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Investing in
UK care homes
for everyone
2024|Annual report and financial statements
About us
Investing in care homes for everyone
Care REIT plc is the new name for Impact Healthcare REIT plc.
While our name is different, our business, strategy and the needs
we meet are the same.
Find us online:
www.carereit.co.uk
The UK, like most Western countries, is experiencing a profound demographic change.
As our population ages, an unprecedented number of people will require care in later
life. While some of this care can be provided at home, demand for care beds will also
rise and people entering a care home are likely to have increasingly complex needs,
with either advanced frailty or some form of dementia.
However, large numbers of elderly people already
have trouble accessing social care, with many
thousands stuck in hospital beds because they have
nowhere else to go. This leads to worse outcomes for
them, more cost for the NHS and fewer hospital beds
for the patients who need them. A thriving care home
sector is therefore vital to the health and wellbeing
ofthe UK.
The opportunity for us is to help meet the growing
pent-up demand for well-run and affordable
carehomes.
As a specialist and responsible owner of care homes,
we’re deeply immersed in the social infrastructure of
the UK. We’re proud to own care homes that cater for
everyone, with around 70% of our tenants’ residents
funded by local authorities or the NHS.
We take a long-term view and look to generate
secure and growing income, so we can offer
attractive and progressive dividends to our
shareholders and the potential for capital growth.
Key statistics at 31 December 2024
Contents
Strategic report
About us IFC
Our purpose, strategy and values 2
2024 in brief 3
The growing demand
for care beds for the elderly 5
Delivering attractive
risk-adjusted returns 9
Putting our purpose into practice
1 | Working with our tenants 12
2 | Our focus on quality 16
3 | Our focus on affordability 22
4 |Increasing our sustainability 26
5 | Delivering growth through
enhancing our portfolio 32
Our principal risks 37
Financial review 39
Going concern and viability 42
Section 172 statement 43
Governance
Our board 45
Corporate governance review 47
Working with the Investment Manager 51
Nomination committee report 53
Audit committee report 54
Directors’ remuneration report 57
Directors’ report 60
Statement of responsibilities 64
Independent auditor’s report 65
Financial statements
Consolidated statement
of comprehensive income 72
Consolidated statement
of financial position 73
Consolidated statement
of cash flows 74
Consolidated statement
of changes in equity 75
Notes to the consolidated
financial statements 76
Company statement
of financial position 95
Company statement
of changes in equity 96
Notes to the Company
financial statements 97
Additional information
Reporting against the Task Force
on Climate-Related Financial
Disclosures framework 103
Applying the AIC Code Principles 111
EPRA performance measures 113
Notes to the EPRA
performance measures 116
Alternative performance measures 119
Our portfolio 120
AIFM statement 123
Investment policy 124
How we manage risk 125
Glossary 128
Corporate information 129
Financial calendar 129
Properties
137|(2.1)%
2023: 140
Tenants
1
15|+1
2023: 14
Contracted
rent roll
2
£51.4m|+5.3%
2023: £48.8m
Inflation-linked leases
100%
2023: 100%
Assets rated EPC B
or better
3
60%|+3% pts
2023: 57%
Beds
7,655|(0.9)%
2023: 7,721
Portfolio valuation
£679.0m|+4.3%
2023: £651.3m
Weighted average unexpired
leaseterm (WAULT)
20.2 years|(2.9)%
2023: 20.8 years
Dividend per share for 2024
6.95p|+2.7%
2023: 6.77p
Average home ratings on
carehome.co.uk
9.3
National average: 9.0
1. Includes Minster and Croftwood, which are subsidiaries of Minster Care Group.
2. Contracted rent roll is defined in the glossary on page 128.
3. For assets outside England, this is based on an English-equivalent rating.
Strategic report Governance Financial statements Additional information
1
Care REIT plcAnnual report and financial statements 2024
Our purpose, strategy and values
Our Investment
Manager
Impact Health Partners LLP, our Investment
Manager (IM), plays a vital role in our
success. Its senior team has decades of
experience of owning and operating
healthcare real estate, and their
knowledge, skills and relationships give us
an important advantage in our market.
Our values
Care homes are vital to both the people
who live and work in them and society
as a whole. We have a responsibility to
make decisions that take account of
all our stakeholders’ needs, particularly
the impact on our tenants’ residents.
Throughout this report, you’ll see
examples of our values in action, from
the way we work with our tenants to
support their provision of care, to our
investment in our homes to keep them
fit for the future.
Our core values are to:
• focus on the long-term sustainability
of our business;
• act openly and transparently with our
stakeholders;
• be a dependable partner who’s
trusted to deliver; and
• combine the strengths of a listed
company with entrepreneurship.
Our purpose is to work with
tenants to provide quality,
affordable and sustainable
care homes, inorder
to deliver an attractive
risk-adjusted return.
This purpose determines our strategic priorities, which are to:
Work with our tenants
to form long-term,
mutually beneficial
partnerships, so we can
grow together
Focus on quality
by investing in
our buildings and
supporting our tenants
to provide quality care
to their residents
Focus on affordability
by setting rents at levels
our tenants can afford
now and in the long
term, enabling them
to charge fees that
are more likely to be
affordable to residents
Increase our
sustainability by
continuing to improve
our portfolio’s social
and environmental
performance
Optimise our business
to provide more care
home beds that are fit
for our purpose
We’ve used these priorities
to structure this report, to
show how we’re putting
our purpose into practice.
Strategic report Governance Financial statements Additional information
2
Care REIT plcAnnual report and financial statements 2024
The Group performed well in 2024, as shown below:
2024 in brief
Putting our purpose into practice: delivering
attractive risk-adjusted returns
The value of our property investments increased by 5.0% on a
like-for-like basis, mainly due to inflation-linked rental growth,
contributing to 3.7% growth in EPRA NTA per share
1
.
The Group grew adjusted earnings
and its net assets in 2024
Profit before tax
£45.0m|( 7.9)%
EPRA NTA
1
per share
119.21p|+3.7%
Adjusted EPS
1
7.42p|+1.9%
EPRA (net) LTV
1
28.42%|+0.57% pts
EPRA EPS
1,3
8.89p|+2.4%
Property investments
1
£679.0m|+4.3%
1. For further discussion of these metrics see pages 113 to 119. EPRA alternative performance measures have been calculated in line with EPRA best practices recommendation, see pages 113 to 115.
2. This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company’s expected or actual results.
3. The comparative EPRA earnings have been restated in line with updated guidance from EPRA released in 2024 revising the calculation to include cash income received on interest rate derivatives.
4. Includes Minster and Croftwood, which are subsidiaries of Minster Care Group.
This performance enabled us to achieve
our return objectives, which are:
Objective Performance in 2024
A progressive
dividend that’s
fully covered by
adjusted EPS
We met our dividend target of
6.95pence per share, up 2.7%
(2023:6.77 pence per share), which
was 107% covered by adjusted EPS
and 128% by EPRAEPS
3
.
An average
total accounting
return of 9.0%
per annum
1,2
Our total accounting return was 9.4%
(2023: 10.8%), slightly ahead of our
target.
Our dividend target for 2025 is 7.20 pence per share
2
, up 3.6%.
Putting our purpose into practice: working with
ourtenants
We work closely with our tenants, with our long-term
partnershipapproach reflected in the WAULT of 20.2 years
at31December 2024 (31 December 2023: 20.8 years).
We transferred the operation of seven of our care homes to two
new tenants. They replaced Melrose, an affiliate of Minster, which
had stabilised the homes’ performance as part of a recovery plan
we announced in June 2023. As a result of these changes, we had
15 tenants
4
at the year end, a net increase of one in the year.
2023 £48.8m
2022 £16.9m
2021 £32.0m
2020 £28.8m
2024 £45.0m
2023 7.28p
2022 7.11p
2021 6.68p
2020 5.93p
2024 7.42p
2023 8.67p
2022 8.40p
2021 8.05p
2020 7.25p
2024 8.89p
2023 £651.3m
2022 £568.8m
2021 £496.9m
2020 £418.8m
2024 £679.0m
2023 114.96p
2022 110.08p
2021 112.41p
2020 109.58p
2024 119.21p
2023 27.85%
2022 24.10%
2021 23.17%
2020 17.06%
2024 28.42%
Strategic report Governance Financial statements Additional information
3
Care REIT plcAnnual report and financial statements 2024
2024 in brief continued
Putting our purpose into practice:
our focus on quality
Improving the quality of our assets
In 2024 we significantly ramped up our
asset management programme, approving
£12.7million on projects at existing homes
and a further £8.7 million investment in the
development of a new home. During the year
we invested £14.0million, up from £4.7 million
in 2023. Overall, these projects will add a
net 119beds, create new indoor and outdoor
spaces for residents, and reduce energy use.
At the year end, we had a further ten projects
in the pipeline, with anticipated funding of
£16.8million over the next two to three years.
Our tenants continue to
providegoodcare
While the quality of our assets is important,
the quality of care our tenants provide to
their residents is paramount. A great building
won’t compensate for poor care and great
care can be delivered in many different types
of building. The government has publicly
raised concerns over the reliability of the
Care Quality Commission (CQC), which is the
regulator in England; this is evidenced by our
own portfolio where some of the ratings from
inspectors are now more than five years old.
We are currently reviewing different ways in
which we can monitor quality of care by our
tenants, including website ratings and secret
shopper inspections.
Putting our purpose into practice:
our focus on affordability
With our leases running for up to 35 years, it’s
vital that our rents remain affordable to tenants
in the long term. We therefore set initial rents at
sustainable levels and almost all our leases set
out rent increases in line with general inflation
but with minimum and maximum annual
increases, typically 2% and4% respectively.
Rent cover is one of our most important key
performance indicators (KPIs).
The increase in the year to 2.2x (2023: 2.0x)
reflects continued improvement in occupancy
and in particular our tenants’ ability to raise
their fees in line with, or ahead of, inflation.
Our tenants have continued to focus on
efficiency and further reducing agency staff
costs, which, along with lower inflation in
utility costs, the capped increases in our rents
and the increase in average weekly fees they
charge, has helped them to pay for wage
increases for their staff.
Rent reviews in the year added 3.4% to
contracted rent, increasing the contracted
rent roll by £1.7 million. We collected 100%
ofrent due in respect of the year.
Putting our purpose into practice:
increasing our sustainability
We continued to focus on improvements
to the environmental sustainability of our
portfolio with a target to achieve net zero
status by 2045. We’ve further improved the
energy efficiency of homes through asset
management projects and improved energy
performance certificate (EPC) ratings through
energy efficiency projects. 60% of our homes
have an EPC rating of B or above, making us
well positioned to achieve 100% by the year
2030. The CO
2
emissions from our tenant
energy consumption reduced by 3%, but our
2025 target of a 15% reduction from our 2022
baseline is unlikely to be met. We continue
to review the best long-term strategy for
investing further to improve energy efficiency,
balancing environmental and commercial
considerations for ourselves and our tenants.
Putting our purpose into practice:
optimising our business
In 2024, rising interest rates and conditions
in the equity market meant that most REITs,
ourselves included, had share prices at a
significant discount to net asset values.
These factors made the Group focus on using
existing cash flow and disposals to fund the
business rather than trying to raise new equity
or borrow significantly more.
Therefore, we continued to invest modestly in
the portfolio using our existing financial
resources and the proceeds from selling assets.
This has allowed us to grow income and bed
numbers internally through asset management
(see above) and to add new assets to the
portfolio, while keeping our debt levels stable.
