For undrawn debt under the revolving credit facility the Group pays a commitment fee of 40% of the margin.

In addition to the revolving credit facility and the new £195.0 million facility, the Group has a long-term, fixed-rate facility with MetLife Investment Management providing £68.5 million of debt secured against a defined portfolio of the Group's properties at a Day-1 loan-to-value of 40%. The facility comprises two tranches of £41.5 million and £27.0 million with maturities in 2028 and 2033 respectively. The weighted average interest rate on the existing facility in place as at 30 June 2021 is 3.04%. The facility requires the Group to maintain an asset cover ratio of 2.00x and an interest cover ratio of 1.75x. At all times, the Group has complied with these debt covenants.

Further information is set out in note 14 of the financial statements.

Strategic Alignment and Asset Selection

Despite the continuing challenges presented by Covid-19, the Group continued to execute on its investment strategy using its recently-secured equity and debt funding, allowing it to continue delivering inflation-protected income underpinned by a careful selection of secure, long-let and index-linked properties. During the period, the Group bought 14 properties for a total investment cost of £22.3 million (including acquisition costs) using the proceeds of the October 2020 equity raise. These schemes provide 99 new units of accommodation. The table below sets out the Group's portfolio at the period end:

1 One asset within the existing portfolio has been sold.

2 Unit adjustments have been made to assets within the existing portfolio as a result of ongoing asset management activities and one asset within the existing portfolio being currently held for sale.

In addition, as at 30 June 2021 the Group had outstanding commitments of £1.0 million (including acquisition costs) comprising £0.8 million for contracts exchanged on two properties, and £0.2 million for undrawn forward funding commitments.

Property Portfolio

As at 30 June 2021, the portfolio comprised 458 properties with 3,214 units and showed a broad geographic diversification across the UK. The four largest concentrated areas by market value were the North West (22.3%), West Midlands (16.6%), East Midlands (12.1%) and Yorkshire (10.9%). The IFRS value of the portfolio at 30 June 2021 was £596.3 million.

As at 30 June 2021, the Group had entered a total of 22 forward funding projects with all schemes having successfully reached practical completion. In total, the Group has committed £56.2 million to forward funding schemes providing homes to 320 residents. As mentioned previously, we are looking to re-start forward funding using the proceeds of the recent refinancing.

Rental Income

In total, the Group had 355 fully repairing and insuring leases (excluding agreement for leases on exchanged properties). The Group had a total annualised rental income of £33.4 million on its standing investments.

During 2021, the Group entered into leases with another two Approved Providers, increasing its total to 22. This enhanced the Group's counterparty diversification. The Group's three largest Approved Providers by rental income were Inclusion Housing (914), Falcon (366) and Hilldale (328).

As at 30 June 2021, the portfolio had a WAULT of 25.8 years (well in excess of the Group's minimum term of at least 15 years), with 98.0% of the portfolio's rental income showing an unexpired lease term above 21 years. The WAULT includes the initial lease term upon completion as well as any reversionary leases and put/call options available to the Group at expiry of the initial term.

Rents under the leases are indexed against either CPI (92.1%) or RPI (7.9%), which provides investors with the comfort that the rental income will increase in line with inflation. Some leases have an index 'premium' under which the standard rental increase is based upon CPI or RPI plus a further percentage point, reflecting top-ups by Local Authorities. These account for 8.1% of the Group's leases. For the purposes of the portfolio valuation, JLL assumed CPI and RPI to increase at 2.00% per annum and 2.50% per annum respectively over the term of the relevant leases.

Outlook and Pipeline

10 years after Winterbourne View, the focus on resident wellbeing is as great as ever. The policy environment continues to emphasise the rights and wellbeing of residents. One recent Social Housing White Paper set out what the government will do to improve the conditions and rights of people in social housing.3 More recently, in May 2021, the Equity and Human Rights Commission called for the UK government to grant a legal right to independent living to give disabled people the same choice, control and opportunities as other people, pointing out that thousands are kept in long-stay hospitals which deprive them of these opportunities.4 The report argued for a reduction of people in long-stay hospitals and more support in the community for them to live with as much freedom as possible.

