So­cial hous­ing trust of­fers a safe home for res­i­dents – and for in­vestors’ cap­i­tal

Triple Point So­cial Hous­ing Reit is suf­fer­ing no loss of rent dur­ing the pan­demic and is still in­vest­ing in new prop­er­ties

The Daily Telegraph - Business - - Business - RICHARD EVANS Read Questor’s rules of in­vest­ment be­fore you fol­low our tips: tele­graph.co.uk/go/ questor­rules; twit­ter.com/DTquestor

SPE­CIAL­IST hous­ing as­so­ci­a­tions pro­vide life-chang­ing ac­com­mo­da­tion and care to res­i­dents who have spe­cial needs – and vi­tal sus­tain­able in­come to those who in­vest in them via ded­i­cated in­vest­ment trusts.

While Questor’s In­come Port­fo­lio does not have a spe­cific “eth­i­cal” as­pect, it will no doubt cheer many read­ers who fol­lowed our ad­vice to buy shares in Triple Point So­cial Hous­ing Reit to know that their cap­i­tal is de­ployed to such wor­thy ends.

They will also be cheered by the trust’s abil­ity to col­lect in­come from its hold­ings through thick and thin. In an up­date to in­vestors early last month it said it had col­lected 100pc of rents due in April and 95pc of those due for May, with the bal­ance ex­pected to ar­rive within the fol­low­ing two weeks. This is ex­actly the kind of up­date we had hoped

for and ex­pected to hear from the trust when we added it to the port­fo­lio in April, along with some sim­i­lar funds, as a re­place­ment for five stocks whose div­i­dends had been can­celled, or seemed likely to be, as a re­sult of coro­n­avirus-in­duced dis­rup­tion.

Nei­ther was the con­sis­tent in­come the only good news from the trust. It an­nounced at the same time that it had bought seven new prop­er­ties for a to­tal of £7.6m. The trust’s cur­rent value, for com­par­i­son, is about £372m. The in­come it is to re­ceive from these prop­er­ties will in­crease its div­i­dend cover – in­come re­ceived di­vided by in­come paid to share­hold­ers – to 95pc, which is com­fort­able enough. As with all of its other prop­er­ties, the newly ac­quired ones are leased to its hous­ing as­so­ci­a­tion or lo­cal author­ity ten­ants on con­tracts that stip­u­late an­nual in­fla­tion-linked ren­tal in­creases. This means that share­hold­ers too can ex­pect their in­come to rise broadly in line with the cost of liv­ing.

All 171 of the trust’s leases sub­ject to rent in­creases in April did in­deed have their rents in­creased in line with the con­sumer prices in­dex. The fig­ure from Fe­bru­ary, 1.7pc, was used. The third wel­come state­ment in last month’s up­date was that the com­pany em­ployed by the trust to carry out in­de­pen­dent val­u­a­tions of its es­tate, Jones Lang LaSalle, had with­drawn an ear­lier stip­u­la­tion that those val­u­a­tions were sub­ject to “ma­te­rial un­cer­tainty”.

The trust said Jones Lang LaSalle “no longer con­sid­ers that there is ma­te­rial un­cer­tainty when valu­ing spe­cialised sup­ported hous­ing of all types on the ba­sis of mar­ket value”. It said the re­moval of the ma­te­rial un­cer­tainty clause re­flected “the con­tin­ued timely re­ceipt of rents in line with pre-Covid-19 lev­els and the level of ac­tiv­ity within the sec­tor, which re­mains con­sis­tent”.

We will of course hold on to this fund.

Up­date: Low­land

This in­vest­ment trust sur­vived the whole­sale change in hold­ings forced on us by the epi­demic: it has been in the port­fo­lio since April last year.

One fea­ture that at­tracted us was its record of div­i­dend growth. At that time the divi had grown by an av­er­age of 7pc over the pre­vi­ous 29 years.

Now, of course, the fu­ture of div­i­dends across the Lon­don mar­ket, and be­yond, is up in the air. But al­though Low­land said last month in its in­terim re­port that its own div­i­dend in­come had fallen to 14.5p a share from 22.2p last year, it main­tained its divi at 30p for the half-year. It did not give up hope for the fu­ture ei­ther, al­though it ac­knowl­edged that there could be no guar­an­tees.

The chair­man, Robert Robert­son, pointed out that Low­land’s re­serves had amounted to 68p a share at the end of the fi­nan­cial year. “Rev­enue re­serves are there for a rainy day. At present it feels more like a thun­der­storm and we will have to make a judg­ment on whether we can main­tain the [div­i­dend] pol­icy,” he said. “We are cog­nisant of share­hold­ers’ de­sire for reg­u­lar in­come and it is our firm in­ten­tion to main­tain the pol­icy if pos­si­ble.” Hold.

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