During the year, we exchanged contracts to
purchase an 83-bed care home near
Darlington, for £3.8 million, and agreed to
invest in the development of a new 72-bed
home in Bedale, North Yorkshire, for a capped
price of £8.7 million.
We also continued to optimise our portfolio,
toimprove its overall quality and generate
funds for reinvestment. In 2024, we agreed
sales of five non-core assets for a total of
£8.8million, in line with their latest valuation.
Two of these disposals had completed by the
year end. The sales also reduced our exposure
to Minster, our largest tenant.
Prudently financing the business
We continued to maintain our existing debt
financing to support our investments and
increase returns, ensuring that we have kept a
strong balance sheet. At the year end our
gross loan to value (LTV) of 28.3% was well
within the maximum in our policy of 35%. We
had committed bank facilities of £250million
and significant liquidity available, with £52.2
million of undrawn facilities and £10.5 million
of cash, against commitments of£15.7million.
Our new name
In October 2024, we announced that we had
changed the Company’s name from Impact
Healthcare REIT plc to Care REIT plc. This
complies with the Financial Conduct Authority’s
updated Sustainability Disclosure Rules, which
limits the use of the word “impact”.
Our new name better reflects that we’re a
realestate business that invests in care
homes. Our investment policy, strategy and
objectives remain the same and we are firmly
focused on the significant opportunity we see
in the care home sector over the coming years.
A successful continuation vote
In common with other investment trusts, the
Company doesn’t have a fixed life. Instead,
shareholders have the opportunity to vote from
time to time on whether it should carry on or
be wound up. Our first continuation vote took
place at the Annual General Meeting (AGM) in
May 2024. We were delighted to receive 100%
of votes in favour of this resolution and thank
shareholders for their support.
Outlook
We remain well positioned to continue to
deliver long-term sustainable returns to
shareholders. The key themes influencing our
market – an ageing population, the growing
demand for higher-acuity care and the
affordability of social care – play to our
strengths and will offer opportunities for us for
many years to come. However at present the
difficulty we have in raising new capital with
high market interest rates and a share price
well below net asset value constrains our
ability to deliver on these opportunities.
In the year ahead, we’ll continue to actively
manage our portfolio and dispose of non-core
assets. We’ll also consider selling homes where
we’ve completed our asset management
plan, so we can recycle the capital into other
high-return opportunities. The rental growth
built into our leases and the return to rental
payments from the former Silverline homes
will also support further progression in our
earnings and dividend.
As announced on 11 March 2025, the Company’s
directors have reached agreement on the
terms of a recommended cash acquisition of
the ordinary share capital of the Company
(the “Acquisition”). The background to and
reasons for the directors’ recommendation for
the Acquisition is set out in the announcement
made on 11 March 2025. If the Acquisition is
completed, this will result in a change of
control of the Company.
Strategic report Governance Financial statements Additional information
4
Care REIT plcAnnual report and financial statements 2024
The growing demand for care beds for the elderly
Demand: UK elderly population growth, 75 years+ (000s)
60,000
62,000
66,000
64,000
72,000
70,000
68,000
74,000
76,000
78,000
80,000
UK
population
2025
Aged
0-14
Aged
15-29
Aged
30-44
Aged
45-59
Aged
60-74
Aged
75+
UK
population
2050
69,868
(537)
(831)
1,425
2,304
1,465
3,507 77,201
Projected UK population aged over 75 (000s)
5,000
6,000
9,000
8,000
7,000
10,000
11,000
14.0%
13.0%
12.0%
11.0%
10.0%
9.0%
8.0%
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
Percentage of UK population aged 75+ (RHS)UK population aged over 75 (LHS)
Source: ONS.
Source: ONS.
Real estate opportunities
are often underpinned by
powerful structural trends.
We’ve seen this in the last decade, with the growth
in e-commerce, digitisation and student numbers
fuelling huge demand for logistics assets, data
centres and student accommodation. An ageing
society underpins the demand, and therefore
investment rationale, in our segment of healthcare.
Last decade
Structural trend
E-commerce
Digitisation
Education
Ageing societies
Real estate opportunity
Next decade
Industrials/Logistics
Data centres
Student accommodation
Healthcare
Strategic report Governance Financial statements Additional information
5
Care REIT plcAnnual report and financial statements 2024
The growing demand for care beds for the elderly continued
We believe that the challenge of caring for
an ageing society is the next structural trend,
with the potential to create attractive returns
for care home owners who choose the right
assets and partner with the right operators.
Within this trend we see three main themes:
ageing, acuity and affordability.
Ageing
A growth market created by
anageingpopulation
The UK will be home to an unprecedented
number of older people in the coming
decades. There are currently 6.5 million
peopleaged over 75 in the UK and that
number is forecast to increase by 55%,
to10.1million, over the next 25 years.
Thischangewill happen during the lifetime
ofmost of our leases.
Rising numbers of older people will directly
lead to more demand for care home beds.
However, the market has not responded
by increasing supply. In fact, between 2012
and 2021, the supply of beds in nursing and
residential care homes fell from 11.3 per 100
people aged over 75 to 9.4 – a 17% decrease.
This reflects the high cost of developing new
homes (see Affordability below), coupled
with inefficient smaller operators leaving
themarket.
Acuity
An ageing population means care
needs are becoming more complex
While rising life expectancies are good news,
the downside is that most people will spend
the last 15 years of their life with some ill
health
1
. Around 10% of people over 80 have
care needs that make it difficult for them to
live at home.
Dementia is the most common acute
condition affecting people in care homes.
Around 70% of care home residents suffer
from some form of memory loss, which ranges
from mild confusion to severe dementia.
The Alzheimer’s Society projects that the
number of people in the UK with some form of
dementia will rise from just over 1.1 million in
2025 to 1.6 million in 2040, with the greatest
rise being among people with a severe form
of the condition. Dementia and Alzheimer’s
disease is already the leading cause of death
in England and Wales, accounting for 11.4% of
deaths in 2022 (source: ONS).
Since the COVID-19 pandemic, our tenants
have reported that people are moving
into care homes later than before, that
they’re more likely to be frail or ill and
that their staysare shorter. This is creating
a longer-term shift in the industry, with
increasing demand for care providers who
candeliver higher-acuitycare.
However, many people are kept longer in
hospital due to the shortage of care home
beds and their inability to pay for residential
or home care. This means they’re in the wrong
setting for the care they need, particularly if
they have dementia. On average during 2023
there were just over 12,000 people
2
in hospital
every night who had no clinical reason to be
there but could not be safely discharged. Half
of those people, nearly all of them elderly,
had been waiting more than 21 days to be
discharged. This “bed blocking” increases
costs for the NHS and has a knock-on effect
on other patients, who can’t be admitted
to hospital without a vacant bed. The
government has made reducing NHS waiting
lists one of its main political aims. Achieving
this will require adequate capacity in properly
funded care homes.
Bed supply hasn’t increased to respond to growing demand
Source: LaingBuisson.
Increase in people living with dementia in the UK
Source: Alzheimer’s Society.
1. Source: ONS: Healthy life expectancy in England and
Wales: between 2011 to 2013 and 2021 to 2023.
2. https://www.cqc.org.uk/publications/major-report/
state-care/2022-2023/access-to-care#waits
Strategic report Governance Financial statements Additional information
6
Care REIT plcAnnual report and financial statements 2024
SevereModerateMild
2025
+40%
+31%
+59%
Total diagnosed
dementia cases: 1,060,100
140,700
250,300
669,100
196,600
327,500
1,066,000
2040
Total diagnosed
dementia cases: 1,590,100
(30,000)
(20,000)
(10,000)
10,000
0
30,000
20,000
Year ending 31 March
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025 proj.
50,000
40,000
Total net capacity change
Beds
Capacity shake-out following
1993 community care reforms
Blair/Brown public
expenditure growth
Austerity COVID
The growing demand for care beds for the elderly continued
Affordability
The solution to rising demand must beaffordable for care funders
Most care home residents in England are state-funded, with this source of funding being
particularly important for people living in the Midlands and the North.
However, there is no national government budget for adult social care in England and a
person’s care needs might be met by their local authority’s social services budget or by their
local NHS Trust. The individual or their relatives may also have to contribute to the cost. Most
local authorities support their adult social care costs through a council tax levy and, in certain
situations, local authority or NHS funding is means tested.
This complexity and the pressure on public sector finances mean waiting lists for social care
have grown in recent years, with a doubling of the number of people waiting for over six
months. While waiting lists for NHS care are well known, the waiting lists for social care are
muchless publicised.
Prevalence rate of dementia by age cohort
Source: NHS Digital, ONS, LEK.
Private and state-funded care home residents
By region in England 2022 to 2023.
Source: ONS Care homes and estimating the self-funding population, England: 2022 to 2023.
Highly fragmented operator market
Source: LaingBuisson.
0%
20%
40%
60%
80%
Dec
23
Dec
24
Dec
22
21 22201918171615
14
131211100908070605040302010099989796959493
92
Ten largest groups All other groups (three+ care homes)
South East
South West
East
East Midlands
West Midlands
Yorkshire and
the Humber
North West
London
North East
100
80
604020
0
Proportion of care home residents state-funded
Proportion of care home residents self-funding
0%
90+85-8980-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-34
21.2%
22.8%
16.5%
1.9%
0.9%
0.3%
0.1%0.1%
0.0%0.0%
5%
10%
15%
20%
25%
3.6%
24.7%
7.9%
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Care REIT plcAnnual report and financial statements 2024
Affordability continued
The solution to rising demand
mustbeaffordable for care
funderscontinued
With local authority budgets likely to remain
hugely constrained and demand continuing to
rise, the affordability of care home places will
be crucial. The economics of our sector mean
that existing homes are more likely to meet
this affordability test than new developments.
An existing home providing good care can
cost less than £100,000 per bed. In contrast,
a high-quality new care home is often
£200,000 or more per bed, reflecting high
construction costs and limited land supply.
The higher build costs of new homes lead to
higher rents for tenants – up to 20%
1
of their
revenues as opposed to our average of 12.5%
– which they have to pass on through higher
fees for residents.
This restricts the size and growth of this
segment of the market and means that higher
fees don’t automatically translate into better
care, which depends more on the quality and
stability of the staff than the building.
From an investment perspective, an existing
home generally offers us better risk-adjusted
returns. We can buy a home at less than
its replacement cost and invest in it to add
more beds, allow the tenant to offer more
services such as dementia care, and improve
its facilities and environmental performance.
A bed in a well-run existing home is likely to
be in high demand, generating a long-term
and steadily growing income stream, which
supports its capital value.
A highly fragmented market creates
long‑term opportunity for us
There are currently just over 10,700
2
registered
care homes in the UK. The market is unusually
fragmented and over the past 15 years that
fragmentation has increased, as the market
share of the top ten care providers has
declined from a peak of 27% in 2006 to 19%
in 2024. The market share of sole traders
operating one or two care homes has also
declined, from over 80% in the early 1990s to
under 30% today. Mid-sized care providers,
operating between three and 80 homes, have
grown to fill this gap. Developing partnerships
with operators in this space has allowed us
to acquire good-quality assets at attractive
yields, with the confidence that our tenants
will run them well.
We currently own 1.7%
2
of the market,
which means we have substantial scope for
long-term growth when economic conditions
allow. We will continue to generate growth
internally, by adding beds to our existing
homes, and when opportunities arise acquire
more assets; to help meetthe need for
good-quality, affordable care homes.
The growing demand for care beds for the elderly continued
People on waiting lists for publicly funded care
The number of people waiting over six months for a care assessment has doubled (Source: ADASS).