It is gratifying to know that the community-based housing that the Group invests in has the support of government. So long as we stay focused on quality, we should keep delivering sustainable financial and social returns for the Group. To this end, we continuously evolve our investment and property management processes, staying on top of emerging best practices and learning from experience. Our pipeline has over £150 million of live investment opportunities. As life in this country slowly returns to normality, we will remain vigilant about upholding the quality of both our existing portfolio and our new investments. With the worst of the pandemic hopefully behind us, we feel renewed, cautious optimism as we move forward to meet the challenges ahead.

Max Shenkman

Head of Investment

2 September 2021

Notes:

1 HM Government, Energy White Paper: Powering our Net Zero Future, 2020, p.98

2 HM Government, Energy White Paper: Powering our Net Zero Future, 2020, p104

3 https://www.gov.uk/government/publications/the-charter-for-social-housing-residents-social-housing-white-paper

4 https://www.equalityhumanrights.com/en/publication-download/strengthening-right-independent-living

PORTFOLIO SUMMARY BY LOCATION

KEY PERFORMANCE INDICATORS

In order to track the Group's progress the following key performance indicators are monitored:

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.

Full reconciliations of EPRA Earnings and NAV performance measures are included in notes 21 and 22 of the consolidated interim financial statements respectively. A full reconciliation of the other EPRA performance measures are included in the Unaudited Performance Measures section.

PRINCIPAL RISKS AND UNCERTAINTIES

The Audit Committee, which assists the Board with its responsibilities for managing risk, considers that the principal risks and uncertainties as presented on pages 16-23 of our 2020 Annual Report were unchanged during the period and will remain unchanged for the remaining six months of the financial year.

DIRECTORS' RESPONSIBILITIES STATEMENT

The Directors confirm that to the best of their knowledge this condensed set of financial statements has been prepared in accordance with UK-adopted IAS 34 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 Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority namely:

• an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed interim 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 six months of the financial year as disclosed in note 18 and any material changes in the related party transactions disclosed in the 2020 Annual Report.

Shareholder information is as disclosed on the Triple Point Social Housing REIT plc website.

Approval

This Directors' responsibilities statement was approved by the Board of Directors and signed on its behalf by:

Chris Phillips

Chairman

2 September 2021

GROUP FINANCIAL STATEMENTS

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

For the period from 1 January 2021 to 30 June 2021

CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

The Condensed Group Financial Statements were approved and authorised for issue by the Board on 2 September 2021 and signed on its behalf by:

Chris Phillips

Chairman

2 September 2021

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

For the period from 1 January 2021 to 30 June 2021

CONDENSED GROUP STATEMENT OF CASH FLOWS

For the period from 1 January 2021 to 30 June 2021

NOTES TO THE GROUP CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

For the period from 1 January 2021 to 30 June 2021

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 1 King William Street, London, United Kingdom, EC4N 7AF. The Company is registered as an investment company under section 833 of the Companies Act 2006 and is domiciled in the United 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

These condensed consolidated interim financial statements for the 6 months to 30 June 2021 have been prepared in accordance with IAS 34 "Interim financial reporting" and also in accordance with the measurement and recognition principles of UK-adopted international accounting standards. They do not include all of the information required for full annual financial statements and should be read in conjunction with the 2020 Annual Report and Accounts, which were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

The comparative figures for the financial period ended 31 December 2020 are not the Group's statutory accounts for that financial period. Those accounts have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed consolidated financial statements for the six months ended 30 June 2021 have been reviewed by the Company's Auditor, BDO LLP, in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. The condensed consolidated financial statements are unaudited and do not constitute statutory accounts for the purposes of the Companies Act 2006.

The Group's Financial Statements have been prepared on a historical cost basis, as modified for the Group's investment properties, which have been measured at fair value. Gains or losses arising from changes in fair values are included in profit or loss.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement Board. The Company transitioned to UK-adopted international accounting standards in its consolidated financial statements on 1 January 2021. There was no impact or changes in accounting policies from the transition. The Group has applied the same accounting policies in these Condensed Group Financial Statements as in its 2020 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on or after 1 January 2021. The new standards and amendments impacting the Group are:

· Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39 and IFRS 7); and

· Covid-19-Related Rent Concessions (Amendment to IFRS 16).

