Triple Point Social Housing REIT : Half Year Impact Report 2023

Triple Point Social Housing REIT Plc Half Year Impact Report 2023

September 2023

Contents

	IMPACT REPORT - HEADLINE RESULTS	4
	EXECUTIVE SUMMARY	6
1	INTRODUCTION	8
	About Triple Point Social Housing REIT	8
	Impact Measurement and Management Framework	9
	This Report	9
2	IMPACT ASSESSMENT AND RESULTS	10
	Social Need	12
	Fund Sustainable Developments	16
	Increase Supply	18
	Quality Services and Partnerships	19
3	CONTRIBUTION TO OUTCOMES	22
	Wellbeing	24
	Value for Money	26
4	IMPACT RISK	27
5	CONCLUSIONS AND NEXT STEPS	29
	APPENDICES	30
	Appendix 1 - Data sources	30

This report has been commissioned by Triple Point Social Housing REIT Plc ("SOHO") and has been prepared by The Good Economy Partnership Limited ("The Good Economy" and "TGE"), a specialist advisory firm with expertise in impact measurement and management.

The Good Economy supported SOHO in developing its impact assessment methodology and review SOHO's social performance bi-annually. This report is based on analysis of quantitative data and evidence, as well as in-depth interviews with management and staff at SOHO, partner housing associations, care providers, local authorities and/or an outcomes survey of a sample of residents.

The findings and opinions conveyed in this report are based on information obtained from a range of sources. However, the information reviewed should not be considered exhaustive and The Good Economy, its principals and staff cannot and does not guarantee the accuracy, completeness and/or fairness of the information and opinions contained herein. This report shall not be construed as a financial promotion or as a recommendation, invitation or inducement to any person to engage in investment activity.

This report has been prepared solely for the benefit of SOHO and no other person may rely upon this report. Accordingly, The Good Economy accepts no duty of care, responsibility or liability (whether in contract or tort (including negligence) or otherwise) to any person other than SOHO for any loss, costs, claims or expenses howsoever arising from any use or reliance on this report.

The information within this report is subject to change relative to new developments, facts and/or research. The Good Economy therefore reserves the right (but is under no obligation) to alter the conclusions and recommendations presented in this report in light of further information that may become available.

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Impact Report - Headline Results

As of 30 June 2023

£599 million invested1

497 properties	Providing homes for
	up to 3,455 people

Homes managed by	Residents supported
27 housing providers	by 116 care providers

For every £1 invested,

SOHO generates £3.30 in social value

Over the duration of the investment2

1. This figure declined from £602m, as stated in the last impact report, due to stamp duty land tax reclaim from HMRC for stamp duty relief based on recalculations.
2. As of December 2022, when the last value for money calculation was carried out. We expect the figure to have remained at a similar level since the latest calculation. We are 90% confident that the Social Return on Investment (SROI) ratio is between £2.69 and £3.90 (based on the survey findings which underpin this calculation).

Properties located across	75% of homes are located in the
153 local authorities	40% most deprived local authorities

62% of homes are new to the SSH	9% of homes
sector at the point of acquisition	forward-funded by SOHO

71% of homes have	49% of residents receive more
EPC ratings of A-C	than 50 hours of care per week3

91% of surveyed residents reported feeling satisfied with the quality of their home4

80% of surveyed residents reported an improvement in their level of independence since moving into their current home4

1. Based on resident info collected by partner RPs, covering approximately 49% of the portfolio.
2. Based on a survey carried out with a sample of 60 residents between January and February 2023.

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Executive Summary

In 2017, Triple Point Investment Management LLP established Triple Point Social Housing REIT Plc (SOHO or the Fund). SOHO's primary objective is to invest in UK social housing, focusing on specialised supported housing (SSH). This type of housing allows individuals with diverse care and support needs to live independently in their communities. The goal of the Fund is to raise the provision of high-quality SSH, deliver positive outcomes for residents and provide stable, long-term returns to shareholders.

This is SOHO'S sixth Impact Report. It has been produced by The Good Economy (TGE), an independent impact advisory firm specialising in impact measurement and management.

The report provides an independent assessment of SOHO's impact performance. It covers the period from January to June 2023. As of 30 June 2023, SOHO's portfolio stands at 497 properties, providing homes for up to 3,455 people.

OUTCOMES

Improve Wellbeing

During site visits to two separate schemes, we heard positive feedback from residents and staff on aspects related to the wellbeing of residents. The residents mentioned being happy at their homes, getting along well with the staff, and a greater sense of independence since moving into the residences. This reinforces the findings of a survey conducted with a sample of 60 residents between January and February 2023.