30 November 2021 31 August 2023 30 November 2021 31 August 2023 30 November 2021 31 August 2023
395,845
470,576
204,241
249,589
41,192
84,788
+19%
+22%
+106%
Awaiting assessment, care, direct payments or review Awaiting care assessment Awaiting care assessment for over six months
1. Illustrative numbers of “Typical Care Home Financials” published by a developer selling new care homes.
2. Source: LaingBuisson.
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Care REIT plcAnnual report and financial statements 2024
Delivering attractive risk-adjusted returns
What we do
Our business model
Select tenants
We have a diversified portfolio of tenants
that includes national, regional and local
businesses. When selecting a new tenant
we consider:
• their track record and financial
performance;
• the strength of their business plan;
• their ability to provide high-quality care
to residents; and
• their ability to deliver strong trading
returns over the longer term, which will
support our investment.
Work with tenants to
improve our assets
We agree plans with our tenants to
upgrade and extend our homes. This
makes them better places to live and
work, increases their capacity, improves
their sustainability and can broaden their
offer. We can also work with tenants to
develop new homes in areas with strong
demand. These activities increase our rent,
the value of our homes and our tenants’
revenues.
Identify and appraise assets
We often identify assets we’d like to acquire
and engage with existing and new tenants
to evaluate operational performance,
the affordable rent and their interest in
becoming the operator. On other occasions,
a tenant will bring an asset acquisition
opportunity to us. When considering a
transaction, we check every aspect of
the homes, including reviewing their local
market and the building’s environmental
sustainability. Our disciplined approach
means we can buy at attractive prices,
which are often less than the cost of
replacing the asset.
Optimise the portfolio
We regularly review our assets and
categorise them as core, value-add or
non-core. Value-add assets are candidates
for asset management. We may sell
non-core assets, so we can reinvest the
proceeds and create more value, while
improving overall portfolio quality.
Agree leases
Our leases are typically for 25 years or
more and balance rental growth with
ensuring rent remains affordable to
tenants (see page 23). The leases require
tenants to spend a minimum amount
every year on repairs and maintenance,
and all our leases since 2020 include
“green” clauses, to help us work with
tenants on our ESG objectives.
Manage risk
We consider risk from many angles, from
ensuring our balance sheet stays strong,
to the way we pick tenants and make
sure they’re performing well, to our focus
on sustainability improvements to the
resilience of our portfolio through asset
management.
Monitor tenants’ performance
We keep a careful watch on many aspects
of our tenants’ performance, including
their financial results and the quality
of their care, which we discuss with our
tenants on a quarterly basis.
More information: adding tenants and
growing with them (page 13).
More information: increasing quality by
investing in our assets (page 17).
More information: choosing which assets to
buy (page 33), where we buy assets (page 34),
who funds our tenants’ residents (page 35).
More information: improving quality through
asset management (pages 21 and 33).
More information: choosing the length of our
tenant relationships (page 13), ensuring our
tenants maintain our buildings (page 19).
More information: how we manage risk
(page 11).
More information: monitoring our tenants’
performance (page 24), monitoring the
quality of care (pages 19 and 20).
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Care REIT plcAnnual report and financial statements 2024
Delivering attractive risk-adjusted returns continued
Our competitive advantages The value we create
Our business model continued
Our competitive advantages come from:
• our strategic focus on mid-market care homes, which we can acquire at below
replacement cost with rents at affordable rates;
• the IM’s deep sector knowledge and understanding of how care businesses work, which
helps with everything from buying the right assets to forming and maintaining supportive
tenant partnerships;
• the IM’s relationships with care home owners, the agents they work with and with
potential new tenants. Great relationships and a proven track record can help us to buy
assets off-market or beat the competition even when we’re not the highest bidder. These
relationships also help us when targeting disposals across the portfolio; and
• the IM’s asset management and development skills. We can identify how to improve a
care home before we buy it, successfully complete each project and improve returns by
developing new homes.
Our high-quality business generates attractive and sustainable value for our stakeholders.
Tenants
Tenants can grow their business
alongside ours, in a long-term
relationship with affordable rents,
whichbenefits both of us.
Lenders
Our lenders can provide long-term
finance to us on attractive terms,
knowing we have a secure and resilient
business, with strong cash flows.
Residents and their carers
As a landlord we support both residents
and their carers through our willingness
to invest in their homes, to improve the
spaces they live and work in.
Shareholders
Our model delivers predictable and rising
revenue, so we can pay a progressive,
fully covered dividend (see page 3). There
is also the potential for capital growth,
which supports an attractive total return.
Careful cost control enables us to benefit
from economies of scale as we grow.
Many of our costs are fixed and some
variable costs will step down as our asset
value rises (including the IM fee which
reduces from 1.0% to 0.7% of NAV above
£500 million). Along with our conservative
approach to debt finance, this helps to
maximise the total return we can deliver
to shareholders.
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10
Care REIT plcAnnual report and financial statements 2024
Delivering attractive risk-adjusted returns continued
How we manage risk
Delivering attractive risk-adjusted returns
requires us to build risk management into
everything we do. The process starts with the
board, which reviews and sets our appetite for
different risks each year. While our appetite
for particular risks might vary over time, in
general we maintain a balanced overall level
of risk, which is appropriate for achieving our
purpose (see page 2).
The diagram on the right shows our principal
risks and uncertainties, in order of the risk
that remains after we’ve taken account of the
mitigations we’ve put in place (known as the
residual risk). As the diagram shows, two of our
risks are outside our risk tolerance and we’re
looking to mitigate them further.
• For significant tenant default, we want no
more than 25% of our contracted rent to
come from a single tenant. The Minster
Group and its affiliates are currently 32%
of our contracted rent (31 December 2023:
37%), with the reduction in 2024 resulting
from adding two tenants and selling assets
Minster manages. We’ll continue to diversify
our income over time (see page 13 for more).
• For underinvestment in care homes,
the board and the IM are working to
understand what the care home of
the future will look like, to focus on
value-enhancing opportunities and
improvements to the environment for both
tenants’ residents and their staff alongside
the cost and delivery plan for achieving
our net zero carbon target by 2045. We’re
looking at whether we can do this by
investing in the homes in return for higher
rents, whether our tenants could fund the
work through increased fees for residents
orif it might have to be a landlord cost.
For more information on our principal risks,
seepages 37 and 38.
Risk appetite
Business
impact
Infectious
diseases
Significant
tenant default
Underinvestment
in care homes
Economic
disruption
Political
events
Reputational
damage
Investment
Manager fails
Accepting Critical
Flexible Significant
Cautious Moderate
Minimalist
Minor
Averse
Key
Unmitigated risk
Mitigated risk
Risk tolerance
Risk appetite and tolerance: Our risk appetite categories are (from high to low): “Accepting” (where we’re focused on maximising
opportunities); “Flexible” (willing to consider all options); “Cautious” (willing to tolerate a degree of risk); “Minimalist” (preferring options
with low inherent risk); and “Averse” (where we avoid risk and uncertainty).
We’ve also determined how much residual risk we can tolerate for each of our principal risks. This is a range, as shown in the diagram
above, and can therefore extend over more than one risk appetite category.
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Care REIT plcAnnual report and financial statements 2024
1| Working with
our tenants
Putting our purpose into practice
WAULT
20.2 years (2.9)%
2023: 20.8 years
Bed occupancy
89.1% 0.9% pts
2023: 88.2%
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Care REIT plcAnnual report and financial statements 2024
We don’t manage or operate our care homes, so we
partner with tenants who’ll operate them well and
who share our focus on providing high-quality, and
increasingly higher-acuity, care (see page 19).
We keep in close contact with our tenants throughout the year and they provide us with
detailed reports, so we can monitor their performance.
The business model on page 9 describes how we choose our tenants. We also have important
choices to make as we grow our portfolio, including the right balance between adding tenants
and growing with existing tenants.
Our strategy: adding tenants and growing with them
When we buy assets, we can select a new tenant to run them and reduce our reliance on
our existing tenants. Alternatively, we can increase the number of homes an existing tenant
operates, strengthening their business and supporting our long-term partnership.
We’re expanding our relationship with Prestige Group, through the transactions described on
page 15. We’ve also reduced our reliance on Minster through the asset disposals discussed on
page 14 and by transferring the operations of the ex-Silverline homes from Melrose, an affiliate
of Minster, to two new tenants, We Care and Fulcrum Care. See the key board decision on page
14 for more information.
1|Working with our tenants continued
How we measure our progress
The portfolio’s weighted average unexpired lease term (WAULT) is a KPI for us.
WAULT
20.2 years
2023: 20.8 years
The WAULT decreased by 0.6 years, with the passage of time offsetting the benefits of new
leases and lease extensions following our asset management projects.
Our shortest care home leases are currently 12.3 years and we are actively exploring ways to
increase these as part of our asset management activities.
Putting our purpose into practice
At the year end, our tenant base was as follows:
Tenant
Contracted
rent (%) Properties Beds
Minster Care
1
20% 28 1,631
Welford 20% 17 1,102
Holmes Care Group 14% 21 1,129
Croftwood Care
1
12% 28 1,158
Prestige Group 7% 5 469
Maria Mallaband and Countrywide Group 5% 7 508
Careport 5% 9 443
Electus Care 4% 5 340
Belmont Healthcare 3% 2 168
Carlton Hall 2% 2
2
86
Renaissance Care 2% 2 128
Optima 2% 2 99
Fulcrum Care 2% 4 212
We Care 1% 3 182
NCUH NHS Trust 1% 2 n/a
3
100% 137 7,655
1. Minster and Croftwood are both part of the Minster Care Group.
2. Carlton Hall includes a development site with planning permission for 72 beds. This is included in “homes” but
excluded from “beds” until completed.
3. Assets leased to the NHS are not care homes but other healthcare facilities, hence bed numbers are not
applicable.
Our strategy: choosing long-term tenant
relationships
The length of new leases is an important decision for us. We favour leases of 25 years or more,
since this generates long-term and growing income for our shareholders, encourages tenants
to take a partnership approach, and gives residents and care home staff a stable environment
to live and work in. Leases of this length also require us to be very selective when signing
newtenants.
During the year, we agreed nine new leases: two with Prestige Group, four with Fulcrum Care,
all of which will run for 35 years, and three with We Care which also include landlord and tenant
options to increase the term to 35 years.
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13
Care REIT plcAnnual report and financial statements 2024
Key board decision – approving
the transfer of operations to new tenants
1|Working with our tenants continued
Monitoring our tenants’ performance
The IM engages with tenants on a weekly and monthly basis and in more depth each
quarter, when it receives detailed reports from tenants setting out their financial and
operating performance. We also run an annual tenant survey to get their feedback, which is
discussed on page 31.
The main factors affecting our tenants’ financial performance and their ability to pay our
rents are their occupancy, fees for residents, staff costs (including agency staff use) and utility
costs. Trends in occupancy and fees remained positive in 2024 and in aggregate our tenants
improved their financial performance and rent cover (see pages 19 and 24).
Staff costs have stabilised as a percentage of tenant income, with our tenants generally
able to recruit more permanent employees and reduce their use of expensive agency staff,
resulting in stable staffing levels overall. Staff costs will rise further from April 2025 because
of the increase in the minimum wage and higher employer’s National Insurance. However,
our tenants are in good shape and have a track record of growing fees in line with or ahead
of inflation, so we’re confident they can manage these cost increases. Utility costs have
improved after substantial increases in previous years and our tenants have continued to
focus in 2024 on their operational efficiency.
More information on how we engage with tenants can be found in the quality section on
pages 17 to 20.