The Directors have given due consideration to the impact on the financial statements of the amendments as follows:

 Interest Rate Benchmark Reform - Phase 2

The above is effective from 1 January 2021. The amendments state that if a financial contract results in a substantial modification as a direct result of IBOR reform, a practical expedient can be applied and the changes will be accounted for by updating the effective interest rate. The date for the transition from LIBOR to SONIA on the RCF with Lloyds and NatWest is 1 July 2021, therefore this may apply to future financial statements if the conditions are met, but is not expected to have a material impact on the financial statements. The amendments also allow a series of exemptions from the regular hedge accounting which may be relevant if the Directors decide to hedge in the future.

Covid-19-Related Rent Concessions

As a result of Covid-19 there was an amendment to IFRS 16, Leases, for Covid-19-related rent concessions. The amendment to the standard has been considered, however at the reporting date had not been required to be applied.

No material impact as a result of new standards is expected.

Amendments to IAS 1 on Classification of liabilities as Current or Non-Current are effective for the financial years commencing on or after 1 January 2023 and are to be applied retrospectively. It is not expected that the amendments may have an impact on the presentation and classification of liabilities in the Group Statement of Financial Position based on rights that are in existence at the end of the reporting period.

There are other new standards and amendments to standards and interpretations which have been issued that are effective in future accounting periods, and which the Group has decided not to adopt early. None of these are expected to have a material impact on the condensed consolidated financial statements of the Group.

2.1. Going concern

The Group benefits from a secure income stream from long leases which are not overly reliant on any one tenant and present a well-diversified risk. The Directors have reviewed the Group's forecast which show the expected annualised rental income exceeds the expected operating costs of the Group.

To date, Covid-19 has not impacted the Group's ability to continue as a going concern for reasons discussed below. As a result, the Directors believe that the Group is still well placed to manage its financing and other business risks and that the Group will remain viable, continuing to operate and meet its liabilities as they fall due despite the risk of Covid-19.

The Directors have performed an assessment of the ability of the Group and Parent Company to continue as a going concern, which includes the impact of Covid-19, for a period of at least 12 months from the date of signing these financial statements. The Directors have considered the expected obligations of the Group for the next 12 months and are confident that all will be met.

In considering the ability of the Group to continue as a going concern, the Directors also considered the impact of Covid-19 on their tenants. Tenants of the Group are Registered Providers who receive their housing benefit from Local Authorities, before it is passed to subsidiaries in the form of rental income. Local Authorities have confirmed they will not stop helping vulnerable people or paying for essential services during this time, and therefore the Directors do not foresee any issues in rent collection, however in the event of a downturn in revenue, variable costs would be reduced to enable the Group to meet its future liabilities. 100% of rental income due and payable for the period ended 30 June 2021 has been collected.

The Directors have also considered the financing provided to the Group. Norland Estates Limited and TP REIT Propco 2 Limited have bank facilities with MetLife Investment Management, Lloyds and NatWest respectively. The loan secured by Norland Estates Limited with MetLife Investment Management is subject to an asset cover ratio covenant of 2.00x. The latest external valuation was carried out at 30 June 2021 and at that point the asset cover ratio was 2.71x. The loan is also subject to an interest cover ratio. The covenant ratio is not less than 1.75x and at 30 June 2021 the interest cover ratio was 4.81x.

The loan secured by TP REIT Propco 2 Limited with Lloyds and NatWest is subject to a loan to value covenant of

The Directors have also considered the circumstances that would lead to a covenant breach. For Norland Estates Limited, the property portfolio valuation at 30 June 2021 is based on a blended net initial yield of 5.21%. Yields would have to move by 146 bps before valuations fell to a level at which the asset cover ratio covenant was breached.

The interest cover ratio would need rental income collection to fall from its current level of 100% to 36% before the covenant is breached.

And for TP REIT Propco 2 Limited, as at 30 June 2021, its property portfolio valuation would need to fall by 20.1% before valuations fell to a level at which the loan to value covenant was breached. The interest cover ratio would need rental income collection to fall from its current level of 100% to 39% before the covenant is breached.

The Group has no short or medium term refinancing risk given the 10-year average maturity of its long term debt facilities with MetLife Investment Management, the first of which expires in June 2028, and which are fully fixed at an weighted average all-in rate of 3.04%.

