Secure Income for long-term returns

Initially there were two tenants; the largest (54 per cent of portfolio value) comprises 20 freehold private hospitals let to a subsidiary of Ramsay Health Care, which generated £47.5m in passing rent, up from £46.3m a year earlier. Leisure assets make up just over a third of the portfolio in value and include Alton Towers, Thorpe Park and Warwick castle, and rental income rose from £30.9m to £31.4m.

The secure bit comes from the fact that lease terms average 23.1 years with no break options, with 58 per cent of rental income subject to annual fixed rental uplifts averaging 2.8 per cent a year, while the rest is linked to upwards-only RPI.

And in October the group raised £140m through a share placing to part-finance the purchase of 55 Travelodge hotels at a net initial yield of 7 per cent. Rental income and upward valuations meant that adjusted net asset value grew by 14.4 per cent to 323.6p per share, while the net loan-to-value ratio improved from 61 per cent a year earlier to 53.5 per cent. The balance sheet was also strengthened with a refinancing package that significantly reduced finance costs.

Analysts at Stifel are forecasting adjusted net asset value at the December 2017 year-end of 324p.