Section 172:
business relationships
The directors must consider the Group’s business relationships, including with our tenants. In
addition to receiving regular updates and detailed reports from the IM on each of our tenants,
the directors all took part in calls with tenants during the year, without the IM being present.
This allowed them to hear first-hand what tenants think of the Company as a landlord and their
relationship with the IM, and to discuss how their business is going and the issues they’re facing.
The directors shared file notes on each call and discussed the feedback at their November
board meeting.
Tenant feedback continued to be positive (see details of our tenant satisfaction survey on page
31) and while some would like us to be able to acquire more assets and help them to grow more
quickly, they were very complimentary about their relationship with the IM and the support they
receive.
Our 2023 annual report included an
extensiveexplanation of our decision to
replace Silverline Group as the tenant for
seven of our homes. Melrose, an affiliate of
Minster, temporarily stepped in as the tenant
to stabilise the homes’ performance and
work with us to develop a long-term strategy
forthem.
During 2024, we were pleased to announce
that We Care had taken on the operation
of the three care homes in Bradford, and
Fulcrum Care was the new tenant for the
four homes in Scotland. The board carefully
considered whether to approve the transfers
and looked at the alternatives, such as selling
the homes.
The directors discussed the risks of transferring
underperforming homes to new tenants,
the operators’ experience of turning homes
around and the commercial terms, including
lease incentives and working capital facilities,
the Company was offering to support the
new tenants (see page 85). The directors
considered the interests of the relevant
stakeholders, including the potential impact
on residents and staff, and concluded that
the transfers were in the best interests of all
stakeholders.
See our Section 172 statement on page 43
Putting our purpose into practice
See our Section 172 statement on page 43
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14
Care REIT plcAnnual report and financial statements 2024
1|Working with our tenants continued
Case study
Growing with our tenants
Extending our partnership with
PrestigeGroup
During the fourth quarter of 2024, we invested
in two value-add opportunities in the North of
England, partnering with one of our existing tenants,
PrestigeGroup.
The first opportunity was to acquire Middleton
Manor, an 83-bed purpose-built nursing home which
Prestige owned and operated. We’re leasing the asset
back to Prestige, which is repositioning it to provide
much-needed higher-acuity care for residents requiring
both dementia and nursing care. This transaction,
whichexchanged in 2024 and is awaiting CQC
re-registration before it completes, reflects our strategic
focus on homes which provide higher-acuity care in
communities with significant unmet demand, as is
prevalent in the North ofEngland, and which we can
acquire below replacement cost.
The second opportunity was to forward fund the
development of Bedale, a 72-bed care home. It is
pre-letto Prestige and will be developed by Prestige’s
sister development company, which completed the
successful Merlin Manor scheme in 2022. The Prestige
Group has significant experience of developing and
launching care homes in the North of England and
makes a strong partner for us on the Bedale investment.
The home will be built to the latest specifications for
both care and real estate. The design is mindful of
energy efficiency, with the home being fully electric, and
it is expected to achieve an EPC A rating on completion.
Structuring investments to control risk
andcapture increased value
In structuring the transactions, the IM focused on
mitigating the risks while ensuring we can benefit
from uplifts in value. For Middleton Manor, we’ll pay
£3.8million upfront, with a £2.1 million deferred payment
depending on the success of the repositioning and
resulting improvement in the home’s profitability. This
will also trigger an increase in the rent we receive.
This structure is very similar to a previous investment
withPrestige, Yew Tree (see the case study on page 18).
The forward funding of Bedale is expected to generate
a highly attractive net yield on cost of over 8%. We’ve
mitigated the risk posed by new developments by
capping the price here at £8.7 million, with the developer
required to cover any unexpected costs.
Creating a win-win-win investment through
investment in strategic partnerships
Partnering with existing tenants benefits us, our tenants
and society. Supporting the growth of good regional
and national care operators such as Prestige diversifies
our rental stream, giving our investors greater income
security. It also reduces risk for us, since our existing
relationship and ability to structure the investment
based on previous successful transactions gives us
confidence in Prestige’s ability to deliver on the business
plans. Finally, and most importantly, these partnerships
add to the UK’s essential social infrastructure, creating
new beds in local communities and enabling care for
some of the country’s most vulnerable people.
Putting our purpose into practice
Anticipated yield
on cost
8%
Number of
additionalbeds
155
33%
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15
Care REIT plcAnnual report and financial statements 2024
2| Our focus
on quality
Putting our purpose into practice
Capex invested in improving homes
for residents and staff
£14.0m
2023: £4.7m
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16
Care REIT plcAnnual report and financial statements 2024
2|Our focus on quality continued
Quality has two main
aspects: care and buildings.
Putting our purpose into practice
Both determine how full the homes are, how much
our tenants can charge and how secure our income
is.However, the quality of care is paramount for
bothus and our tenants. Without this, the homes
cannot succeed.
Our strategic choices include how much capital we should allocate to asset management,
what sort of improvements we should target, and the extent to which we should fund
newdevelopments.
Our tenants are responsible for repairing and maintaining the buildings and for their quality
ofcare. We monitor both of these and discuss them with our tenants at least once per quarter.
Our strategy: increasing quality by
investing in our assets
Our returns on asset management are higher than on most asset acquisitions. The lease
terms typically allow us to rentalise the investment at 8%, with the potential for valuation
uplift on the capital invested, giving a rate of return above the yield alone. These projects
are also generally lower risk, since we and the tenant have a good understanding of the
home and how the project will improve its performance.
However, we have to carefully consider how much to invest each year, since we also want to
continue to grow the portfolio within our leverage limits and need to retain enough capital
to buy assets. Our tenants also have to balance a project’s longer-term benefits with the
short-term disruption to the home, which can reduce their income while work is under way.
We therefore need our tenant’s permission for a project to go ahead.
Our portfolio management process identifies homes with the potential to add value through
asset management. We then target projects that:
• improve the home for residents and staff, such as adding en-suite bedrooms and
upgrading kitchens, laundries and other facilities;
• improve the environmental performance of the home and future-proof it against
obsolescence; and
• expand the services our tenants can offer, such as adding specialist beds for
dementiacare.
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Care REIT plcAnnual report and financial statements 2024
2|Our focus on quality continued
Putting our purpose into practice
Our progress in 2024
During 2024, we approved £12.7 million of
new asset management projects, of which
£6.7million was spent in the year and £6
million remains outstanding. These projects
are adding beds, improving the living
and working environment and enhancing
the homes’ energy efficiency. In total, our
approved projects will increase bed numbers
by 47 and add £1 million to contracted rent.
Our largest current projects are shown in the
table on the right. The case studies below give
more insight on the projects at Wombwell Hall
and Yew Tree:
Wombwell Hall case study
The first phase of work at Wombwell Hall in Gravesend, Kent was
completed in November2024. This comprised the reconfiguration of
an existing 30-bed unit into 22bedrooms with full en-suite wet room
provision and new dining and lounge areas for residents. A central
reception and administration building has been converted into a “hub”
with café area, salon and meeting place for residents and families. A
comprehensive upgrade of the mechanical and electrical systems has
also been completed, future-proofing the home for years to come.
Care REIT invested £2.5 million with a return of 8.12% on the works,
which form part of a longer-term strategy to reposition the home as
a centre for dementia care alongside its core nursing provision. The
works have resulted in an improved EPC B rating through additional
insulation and new high-performance windows and external doors.
Quote from Wombwell Hall home manager: “The newly refurbished
unit is an inspiring example of how we can reimagine care for those
living with dementia. We’ve created a space that not only offers
security but also enhances the quality of life of our residents.”
Yew Tree Grange case study
Yew Tree Grange is a purpose-built care home
comprising 25 bedrooms located alongside the
existing Yew Tree Care Centre in Redcar, Teesside.
Our tenant, Prestige, developed the building to
provide premium rooms to complement the existing
76-bedroom nursing home. Yew Tree Grange is
self-contained and includes residents’ lounges and
dining areas, with all bedrooms benefiting from
generously sized en-suite wet rooms. Care REIT
invested £2.5million in the project with a return in
excess of 8%.
The building has been constructed to high
environmental standards with an EPC A rating.
Heating and hot water is provided from air source
heat pumps and solar panels, meaning there is no
need for a traditional gas-fired boiler.
Our pipeline currently has a further ten
projects at various stages, with total funding
of up to £16.8 million over the next two to
three years. These projects have the potential
to add 85 beds and £1.3 million of annual
rent. We’ll support them if they improve the
quality of care and the building, create value
for shareholders and we have the financial
resources to deploy.
Home and tenant
Amount
committed Project benefits
Wombwell Hall
Belmont
£2.5m Reconfiguration of 30-bed unit into 22 beds, all with wet rooms. Refurbishment of main entrance and
office into “hub” with café, seating and hair salon. Upgrade to mechanical and electrical installations
and window replacement.
Kingston Court
Careport
£1.0m Internal reconfiguration to create four additional bedrooms and a dementia-orientated wing, with café.
Installation of solar PV.
Turnpike Court
Croftwood
£1.1m Extension to create eight additional bedrooms and new residents’ lounge. Installation of solar PV on the
roof. Improved EPC (C to B).
Elm House
Croftwood
£3.0m Extension and internal reconfiguration to form 21 new beds (a net increase of 19), new day spaces,
entrance lobby and reception, and sensory garden. Improved EPC (C to B).
Amberley
Minster
£2.5m Demolition of existing wing and replacement with 21 new-build rooms (net increase of seven). Electric
heating to new wing with air source heat pump. Improved EPC (Cto B).
Yew Tree
Prestige
£2.5m New-build 25-bed unit alongside existing 76-bed YewTree Care Centre. All new rooms have wet rooms
and are fully electric with air source heat pumps and solar PV. The unit is targeting an EPC A rating.
Leycester House
Croftwood
£1.2m Infill extension and internal reconfiguration to create additional wet room bedrooms and improved
lounge and dining space, resulting in a net increase of five bedrooms. Improved EPC (C to B).
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2|Our focus on quality continued
Ensuring our tenants maintain our buildings
Regular repairs and maintenance protect the value of our homes and keep them up to
standard for residents and staff.
Our leases specify the minimum amount our tenants need to spend, which totalled nearly
£14million in 2024. We monitor this carefully, looking at spend in the current year and the total
over the last three years. The IM regularly visits homes to inspect them and check progress,
with 124 visits taking place in 2024. Our valuer, surveyors, environmental specialists and
other advisers support the IM in reviewing the quality of our buildings, with the valuers alone
undertaking 46 home inspections in the year as part of their commitment to visit each property
at least every three years.
Where we identify concerns, we engage with the tenant to resolve them. This may be because
the tenant has fallen behind on the repairs and maintenance required by the lease terms
or because we have a more general concern that the home isn’t being maintained to the
standards we expect.
Monitoring the quality of care
The main ways we look after residents’ interests are through our oversight of care quality ratings
and ensuring the homes are well maintained, as described above. Our tenants are responsible
for their residents and we don’t directly engage with them, except when we meet them during
home visits.
The IM tracks reports and ratings from regulators, and regularly reviews customer feedback
on the homes. If the regulator rates a home as inadequate or requires improvement, the IM
reviews the report in detail and discusses the findings with the tenant’s operations director. This
allows us to understand the issues, the actions the tenant is taking and whether there are any
broader operational concerns the tenant is looking to address. In addition to this the IM visits
the home and meets with the home manager to better understand the issues on the ground.
Where appropriate, we’ll seek independent support to help resolve any ongoing issues.