Since the period end, the RCF has been refinanced by a new long- term, fixed-rate debt facility. The RCF remains in place with available funds to draw of £160 million at the time of publishing this report. Further information is detailed in note 19.

Based on the forecasts prepared and the intentions of the Parent Company, the Directors consider that the Company and its subsidiaries will be able to settle its liabilities for a period of at least 12 months from the date of signing these financial statements.

Under the downside model the forecasts have been stressed to show the effect of Care Providers ceasing to pay their voids liability, and as a result lessees being unable to pay rent on void units. It assumes that the Registered Provider (the tenant) will not be able to pay the voids. Under the downside model the Company and its subsidiaries will be able to settle its liabilities for a period of at least 12 months from the date of signing these financial statements.

As a result of the above, the Directors are of the opinion that the going concern basis adopted in the preparation of the financial statements is appropriate.

2.2 Reporting period

The financial statements have been prepared for the period ended 30 June 2021. The comparative periods are the six-month period ended 30 June 2020 and the year ended 31 December 2020.

2.3 Currency

The Group and Company financial information is presented in Sterling which is also the Company's functional currency.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

In the application of the Group's accounting policies, 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 are unchanged from the annual report for the year to 31 December 2020. In the director's view, there have been no significant changes to the extent of estimation uncertainty, key assumptions or valuation techniques relating to investment properties arising as a result of Covid-19. Further details can be found in note 9.

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective for periods beginning subsequent to 31 December 2021 (the date on which the Company's next annual financial statements will be prepared up to) that the Group has decided not to adopt early. The Group does not believe these standards and interpretations will have a material impact on the financial statements once adopted.

4. RENTAL INCOME

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.

All rental income arose within the United Kingdom.

5. MANAGEMENT FEES

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. A Deed of Variation was signed on 23 August 2018. This defined cash balances in the Net Asset Value calculation in respect of the management fee as "positive uncommitted cash balances after deducting any borrowings".

The management fee is an annual management fee which is calculated quarterly in arrears based upon a percentage of the last published Net Asset Value of the Group (not taking into account uncommitted cash balances after deducting borrowings) as 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 £1billion, an amount equal to 0.8% of such part of the Net Asset Value; and

(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.

Management fees of £2,266,000 were chargeable by TPIM during the period to 30 June 2021 (30 June 2020 - £1,975,000, 31 December 2020 - £4,100,000). At the period end, £1,132,000 was due to TPIM (30 June 2020 - £986,000 31 December 2020 - £1,132,000).

By two agreements dated 30 June 2020, the Company appointed TPIM as its Alternative Investment Fund Manager by entering into an Alternative Investment Fund Management Agreement and (separately) documented TPIM's continued appointment as the provider of portfolio and property management services by entering into an Investment Management Agreement.

6. FINANCE INCOME

7. FINANCE COSTS

8. 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 interim period from 1 January to 30 June 2021, 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.

9. INVESTMENT PROPERTY

*Gain from fair value adjustment on investment property in the SOCI includes loss from fair value adjustments on assets held for sale

Reconciliation to independent valuation:

Properties under development represent contracts for the development of a pre-let property under a forward funding agreement. Where the development period is expected to be a substantial period, the borrowing costs that can be directly attributed to getting the asset ready for use are capitalised as part of the investment property value.

The carrying value of leasehold properties at 30 June 2021 was £36.7 million (30 June 2020 - £34.9 million, 31 December 2020 - £36.5 million).

In accordance with "IAS 40: Investment Property", the Group's investment properties have been independently valued at fair value by Jones Lang LaSalle Limited ("JLL"), an accredited external valuer with recognised and relevant professional qualifications. The independent valuers provide their fair value of the Group's investment property portfolio every three months.

JLL were appointed as external valuers by the Board on 11 December 2017. JLL has provided valuations services to the Group. The proportion of the total fees payable by the Company to JLL's total fee income is minimal. Additionally, JLL has a rotation policy in place whereby the signatories on the valuations rotate after seven years.

% Key Statistics

The metrics below are in relation to the total investment property portfolio held as at 30 June 2021.