Value for Money

A value for money calculation revealed that SOHO's portfolio delivered £128.4m in Total Social Value in the year to December 2022. This includes £27.4m of

Impact Assessment

TGE assesses SOHO's impact performance according to its stated impact objectives (the areas over which it has direct influence) and the real-world outcomes to which it aims to contribute (which are contingent on many factors).

IMPACT OBJECTIVES

Social Need

SOHO's properties help to meet a key social need, offering much-needed homes for individuals depending on a high level of support in their daily lives. SSH aligns with government policy to prioritise community- based housing, which encourages independence

for residents, as outlined in the Transforming Care Programme. As a result, there is considerable demand from commissioners across the country against

the backdrop of a continued lack of supply. This is largely evidenced through SOHO's steadily increasing operational occupancy rates across the portfolio.

Fund Sustainable Developments

SOHO has begun implementing the pilot phase of a retrofit programme, designed to enhance energy efficiency across the portfolio by improving all properties to a minimum EPC grade C. 71% of properties currently meet this standard, a relatively high proportion in the SSH sector where properties are often older buildings which have been repurposed. Regarding residents' perspective of quality of homes, 91% of respondents participating in a resident survey reported being satisfied with the quality of their home (survey conducted between January and February 2023).

Increase Supply

SOHO's portfolio has remained static in the past six months as the Fund has had limited capital to deploy. This means the portfolio has remained at 497 properties, with the capacity to provide a home for 3,455 people if fully occupied.5 Nevertheless, since its launch in 2017, SOHO has made a substantial contribution to increasing supply, with 62% of homes defined as new to SSH at the point of acquisition.

Quality Services and Partnerships

In the first half of 2023, two of SOHO's partner Registered Providers (RP) were issued with Enforcement Notices by the Regulator of Social Housing (RSH). To date, 10 out of 18 Registered Providers have been declared non-compliant with the RSH's viability and governance standards. The Fund is taking well-defined steps to mitigate the RSH's concerns with the lease-based model - in 2022 SOHO received approval on a set of changes to its investment policy from shareholders to enable it to enter more flexible leases. This gives SOHO more flexibility to respond to the evolution of the market in respect of risk sharing terms between landlord and tenant.

We are encouraged to see evidence that SOHO is in the process of capitalising on this flexibility as well as using it retrospectively, introducing new provisions to its existing leases with RPs which aims to rebalance risk, subject to a materiality threshold and allow its RP lessee's to respond to the Regulator's concerns. SOHO has shared this clause with all of its RP lesses with the aim of implementing it by the end of the year. SOHO worked with its largest tenant, Inclusion Housing (Inclusion), in developing the clause and expects that it will be implemented imminently across its portfolio of properties with Inclusion.

Social Impact and £101.0m of Fiscal Savings. Overall, these figures reflect a Social Return on Investment (SROI) ratio of £3.30. This means, for every £1 invested, SOHO generates £3.30 per year in social value over the duration of the investment.

STRENGTHS

New lease clause

Following engagement with stakeholders, including the RSH, SOHO has finalised a new lease clause to redress the balance of risk-sharing with partner housing providers. The implementation of the clause is intended to enhance the compliance of SOHO's partner housing providers

in response to RSH concerns. SOHO is one of the first institutional landlords in the sector to have developed and committed to implementing risk sharing provisions throughout its portfolio.

Rent cap

SOHO set a voluntary rent cap of 7% from January 2023. This is in line with the government's 7% rent cap on social housing increases, though the Fund could have charged more, since all of its leases are linked to inflation and SSH is exempt from the social housing rent cap. This provides an example of SOHO acting as a responsible landlord and looking to ensure the long-term sustainability of its rents.

Occupancy

We consider it best practice from a transparency perspective that SOHO shares property-level occupancy data with us for the whole portfolio, including commentary on each property's current status. Over time, this data has shown occupancy rates continuing to increase steadily across the portfolio, demonstrating strong and increasing underlying demand for the Fund's homes.

POTENTIAL WEAKNESSES AND MITIGATING ACTIONS

Regulatory concerns

The RSH continues to highlight concerns with the level of risk faced by lease-based providers of SSH. Currently, 10 of SOHO's 18 partner RPs (accounting for 79% of homes) have been declared non-compliant with the RSH's Governance and Viability Standards. We note the new lease clause as a positive step to mitigate risk to RPs, addressing these concerns and allowing RPs to respond to RSH concerns. It is encouraging that SOHO expects to apply the clause to all of its leases with its largest landlord, and we understand there are plans for it to be rolled out across the rest of the portfolio by the end of the year.