Putting our purpose into practice
How we measure our portfolio quality
The following KPIs reflect the overall quality of our assets. Our total accounting return
(page119), the WAULT (page 13) and our 0% vacancy rate (see page 117) are also important
measures of quality:
EPRA topped-up net initial yield
(NIY)
Occupancy
6.96% 89.1%
2023: 6.92% 2023: 88.2%
EPRA topped-up NIY had a marginal
movement of 4bps across the year,
reflectingstable market conditions.
Occupancy across the portfolio continued to
increase during the year as it recovered to
pre-COVID levels (see the chart below). This
reflects both the continued attractiveness
of our homes and the essential nature of the
service our tenants provide.
Care REIT Group average adjusted bed occupancy
1
76%
78%
88%
86%
84%
82%
80%
90%
92%
Jan
2025
Jan
2020
Jan
2021
Jan
2022
Jan
2023
Jan
2024
COVID
1. Excludes closed or under-development homes. Upon opening, these are excluded for up to three years while in
build-up. Currently one home is excluded.
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2|Our focus on quality continued
Putting our purpose into practice
Section 172: community impact
and business reputation
In addition to the financial implications of building and care quality discussed above,
the directors must consider how these issues can affect the community and the Group’s
reputation. Poor buildings or care have a direct impact on residents’ quality of life and the
working environment for staff, and therefore the community within which they operate.
Badlymaintained buildings and poor care could do significant damage to tenants’
reputations,which in turn could harm perceptions of the Group.
Monitoring the quality of care continued
The CQC (the regulator for England) carried out inspections for only 10% of the portfolio of
homes inEngland.
In contrast, the Care Inspectorate (Scotland’s care regulator) continued to carry out their regular
inspections, with almost 75% of the portfolio’s Scottish homes being inspected during 2024.
The government has announced its intention to improve the effectiveness and efficiency of
key patient safety organisations, particularly the CQC. The new chief executive of the CQC
has acknowledged that the public can no longer rely on the safety ratings of care homes
in England: “Effectively, the CQC is not delivering on its operational performance.” With the
average age of CQC assessments currently around four years
1
, we will be closely monitoring how
this progresses. In the meantime, we’re considering other indicators we can use to monitor care
quality, such as ratings and reviews from residents and their families on carehome.co.uk. While
online ratings are imperfect, they are regularly updated and may give usearly visibility of trends
in performance.
Average home ratings on carehome.co.uk
9.3 average score for our operators by home on
carehome.co.uk
Above the national average of 9.0
We monitor ratings closely for individual homes and our tenants, reporting results to the board on
aquarterly basis.
See our Section 172 statement on page 43
1. Source: Health and Social Care Committee on 15 January 2025, UK Parliament.
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2|Our focus on quality continued
Asset management timeline
January
Handover of refurbished
bedrooms at Fairview House.
Spend (in year)
£0.1m
April
Work commences at Leycester
House to form an additional
five bedrooms and enhance the
lounge and dining space.
Spend (in year)
£1.1m
Additional bedrooms
5 | +12.5%
April
Works commence on
reconfiguration of Copperfield
unit at Wombwell Hall.
Spend (in year)
£2.5m
September
Works complete at Karam Court
to create four new bedrooms and
new reception area.
Spend (in year)
£0.2m
Additional bedrooms
4 | +8.5%
July
Work commences on extension
at Birchlands to form four
additional bedrooms, reception
area and manager’s office.
Spend (in year)
£0.9m
Additional bedrooms
4 | +7.4%
March
Works commence on
refurbishment and four additional
bedrooms at Kingston Court.
Spend (in year)
£1.0m
Additional bedrooms
4 | +5.3%
October
Handover of Copperfield unit at
Wombwell Hall.
May
Works commence on new
eight-bedroom extension at
Turnpike Court and roof-mounted
solar panels.
Spend (in year)
£1.1m
Additional bedrooms
8 | +15.1%
July
Handover of new-build 25-bed
unit at Yew Tree Care Centre.
EPC A rated with air source heat
pump and solar panels.
Spend (in year)
£2.5m
Additional bedrooms
25 | +32.9%
December
Work commences on
eight-bedroom extension and
new dining area at Duncote Hall.
Additional bedrooms
8 | +20.0%
Putting our purpose into practice
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3| Our focus on
affordability
Putting our purpose into practice
Rent cover
2.2x+9.4%
2023: 2.0x
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3|Our focus on affordability continued
For our business to be sustainable, our tenants must be able to attract a sufficient number of
residents at appropriate fee rates, both private and publicly funded. Additionally, the rent we
charge our tenants has to be affordable over the long term.
Our strategic choices relate to the rents we set when we first agree leases and how we structure
our rent review clauses.
Strategy: setting initial rents and ensuring sustainable rental growth
We believe that all our stakeholders will be better off in the long run if we make sure rents
remain affordable. With this in mind we typically set initial rents to ensure strong rent cover from
day one, and all our leases include annual inflation-linked rental growth, with minimum and
maximum increases each year. For most leases, these are set at 2% and 4% respectively.
This structure shares risk between us and our tenants. It guarantees that our income will grow
every year, including when inflation is low, while protecting our tenants when inflation is high.
How we measure affordability
Rent cover is one of the most important KPIs for our business. We also track our rental growth
and the amount of rent that’s overdue:
Section 172: long-term impact
and business reputation
The way we set initial rents and structure rent reviews are good examples of our focus on the long
term. If rents become too high, we’ll lose tenants and hence income, causing major disruption
to residents and staff, reducing the value of our assets and risking damage to our reputation.
Balancing rental growth with affordability is therefore a key part of providing sustainable returns
for shareholders.
Rent cover Average rental growth
2.2x 3.6%
2023: 2.0x 2023: 4.1%
Rent cover was strong through the year,
reflecting our tenants’ success in growing their
fees, as well as further increases in occupancy.
In total, 131 rent reviews added £1.7 million to our
contracted rent in 2024.
Rent collection
100%
2023: 99%
We’ve collected 100% of the rent due in respect of 2024. Seven of the Group’s properties are on
variable-rent leases after being re-tenanted in 2024 from Melrose.
Putting our purpose into practice
See our Section 172 statement on page 43
Care REIT leases inflation linkage
99%
1%
 Percentage of Care REIT leases
with RPIlinkage
 Percentage of Care REIT leases
with CPIlinkage
Care REIT leases caps and collars
84%
1%
15%
 Percentage with floor 2%/cap 4%
 Percentage with floor 1%/cap 5%
 Percentage with upwards-only
inflation linkage
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3|Our focus on affordability continued
The chart below shows rent cover over time, demonstrating that rents have been consistently
affordable for our tenants, as well as the scale of the improvement over the last 18 months:
Rental growth versus inflation
The chart below sets out the rental growth we’ve achieved over the last seven years and
compares the percentage increase with the rate of inflation. It shows that we’ve received
above-inflation increases for much of this period, with our tenants being protected from high
inflation during 2023 and 2024.
Putting our purpose into practice
Average annual fee increases since 1998
Source: LaingBuisson.
Affordability of our tenants’ rent
An important indicator of whether our tenants’ rent is affordable is whether their fees increase
at or ahead of the rate of inflation. As shown below, care home operators have a long history of
achieving this:
AWF growth by quarter since 2018
This continued in 2024. Across our portfolio, the average weekly fee (AWF) rose by 6.7% to £1,119,
contributing to rising tenant profitability and rent cover.
0
0.5
1.0
1.5
2.0
2.5
Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1
Rent cover Last 12 months (LTM) rolling average
2019 2020 2021 2022 2023 2024
16%
12%
8%
4%
0%
Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q1 Q2 Q3 Q4
RPI uplift floor protection RPI uplift cap protectionRPI Rental uplift % increase
2018 2019 2020 2021 2022 2023
Q4Q3Q2Q1
2024
4.2%
4.3%
3.4%
Average fees for
nursing care
Average fees for
residential care
RPI
0
£400
£200
£600
£800
£1,000
16%
14%
12%
10%
8%
6%
2%
4%
Tenant AWF excluding grant income AWF increase LTM (%) Linear (tenant AWF excluding grant income)
£1,200 18%
Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1
20192018 2020 2021 2022 2023 2024
Trend line
Rent cover by quarter
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Care REIT plcAnnual report and financial statements 2024
3|Our focus on affordability continued
In 2024 we invested £1 million in
improving Kingston Court (see page
29). Oncompletion of the capex we
had aQ&A with the home manager:
Putting our purpose into practice
Q: What improvements did you want to make
to the home andwhy?
A: The aim was two-fold; to increase the number of wet rooms
and create a more comprehensive dementia-friendly
environment.
We added 24 wet rooms to existing bedrooms and converted
two unused lounges into four new wet room bedrooms.
Alongside bedroom upgrades and additions, we enhanced our
dementia-friendly environment with the addition of a library-
themed coffee shop, local market-themed shop, a revitalised
hair salon and themed corridors.
The new wet rooms we felt gave the home a more premium
feel for those who prefer their own showering facilities over the
communal, yet well-apportioned, bathrooms.
The dementia-specific areas were intended to enhance the
lives of those living with dementia, providing destination areas
to reminisce, discuss and reflect.
Q: How did you manage the works; was there any disruption?
A: Through planning with our project management team,
contractor and our care teams we facilitated the works
programme as smoothly as possible. Residents and families
were made aware of the works programme well in advance to
keep them informed and seek feedback.
Given our high occupancy level, it was important to keep a
tight programme of works to release bedrooms and move
residents to ensure there was no delay or unnecessarily empty
bedrooms. The building contractor was flawless in managing
this, as well as quiet and considerate. Disruption was kept to
an absolute minimum.
Overall our residents were excited by the works and the
improvements to come.
Q: What has been the response of residents, families and
staffto the improvements that have been made?
A: The new wet rooms and bedrooms have been well received
by current residents and have proved useful in attracting new
residents to the home.
The library-themed coffee shop, local market-themed shop,
revitalised hair salon and themed corridors have been a hit
with residents – enriching their lives, sparking conversations
and providing places to visit. New residents and their families
are typically pleased with the quality of these areas and can
quickly see the benefits the new facilities provide.
Our staff have always been committed to the residents and
the home and the upgrades have further enhanced this
commitment. Staff are immensely proud of the great care
they deliver and now have an even better environment to
match.
Q: How do you think those residents living with dementia
willbenefit?
A: The new dementia features have benefited our residents in
many ways by promoting social interactions, engagement
and activity, feelings of familiarity, calming, a sense of normal,
physical movement and places for residents and staff or
families to interact and reminisce.
It’s great to see these benefits in action every day, and
pleasing to hear visiting health and social care professionals
delighted with further improvements in residents’ lives we are
delivering here.
Q: Have you noticed any difference in the electricity bills
afteryou installed the solar panels on the roof?
A: Yes, the solar panels are contributing a healthy amount of
electricity to the care home which we can monitor via a web
portal. And at 80 bedrooms, it’s all well used in both the
summer and the winter months. It’s also great for the planet
and we are pleased to be playing our own small part in
reducing the home’s carbon footprint.
Kingston Court summary
Number of beds
80
Public/private fee split
85%/15%
Average EBITDARM margin (since January 2020)
27.5%
2024 average
occupancy
94%
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Care REIT plcAnnual report and financial statements 2024
4| Increasing our
sustainability
Putting our purpose into practice
EPCs rated B and above
60%
2023: 57%
Carbon intensity
(kg CO
2
e per m
2
per year)
51kg (3)%
2023: 53kg
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4|Increasing our sustainability continued
Our ESG framework sets out our approach to
implementation of ESG across the business.
We invest in care homes which deliver
positive social outcomes in the heart of
thecommunity.