* calculated excluding acquisition costs

**calculated using IAS 40 valuations (excluding forward funding acquisitions)

*** calculated excluding forward funding acquisitions

Regional exposure

*excluding acquisition costs

Fair value hierarchy

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.

The valuations have been prepared in accordance with the RICS Valuation - Professional Standards (incorporating the International Valuation Standards) by JLL, one of the leading professional firms engaged in the social housing sector.

As noted previously all of the Group's investment properties are reported as Level 3 in accordance with IFRS 13 where external inputs are "unobservable" and value is the Directors' best estimate, based upon advice from relevant knowledgeable experts.

In this instance, the determination of the fair value of investment property requires an examination of the specific merits of each property that are in turn considered pertinent to the valuation.

These include i) the regulated social housing sector and demand for the facilities offered by each SSH property owned by the Group; ii) the particular structure of the Group's transactions where vendors, at their own expense, meet the majority of the refurbishment costs of each property and certain purchase costs; iii) detailed financial analysis with discount rates supporting the carrying value of each property; iv) underlying rents for each property being subject to independent benchmarking and adjustment where the Group considers them too high (resulting in a price reduction for the purchase or withdrawal from the transaction); and v) a full repairing and insuring lease with annual indexation based on CPI or CPI+1% and effectively 25 years outstanding, in most cases with a Housing Association itself regulated by the Regulator of Social Housing.

The valuer treats the fair value for forward funded asset as work-in-progress value whereby the Company forward funds a development by committing a total sum, the Gross Development Value ("GDV") over the development period in order to receive the completed development at practical completion. The work-in-progress value of the asset increases during the construction period accordingly as payments are made by the Company which leads, in turn, to a pro-rata increase in the valuation in each quarter valuation assuming there are no material events affecting the GDV adversely. Interest accrued during construction as well as an estimation of future interest accrual prior to lease commencement will be deducted from the balancing payment which is the final payment to be drawn by the developer prior to the Company receiving the completed building.

Descriptions and definitions relating to valuation techniques and key unobservable inputs made in determining fair values are as follows:

Valuation techniques: Discounted cash flows

The discounted cash flows model considers the present value of net cash flows to be generated from the property, taking into account the expected rental growth rate and lease incentive costs such as rent-free periods. The expected net cash flows are then discounted using risk-adjusted discount rates.

There are two main unobservable inputs that determine the fair value of the Group's investment property:

1 The rate of inflation as measured by CPI; it should be noted that all leases benefit from either CPI or RPI indexation; and

2 The discount rate applied to the rental flows.

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

The Group's property portfolio valuation is open to judgements and is inherently subjective by nature. The estimates and associated assumptions have a significant risk of causing a material adjustment to the carrying amounts of investment properties. The valuation is based upon assumptions including future rental income (with growth in relation to inflation) and the appropriate discount rate.

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 6.58% (30 June 2020 - 6.61%, 31 December 2020 - 6.62%).

The range of discount rates used in the Group's property portfolio valuation is from 6.2% to 7.6%. (30 June 2020 - 6.3%-7.2%, 31 December 2020 - 6.3%-7.4%).

Given that the factors on which the valuations are based have not been adversely affected by Covid-19, there has been no direct impact to the investment property valuation as a result of Covid-19.

10. TRADE AND OTHER RECEIVABLES

Included in Prepayments are prepaid acquisition costs which include the cost of acquiring assets not completed at the year end.

The Directors consider that the carrying value of trade and other receivables approximate their fair value. All amounts are due to be received within one year from the reporting date.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for rent receivables. To measure expected credit losses on a collective basis, rent receivables are grouped based on similar credit risk and ageing.

The expected loss rates are based on the Group's historical credit losses experienced since incorporation in 2017. The historical loss rates are then adjusted for the current and forward-looking information on macroeconomic factors affecting the Group's tenants. Both the expected credit loss provision and the incurred loss provision in the current and prior period are immaterial. The Group does not hold any collateral as security.

The Group applies the general approach to providing for expected credit losses under IFRS 9 for other receivables. Both the expected credit loss and the incurred loss provision in the current and prior year are immaterial.

11. CASH, CASH EQUIVALENTS AND RESTRICTED CASH