Enforcement Notices

Two of SOHO's partner RPs were issued with Enforcement Notices during the reporting period. In both instances, the RSH has voiced serious concern over the financial viability of these organisations and raised questions around inadequate governance. Should either of these providers fail, residents could experience service disruption. In advance of such an occurrence, SOHO has stated it would proactively mitigate risk to residents by transferring leases to another provider.

5. Note total portfolio capacity has decreased by one unit between January and June 2023. This is due to one lettable room being converted to provide a bedroom for carers to provide waking-night support.

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1 / Introduction

About Triple Point Social Housing REIT

Launched in 2017, Triple Point Social Housing REIT (SOHO or the Fund) is a Real Estate Investment Trust (REIT) with the aim of investing in social housing across the UK. The focus of the Fund is specialised supported housing (SSH), a form of community housing provision in which homes are built or specially adapted for individuals with support needs.

Impact Measurement and Management Framework

SOHO's impact goal is to increase the provision of high-quality	Under this overall impact goal, SOHO has established the
SSH that delivers positive outcomes for people with care and	following set of impact objectives and target outcomes:
support needs.

IMPACT OBJECTIVES

TARGET OUTCOMES

SOHO has to date, raised capital from investors through equity issuances on the public markets and arranging long term, fixed price debt facilities. This capital has been deployed to acquire SSH properties throughout the UK which are then leased to housing providers (typically, Registered Providers) to manage on, generally, long-term leases. This delivers long- term equity to the social housing sector, increasing the supply of SSH while the rental income funds returns to investors.

SOHO is managed by Triple Point Investment Management LLP, an FCA-regulated investment manager with more than c. £3.5 billion in assets under management. SOHO sits under the Social Housing arm of Triple Point's investment strategies. Broadly, Triple Point has five investment strategies: Social Housing, Digital Infrastructure, Energy, Private Credit and Venture.

SPECIALISED SUPPORTED HOUSING

SSH is a form of housing provision for people living with diverse care needs, ranging from learning and physical disabilities to mental health diagnoses. Properties are designed with modifications to support residents to live independent lives. The degree of modifications varies depending on the extent and type of residents' support needs.

Residents are accommodated in either self-contained apartments within a larger property, or private rooms within communal residences. Their support packages are personalised, ensuring they only receive and pay for the support they require, while there is typically the added security of having support staff on-site 24 hours a day.

SSH aligns with government policy to prioritise community-based housing which aims to enable people to live as independently as possible. There is a high level of underlying demand among local commissioners

The areas under SOHO's direct control or influence.

SOCIAL NEED

Contribute towards

FUND SUSTAINABLE

DEVELOPMENTS

INCREASE SUPPLY

QUALITY SERVICES

AND PARTNERSHIPS

This Report

The real-world outcomes for people, planet and place: these depend on many factors, including the activities of SOHO.

IMPROVE WELLBEING

VALUE FOR MONEY

across the country, with projections that the units of supported housing for working age adults will increase by 16% from 2015 to 2030.6

This is the sixth Impact Report produced for SOHO by The Good Economy (TGE), an independent advisory firm specialising in impact measurement and management. This report covers the six- month period from January to June 2023.

By encouraging greater independence than would be possible in alternative settings, it is broadly considered to offer wellbeing benefits to residents. Additionally, independent evidence suggests SSH has the potential to generate cost-savings for public budgets.7

TGE has served as the social impact advisor to SOHO since 2019. In this role, we designed an impact measurement and management (IMM) framework to enable the Fund to measure, manage, and report on the impact of its investments.

This process involved establishing a set of impact objectives and identifying the target outcomes through which SOHO aims to contribute to positive impact creation. Additionally, we outlined a detailed impact measurement plan and provided input on how to integrate impact considerations into the Fund's investment process. On an ongoing basis, we produce bi-annual impact reports in which we assess SOHO's performance against its impact objectives and target outcomes.

METHODOLOGY

A mix of quantitative and qualitative data informs TGE's independent impact assessment. This includes:

Portfolio data provided by SOHO Interviews with SOHO's partners (including housing providers and care providers) Interviews with Triple Point Investment Management staff Site visits to selected schemes

Interviews with Registered Providers

Overall, we take a stakeholder-driven and outcomes-focused approach to assessing the impact of SOHO's investments. This incorporates a focus on residents' lives and aims to align with guidance outlined by the Impact Management Project (IMP).8

1. Personal Social Services Research Unit, Projected Demand for Supported Housing in Great Britain 2015 to 2030, March 2017.
2. Mencap & Housing LIN, Funding supported housing for all: SSH for people with a disability, April 2018.

8. The IMP is a forum for building global consensus on how to measure, manage and report on impact performance - see https://impactfrontiers.org/.

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