Key pillars of our ESG framework
Environment Social Governance
Priorities
Strategic investment in our portfolio to improve
environmental impact.
Improving EPCs through enhancements to our
properties’ energy efficiency and reduction in
carbon emissions in line with our net zero pathway.
Priorities
Having a positive impact on the people living and
working in our homes.
Recognising the vital social role care homes play
and investing in homes that provide high-quality
care to a range of residents.
Priorities
Robust governance and transparent reporting to all
stakeholders.
Maintaining effective partnerships with key
stakeholders and providing clear and accountable
data.
Objectives
Ensure all assets achieve a minimum of EPC Grade
C by 2026 and a minimum of B by 2030.
Ensure our portfolio is net zero by 2045.
Ensure our portfolio is resilient to climate change.
Objectives
Support health and wellbeing of vulnerable
people.
Ensure access to quality and value-for-money
care for both the publicly funded and private-pay
sectors.
Objectives
Be transparent with all stakeholders.
Maintain robust corporate governance.
Proactively listen and engage with public and
private stakeholders.
Aligns with the following UN Sustainable
Development Goals
Aligns with the following UN Sustainable
Development Goals
Aligns with the following UN Sustainable
Development Goals
Care homes are an important part of the UK’s social
infrastructure and are set to play an increasing role in
supporting older and vulnerable people.
Putting our purpose into practice
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4|Increasing our sustainability continued
Key pillars of our ESG framework
Objectives How we do it Metrics Update
ESG Pillar 1:
Strategic investment
in our portfolio
to improve
environmentalimpact.
Ensure all assets achieve a minimum of EPC
Grade C by 2026 and a minimum of B by
2030.
Ensure our portfolio is net zero by 2045,
with interim targets of:
• 15% reduction from 2022 in absolute
carbon emissions on alike-for-like basis
by the end of 2025; and
• 50% reduction from 2022 in carbon
emissions on alike-for-like basis by the
end of 2030.
Ensure our portfolio is resilient to climate
change.
Investing in assets that are highly energy
efficient or have the potential to be with
further capex.
Modelling the carbon footprint of the
portfolio and implementing our net zero
strategy and plan.
Investing in asset management projects to
improve energy efficiency.
Climate change scenario planning.
Percentage of assets with EPC of C
orhigher.
Number of assets with improved EPC.
Carbon intensity of portfolio in
kgCO
2
e/ m
2
/ year.
Embodied carbon associated with
developments and extensions.
Percentage of assets with green leases.
Like-for-like carbon emissions.
Capex deployed on environmental
improvements.
94% of portfolio rated C or higher
(2023: 93%)
1
.
14 homes with improved EPCs (2023: 12).
51kg CO
2
e/m
2
/year (2023: 53).
Benchmark project 488kg CO
2
e per m
2
17% (2023: 17%).
A 4% increase from our 2022 baseline
14,143 tCO
2
e (2023: 14,413).
£981k (2022: £741k).
ESG Pillar 2:
Having a positive
impact on the people
living and working in
our homes.
Support health and wellbeing
ofvulnerablepeople.
Ensure access to quality and
value-for-money care for both
the publicly funded and
private-pay sectors.
Investing in quality buildings and actively
monitoring care provider performance.
Developing close partnerships with
operators through formal and informal
engagement.
Conducting detailed due diligence on
long-term need for care.
Maintaining balance of private and publicly
funded residents.
Tenant satisfaction survey.
Affordability of rental payments to tenants.
Proportion of publicly funded and
private-pay residents.
CQC ratings.
93% rate relationship with Care REIT as
moderately or very satisfied (2023: 87%).
Rent cover 2.21x (2023: 2x).
69% of tenant income funded by NHS/LA
(2023: 69%).
As discussed on page 20, due to the low
proportion of homes reviewed by the CQC
during the year, we are looking at other
indicators such as carehome.co.uk for which
our tenants received an average score
of 9.3 compared to the national average
of9.0.
ESG Pillar 3:
Robust governance
and transparent
reporting to all
stakeholders.
Be transparent with all stakeholders.
Maintain robust corporate governance.
Proactively listen and engage with public
and private stakeholders.
Maintaining clear disclosures on
operational performance.
Maintaining policies on supplier code
of conduct, anti-money laundering
andbribery.
Managing the business in accordance with
our responsible investment policy.
Engaging with tenants on good governance
practices.
Investment Manager’s UN PRI submission.
EPRA sustainability rating.
Carbon Disclosure Project rating.
UN PRI Signatory status retained.
Gold rated (2023: Gold).
D rated (2023: D).
Putting our purpose into practice
1. Based on English equivalent data for Scottish EPCs.
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Care REIT plcAnnual report and financial statements 2024
EPC breakdown by percentage
English equivalent for UK-wide portfolio
2
4|Increasing our sustainability continued
ESG Pillar 1: Environment
Improving the energy performance of our portfolio
Our target to improve the EPC ratings across our portfolio is to achieve a minimum B rating
(orScottish equivalent) by 2030, with an interim target of 50% by 2025.
During 2024, we continued to assess where we can improve EPC ratings through interventions
such as building fabric improvements and improved energy efficiency. Examples of this are new
electric air source heating systems, replacement windows and insulation, and the installation of
solar panels at four projects.
Where we’ve implemented measures like these, we’ve updated the EPC in accordance with
current building regulations. As a result, we’re pleased to report a further increase in the
proportion of our homes rated EPC B or higher across the portfolio. We are continuing to review
assets that fall below an EPC band B to identify opportunities to improve these in line with our
target for full coverage by 2030.
Year
Target percentage of assets
with an EPC of B or above
1
Progress
in 2024
2025 50% 60%
2
2030 100%
Putting our purpose into practice
1. There may be cases where exemptions apply under MEES regulations, in which case we will provide all viable
energy efficiency measures. The EPC B threshold is based off the England and Wales rating and equivalent
methodology is applied for assets inScotland.
2. Based on published EPC data for English equivalent rating from Scottish EPCs. The English equivalent for one
Scottish property has been estimated based on comparable properties. The EPCs are those currently registered for
each property and may be based off historic regulation and are therefore subject to change upon re-inspection.
0
30
20
10
40
50
60
A B C D
2024 English equivalent (combined) % 2023 English equivalent (combined) %
2% 2%
34%
38%
58%
6%
9%
51%
Kingston Court case study
Kingston Court is a nursing home located close to Cumberland Infirmary in Carlisle and
provides residential and nursing care for up to 80 residents. Our tenant, Careport, wanted to
improve the offer for residents living with dementia whilst also improving the environmental
performance of the building. We agreed a plan to invest £1 million in the building to create
an additional four bedrooms from existing under-utilised day space. Central communal
areas in the home have been converted into a café and library area, providing destination
spaces for residents and families to enjoy.
Solar panels have been erected on the roof to generate renewable energy for the building.
Since these panels were commissioned, they have generated 25% of the building’s
electricity, making them environmentally and economically beneficial with a projected
payback period of five years.
See Q&A with the Kingston Court home manager on page 25.
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4|Increasing our sustainability continued
Putting our purpose into practice
ESG Pillar 1: Environment continued
Working with our tenants to deliver improved energy efficiency
The carbon emissions from the consumption of energy are the responsibility of our tenants, and
therefore classed as “Scope 3” under the Greenhouse Gas Protocol. We continue to work closely
with our tenants to help them reduce their carbon footprint, including investing in renewable
energy technology on asset management projects. Over time we expect to invest further in
energy improvements where the additional rental is affordable to our tenants.
We continue to improve our data collection on our tenants’ energy consumption, with 93%
coverage. As the quality and quantity of our data improves, we’re in a better position to
engage with tenants to identify opportunities where we can increase energy efficiency, reduce
emissions, and reduce running costs.
Like-for-like carbon emissions reduced by 4% despite a small increase in the conversion factor
for natural gas. Whilst we continue to review longer-term trends, this reduction is encouraging.
However, our target of a 15% emissions reduction from our 2022 baseline is unlikely to be
achieved given the increase in the previous year. Whilst helping our tenants to reduce their
emissions remains important to us we will need to review our target for 2025 and how best to
work in partnership with our tenants to help them become more energy efficient. However, our
like-for-like emissions for 2024 were still 2% higher than the 2022 baseline.
12 months to
30 Sep 2024
12 months to
30 Sep 2023
Building energy intensity
(kWh per bed) 10,850 11,036
Building energy intensity like-for-like kWh/m
2
/year 284 289
Greenhouse gas emissions
from building energy consumptions (tCO
2
per bed) 1.95 1.99
Like-for-like total indirect greenhouse gas emissions
(kg CO
2
e per m
2
) 51 53
These emissions are classed as Scope 3 under the Greenhouse Gas Protocol and as such are
notin our direct control; however, we continue to support our tenants in reducing emissions
andadvocate for greater energy efficiency.
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4|Increasing our sustainability continued
Putting our purpose into practice
Tenant satisfaction survey
In 2024 we again conducted a tenant survey,
facilitated by an independent external body.
We are pleased to report a 92% response rate,
of which 93% (2023: 81%) of tenants reported
having a positive relationship with Care REIT
and viewed us a good long-term partner, and
86% (2023: 91%) reported satisfaction with
Care REIT’s level of engagement with them.
We are always keen to get feedback from
tenants and we seek to maintain and grow
our positive relationships with them.
Charitable causes
In 2024, we were delighted to continue our
partnership with The Care Workers’ Charity.
It supports care workers in times of need,
particularly with mental health support,
financial grants and advocating for care
workers generally. As part of our support, a
team from the IM completed the Yorkshire
Three Peaks Challenge, raising funds of
£3,000.
ESG Pillar 3: Governance
During the year we reviewed existing and new policies including our Supplier Code of Conduct,
ESG policy and, following the year end, we also approved a modern slavery statement which
sets out our position against the use of any form of forced labour. We continue to engage on
a regular basis with all our tenants to ensure they have up-to-date employment policies and
practices.
We were pleased to retain our EPRA sBPR award for the fifth year running, demonstrating our
commitment to transparent disclosure on the environmental performance of our portfolio. The
IM is a signatory to the UN Principles for Responsible Investment (UN PRI) and has embedded
those principles in its risk management and investment decision-making processes.
In 2024 we submitted our initial response to the Global Real Estate Sustainability Benchmark
(GRESB), reporting for the calendar year 2023. In line with our expectations, we have received
a one-star rating. Although in some respects our scale and the make-up of our portfolio do
not align with the more generalised scoring in the GRESB framework, we believe we have a
useful baseline from which to measure progress. During the year we also made our second
annual submission to the Carbon Disclosure Project; with identified areas for improvement,
wemaintained an overall D rating.
ESG Pillar 2: Social
On average, 6,551 people were residents in our care homes during 2024. As highlighted on page
23, we set average rents which enable our tenants to charge fees which are more likely to be
affordable to both the private self-pay market and those receiving local authority financial
support.
As well as providing an appropriate community setting for residents, the homes in our portfolio
are an important source of employment for a predominantly local workforce. Care homes rely
on skilled and dedicated workers, but there are subtle differences between nursing homes
(nurses must be on duty 24 hours per day) and residential homes (nurses are not a requirement).
In both types of home, staff are required to undergo mandatory training and professional
development, with staffing levels and qualifications being reviewed by the industry regulators.
On average, over 9,000 people are employed in our care homes, meaning they play an
important role in local communities and economies.
Care homes are highly regulated, and we work closely with our tenants to monitor the quality of
care provided. This depends on our tenants employing properly trained care workers and there
are numerous legal and regulatory requirements for mandatory training. Care workers therefore
typically undertake c.36 hours of training every year as part of their ongoing development. In
many cases this leads to career progression opportunities and greater responsibility.
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31
Care REIT plcAnnual report and financial statements 2024
5| Delivering growth
through enhancing
ourportfolio
Putting our purpose into practice
Contracted rent roll
£51.4m 5.3%
2023: £48.8m
Portfolio valuation
£679.0m 4.3%
2023: £651.3m
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Care REIT plcAnnual report and financial statements 2024
5|Delivering growth through enhancing ourportfolio continued
These choices include the types of assets we buy, where they are and how we use debt to finance our growth.
Putting our purpose into practice
Growing our business requires us to make strategic choices
that influence our returns and the risks we face.
Our strategy: focusing on mid-market care homes
Our investment policy (see page 124) allows
us to invest in different types of healthcare
properties. Given the growing demand for
care beds for the elderly (see pages 5 to
8), we’ve chosen to focus on care homes, in
particular existing homes in the mid-market.
These are attractive to us because:
• they provide a good setting for quality
care;
• they have a larger target market than
high-end homes, which should mean
fewer unfilled beds for our tenants;
• they’re lower risk than new developments,
as the capital cost is significantly less per
bed (see page 8) and they don’t need to
build their occupancy and staffing from
scratch; and
• they often give us scope to add value
through asset management (see page 17).
In the fourth quarter of 2024, we invested
in two homes. One is a 72-bed home being
developed in Bedale, North Yorkshire, by our
existing tenant Prestige Group. By funding
the development for a capped price of £8.7
million, we’ll be investing in a brand-new
home for £121,000 per bed. The property will
be fully electric and we expect it to have an
EPC rating of A.
We also exchanged contracts to acquire
Middleton Manor, an 83-bed care home
near Darlington, through a sale and
leaseback with Prestige. All the bedrooms
have en-suite bathrooms and the home has
an EPC B rating. We’ll pay up to £5.9 million
for the asset, including a £2.1 million deferred
payment based on the home’s performance.
The maximum cost equates to £71,000
perbed.
Both homes will be let to Prestige on new
35-year leases. The blended acquisition
yield is very attractive at more than 8%,
meaning the transactions should increase
our income and should generate growth in
capital values. We’ve had good results from
a similar transaction with Prestige, when we
funded the development of Merlin Manor
in Hartlepool and acquired Yew Tree, an
existing home in Redcar. Both these homes
have performed well and the unlevered
internal rate of return on our Merlin Manor
investment is more than 20% to date.
See the case study on page 18 for more
information.
Optimising our portfolio
As described on page 9, we regularly review our portfolio to identify assets that are no longer
core for us. In July 2024, we sold two care homes in Wales for a combined £4.5 million. We
also exchanged contracts to sell three assets in East Yorkshire for £4.3 million, to a local
care home business; as these had not completed by the year end they were classified as
assets held-for-sale. This transaction should complete when the CQC approves the transfer
to the newoperator. The five homes sold were originally acquired as part of the seed
portfolio purchased in May 2017 after the IPO. They were non-core because they’ve either
underperformed, have low EPC scores or are smaller than the ideal size for a care home. The
aggregate sale price of £8.8 million was in line with their most recent valuation. The disposals
also reduce our reliance on Minster Group, our largest tenant, which operated these homes.
Section 172: maintaining high
standards of business conduct
The IM and Minster Group are related parties. The relationship has many advantages for us
but the directors also take the conflict of interest risk very seriously in their decision-making
(seepage 51 for more information on how we work with the IM).
We sold the two care homes in Wales to an affiliate of Minster, making it a smaller
related-party transaction. To protect shareholders’ interests, we commissioned a second
independent valuation of these assets, which supported the sale price. This enabled the
directors to approve the sale. Our financial advisers and corporate brokers also gave their
opinion that the transaction was fair and reasonable as far as our shareholders were concerned.
See our Section 172 statement on page 43
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33
Care REIT plcAnnual report and financial statements 2024
5|Delivering growth through enhancing ourportfolio continued
Our strategy: diversifying the portfolio
around the country
We manage risk by spreading the portfolio around the UK, so we don’t rely on a small number
of local markets. Most of our homes are in areas where asset prices are more attractive, there’s
strong demand for care and often less competition. This makes our homes an even more
important part of their local communities.
At 31 December 2024, we owned homes in the following locations:
Measuring our progress
In addition to our total accounting return and dividends, which are discussed on page 3, we use the following KPIs to monitor our returns from the portfolio:
Profit before tax NAV EPRA NTA per share Adjusted EPS
£45.0m £494.5m 119.21p 7.42p
2023: £48.8m 2023: £478.1m 2023: 114.96p 2023: 7.28p
Profits fell in the year, primarily due to the
reduction in fair value gains year on year, partially
offset by rental income increases.
The NAV increased by 3.4%, mainly due to rent
reviews feeding through to valuation growth. The
average topped-up NIY for the year was broadly
flat, as discussed on page 19.
The growth in net assets led directly to 3.7%
growth in EPRA NTA per share, with the number of
shares in issue unchanged during the year.
Adjusted EPS benefited from higher income
from rent reviews and rent increases from capital
improvements, alongside strict control of operating
costs, partially offset by higher interest costs.
Properties Beds
Location Number
Change in
2024 Number
Change in
2024
% of portfolio
market value
England
East Midlands 8 — 405 — 5.8%
East of England 9 — 547 — 9.9%
North East 12 — 792 +25 9.0%
North West 33 — 1,358 +4 15.4%
South East 4 — 319 — 6.3%
South West 9 (1)
1
550 +8 10.2%
West Midlands 14 — 862 — 13.9%
Yorkshire & The
Humber
2
11 — 693 — 6.1%
Northern
Ireland 5 — 340 — 3.5%
Scotland 32 — 1,789 — 19.9%
Wales — (2) — (103) —
Total 137 (3) 7,655 (66) 100%
1. Fairview Court and House were previously treated as two properties, with separate CQC registrations. Fairview
now has a single CQC registration across both buildings and is therefore treated at one property. There is no
change to the portfolio as a result of this.
2. Includes three properties classified as assets held-for-sale.
Putting our purpose into practice
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34
Care REIT plcAnnual report and financial statements 2024
5|Delivering growth through enhancing ourportfolio continued
Putting our purpose into practice
Our strategy: prudently financing our growth
We can grow the portfolio more quickly andincrease returns by using an appropriate amount
ofdebt. We’re very aware of the risksof having too much leverage, so our policy is to:
• have a maximum gross loan-to-value (LTV) ratio of 35% at the time we draw down the debt;
and
• have enough hedging to keep the risk of rising interest rates within our risk tolerance.
How we monitor our financing
We use the following KPIs to monitor our debt position:
EPRA net debt EPRA (net) LTV
£194.4m 28.4%
2023: £181.4m 2023: 27.8%
Net debt increased by 7.2% in the year, largely
due to our investment in asset management
projects and Middleton Manor, less the
proceeds from asset sales.
The EPRA (net) LTV decreased with the impact
of higher net debt partially offset by rising
asset values. Gross LTV was 28.3%, which
remains well within our policy limit.
Percentage of drawn debt that is fixed or hedged
88%
2023: 95%
£175 million of drawn debt is hedged via interest rate caps which expire in August 2025 (SONIA
cap at 4% for £50 million) and January 2026 (SONIA cap at 3% for £50 million) and a private
placement facility of £75 million at 3% fixed until 2034.
Our strategy: ensuring a good balance of funding
fortenants’ residents
We like our portfolio to have a good balance of funding for tenants’ residents, from local
authorities, the NHS and private pay. This helps to make our tenants’ revenues more resilient
than relying on one source of fees and means we earn a predictable income from our assets.
Italso has important social benefits, aswe provide care homes for everyone.
With few changes to the portfolio in the year, funding for our tenants’ fee income alsoremained
steady and well balanced:
Public
68.5%| (0.2)%
2023: 68.7%
Local authorities NHS
58.0%| (0.8)% 10.5%| (0.6)%
2023: 58.8% 2023: 9.9%
Private pay
31.5%| 0.2%
2023: 31.3%
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35
Care REIT plcAnnual report and financial statements 2024
5|Delivering growth through enhancing ourportfolio continued
Engaging with our shareholders and lenders
While all our stakeholders have an interest in
the growth of our business and our financial
stability, our shareholders, tenants and
lenders are the most directly affected. Our
engagement with our tenants and their
residents is discussed on pages 13, 19 and
20respectively.
Understanding our shareholders’
interests
The IM leads our investor relations programme
and, along with our corporate brokers,
ensures the board is kept well informed of
shareholder views. Shareholder engagement
in the year included the IM holding investor
roadshows, with one taking place between
the 2023 results announcement and the
continuation vote at the AGM in May and the
second following the interim results in August.
Feedback from the meetings was positive,
with shareholders appreciating the strength
of our performance. We also organised
shareholder visits to our assets, so they could
see the quality of our care homes.
The Chair also offered meetings to our largest
shareholders in the year, with several taking
up the opportunity. Again, shareholders were
complimentary about the Company and the
IM, and while there were concerns about
the share price discount to the NAV, they
recognised this was a market issue rather
than specific to the Company. They also
emphasised the need to preserve capital and
only invest in the best opportunities, in the
current economic situation.
Understanding our lenders’ interests
The IM also regularly engages with our debt
providers, providing quarterly information that
shows we’re complying with the covenants in
our debt facilities, offering site visits to homes
within their security pool, and reporting on the
performance of the tenants and the homes
that the facilities are secured against.
Putting our purpose into practice
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36
Care REIT plcAnnual report and financial statements 2024
Our principal risks
Our risk management process and how we categorise our risk appetite are discussed on pages 125 to 127. Our principal risks are as follows:
Infectious diseases
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk appetite: Cautious
Significant tenant default
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk appetite: Cautious
Underinvestment in care homes
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk appetite: Cautious
Economic disruption
Probability: High
Impact: Moderate
Change in the year: Increase
Risk appetite: Cautious
Underinvestment could occur if: tenants don’t invest
in maintaining the properties, which could reduce
the quality of care they can provide; the market
or regulation may demand enhanced or different
facilities; or, failure to consider the effects of climate
change which could accelerate obsolescence (both
physical and low carbon transition risks) and to meet
our net zero target by 2045.
In addition, there is a risk that shorter-term leases
of under ten years will affect the valuation of our
portfolio.
How we manage this risk
All of our leases have full repair and maintenance
obligations, as described on page 19. In extreme
circumstances, we can replace a tenant who
fails tocomply. We identify asset management
opportunities before we buy assets and where
appropriate we commit with our tenants to ensure
this work begins in the first 12 to 18 months.
We are continuing to review our strategy for
investing in homes to improve energy efficiency and
environmental performance, including resilience
to heat and flooding. We currently invest for an
increase in rent, and are looking at using our buying
power to reduce costs for our tenants.
We continue to wait for guidance on future
environmental regulation. We have put this risk
slightly outside of our risk tolerance.
In relation to the risk of valuation reduction from
leases under ten years, across our care home
portfolio our shortest leases are 12.3 years.
We actively extend leases where significant
development is undertaken and all new leases have
a tenant-only option to extend at year ten. We are
exploring options to extend historic leases.
Opportunity
We can fund building extensions or other
improvements, in return for an increase in rent.
An economic downturn could have a moderate to
significant impact on the business, but we believe
that our mitigations are sufficient to bring it within
our risk tolerance. Difficult economic conditions
could put further pressure on local authority
funding, affecting our tenants’ fees and their
ability to pay our rent.
Interest rates remain high and have been slow
to fall, increasing the scrutiny on the financial
covenants of our debt facilities which, if breached,
could result in the banks taking security over
our assets. Furthermore, the risk of economic
disruption as a result of potential global events has
increased in the year.
How we manage this risk
We can limit the impact of this risk by buying
well, ensuring our tenants have strong rent cover,
managing the assets to increase their value and
managing the level of debt drawn across the Group.
Tenant profitability and long-term affordable rents
are the key to a sustainable business (see pages
23to 25). We regularly assess our tenants’ financial
performance, particularly their rent cover (see page
23). The Care Act 2014 places responsibilities upon
local authorities to support individuals who need
care, which helps to mitigate this risk.
The board agrees cash flow and debt levels,
maintaining a cautious leverage in line with our risk
appetite. Our LTV cap is 35% and we are aiming to
keep our debt levels well below this cap. We also
have a policy to limit our exposure to increases in
interest rates through fixed rate debt and interest
rate caps. Our inflation-linked leases ensure our
income grows every year, which supports property
valuations.
Opportunity
Reduced asset valuations and/or higher debt costs
may create attractive buying opportunities.
An outbreak of a significant new infectious disease
would clearly place care home residents, who are
naturally vulnerable, at significant danger. It may
result in lower care home occupancy, reduced
tenant profitability and higher costs. All of these
would impact on the ability of our tenants to pay
us rent, the value of our portfolio and our ability to
work with tenants successfully.
How we manage this risk
COVID-19, together with other illnesses, means care
home operators have experience of managing
infectious diseases. Since the outbreak of COVID-19,
we have increased our monitoring of occupancy
statistics to a weekly format, giving us rapid
feedback on this KPI. Also, having an affordable
rent, and thus strong rent cover, enables our tenant
operating partners to react better to unforeseen
changes. In an extreme outbreak we would expect
the government to support operators as they did
through COVID-19; however, should they not provide
this support, we have ensured that our business can
sustain a delay in rent collection.
We continually work with our tenants to explore
improvements to the homes; this can include
ensuring the home is better protected to help with
infection control, including air filtration, temperature
sensors and unitisation of the home, to help with
isolating outbreaks.
We believe that, especially with the learnings from
the recent pandemic, the mitigations are sufficient
to reduce the risk to moderate, and to be within our
risk tolerance.
Opportunity
None.
This is the risk that either a single large tenant
(more than 10% of rent roll) or several smaller
tenants default. Any tenant failure is likely to cost
us money (as the Silverline situation shows), but
some tenants are larger than others. Failure of
most tenants would have a moderate impact on
us, but a Minster Group failure, as by far the largest
group (33% of contracted rent), would be critical
and is why the risk is outside of our risk tolerance.
This could reduce our revenues and asset values.
How we manage this risk
Our close monitoring of tenants’ performance
enables us to spot issues quickly and we have shown
we can replace a tenant if needed. Most tenants
have seen improved profitability this year.
Our objective is for no tenant to account for more
than 25% of our contracted rent. Accordingly, we
aim to continue adding new tenants over time,
to further diversify our income (see page 13). We
also maintain close contact with Minster and the
IM receives quarterly accounts which they discuss
in detail with the tenant, confirming its financial
health.
Opportunity
None.
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37
Care REIT plcAnnual report and financial statements 2024
Our principal risks continued
In July 2024 a new Labour government was
elected with a large majority. It is working on
a ten-year plan to improve the NHS, which is
expected to be published at the end of the
first quarter of 2025. The government has also
announced the formation of a Royal Commission
to look at reform of adult social care. However,
the Commission will not deliver its full report
until 2028. That means that during the life of this
parliament it appears to be unlikely that there will
be substantial changes to the way in which social
care is funded and delivered.
How we manage this risk
We see this risk as moderate, because if the
government were to change regulation that
increases operational costs in care homes (for
whatever reason) it would have to accept that fees
would rise to pay for this – the alternative being
tenants losing money and homes closing, which
would be politically unacceptable and disastrous
for local authorities and the NHS. Our tenants are
used to providing care in the current imperfect
environment. We have enhanced our knowledge
of likely future developments in the health service
and sought contact with opinion formers to increase
their understanding of the sector.
Opportunity
Increased government funding could help the sector
to grow and provide more opportunities for us to
support adult social care.
We rely on the IM’s capabilities to execute our
strategy and support our day-to-day relationships.
If the IM fails to retain key staff, this could result
in poor relationships with stakeholders and,
ultimately, failure to collect rent and a reduction
invalue of our portfolio.
How we manage this risk
The service requirements are set out in the
Investment Management Agreement which the
board monitors annually through the management
engagement committee and more regularly
through board member interactions with the IM.
The IM is a well-run partnership closely bound into
the success of the Company. In the last resort, the
board believes that it could find an alternative
manager to take over. The net risk is therefore within
our risk tolerance.
Opportunity
None.
Political events
Probability: Medium
Impact: Moderate
Change in the year: Slight increase
Risk appetite: Cautious
Reputational damage
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk appetite: Minimal
Investment Manager fails
Probability: Low
Impact: High
Change in the year: No change
Risk appetite: Minimal
Circumstances that could damage our reputation
include our tenants providing poor care or
breaching standards around matters such as
minimum wage or modern slavery. In addition,
Minster Group is a related party to the IM. If there
is a breakdown in trust on related party disclosures,
this could damage our reputation.
We have also set targets to deliver net zero carbon
by 2045; failure to deliver against our carbon
reduction strategy could damage our reputation
with investors and the community within which our
care homes operate.
How we manage this risk
We are a responsible company and conscious of
reputational risks, which we think could be critical if
unmitigated, but are minor after the measures we
take. We monitor tenants carefully for the quality of
the care, through regular meetings, care home visits
and CQC ratings. We only select tenants with high
standards.
The board ensures we transparently disclose related
party activities and take decisions in the best
interest of stakeholders. The board also oversees the
monitoring of our progress against our ESG targets.
Whilst not on track for our interim net zero target in
2025, we continue to provide transparent reporting
on our performance and the activities being
undertaken to achieve our 2045 target.
Opportunity
None.
Other risks
There are several other risks that we monitor
closely but we don’t believe are principal risks
for us. These include:
Taxation risk – We’re a UK REIT and have to
comply with certain rules to maintain that
status. Any change to our tax status or in UK
tax legislation could make it harder to achieve
our investment objectives.
Cyber security – We need to protect our
customer and company data from cyber
attacks. Losing sensitive information could
materially harm our financial condition. We
have relatively few IT systems, as the IM runs
our business and the Administrator runs the
accounting and banking systems. The risk
committee reviews our internal controls and
provides assurance to the audit committee
that they’re effective. The audit committee
also reviews our internal controls once a year.
Financial management – There’s a risk
that our budgets and plans are inaccurate,
that we’ve made unrealistic assumptions
or not applied them correctly, leading to
our financial position deteriorating. The
board reviews our financial results and any
differences to our forecasts at least once a
quarter, so we can investigate any issues.
Development activity – Developments are
inherently risky and can face unexpected cost
overruns and delays. High inflation and global
supply chain delays have increased this risk
over recent years. Through careful planning,
site optimisation and ensuring our forward-
fund commitments are capped, we seek to
ensure all developments remain accretive to
investors even if risks materialise.
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38
Care REIT plcAnnual report and financial statements 2024
Financial review
Portfolio valuation reflects income growth and stable market valuations
Cushman & Wakefield independently values our portfolio in accordance with the RICS Valuation
– Professional Standard. As at 31 December 2024, the portfolio was valued at £679.0 million
(31December 2023: £651.3 million), up £27.7 million or 4.3%. The increase was made up as
follows:
Contribution to
valuation increase
£m %
Capital improvements 14.0 2.2
Disposals (4.5) (0.7)
Valuation movement 18.2 2.8
Total 27.7 4.3
The valuation increase of £18.2 million equates to 4.40 pence per share. This is made up of 5.46
pence per share resulting from inflation-linked rental growth, with (1.06) pence per share due to
market value movements.
Resilient financial performance
Net rental income for the year increased by 9.6% to £54.1 million (2023: £49.4 million).
Thisreflected:
• a full year of rental income from a portfolio of properties we invested in initially through an
interest-bearing loan, which previously generated interest income rather than rental income.
We converted these to freehold ownership in June 2023. Rental income was £3.1 million
higher in2024 as a result, with a corresponding reduction in interest income (see below); and
• rent reviews and rent increases following capital improvements, which added £1.6 million
tonet rental income in 2024.
Under IFRS, net rental income includes some rent we’re required to recognise as income before
we receive it, reflecting the minimum uplift in rents over the lease terms, on a straight-line basis.
Our cash rental income for the year increased by 10.9% to £47.2 million (2023: £42.5 million).
Our administrative and other expenses totalled £7.5 million (2023: £7.1 million), which led to a
total expense ratio of 1.54% for the year (2023: 1.54%). The EPRA cost ratio reduced to 13.8%
(2023: 14.4%) as we tightly controlled costs. This is a strong performance and our EPRA cost
ratio is in the top quartile of our peer group. Further discussion of these cost ratios can be found
on pages 115 and 117.
Finance costs were £11.3 million (2023: £12.0 million), reflecting reduced amortisation of
loan arrangement fees compared to 2023, where due to modification of loans, some
brought-forward arrangement fees were fully expensed in the year. Interest income was
£0.2million (2023: £3.8 million), with the 2023 figure including the £3.7 million of income
discussed above.
The change in the fair value of investment properties was a gain of £18.2 million
(2023:£14.8million gain), contributing to profit before tax of £45.0 million (2023: £48.8 million).
EPS for the year was 10.85 pence (2023: 11.79 pence) and EPRA EPS was 8.89 pence
(2023:8.67pence). Adjusted EPS, which strips out non-cash and one-off items, was 7.42 pence
(2023: 7.28 pence). These EPS figures are all on both a basic and diluted basis. More information
on the calculation of EPS can be found in note 11 to the financial statements.
Attractive and fully covered dividends
As a REIT, the Company must distribute at least 90% of its qualifying profits each year. The
Company has therefore declared four quarterly dividends of 1.7375 pence each in respect of
2024, meeting the total dividend target of 6.95 pence per share, up 2.7% on the 6.77 pence
paid in respect of 2023. All four dividends were Property Income Distributions.
The details of these dividends are as follows:
Quarter to Declared Paid
Cash cost
£m
31 March 2024 25 April 2024 17 May 2024 7. 2
30 June 2024 24 July 2024 16 August 2024 7. 2
30 September 2024 24 October 2024 22 November 2024 7. 2
31 December 2024 24 January 2025 21 February 2025 7. 2
Total 28.8
We aim to deliver a dividend that’s fully covered by adjusted earnings. The total dividend for
2024 was 128% covered by EPRA EPS and 107% covered by adjusted EPS.
Our dividend target
for 2025 is 7.20 pence per share
1
, an increase of 3.6% on 2024.
At 31 December 2024, the Company had distributable reserves of £113.6 million.
1. This is a target only and not a profit forecast. There can be no assurance that the target will be met and it should not be taken as an indicator of the Company’s expected or actual results.
Strategic report Governance Financial statements Additional information
39
Care REIT plcAnnual report and financial statements 2024
Financial review continued
Portfolio valuation drives higher net asset value
The NAV at 31 December 2024 was £494.5 million, up 3.4% (31 December 2023: £478.1 million).
NAV per share also increased by 3.4%, to 119.33 pence (31 December 2023: 115.38 pence).
The chart below shows the main contributors to the movement in EPRA NTA per share. As we’re
required to pay out the large majority of our property rental earnings, the portfolio revaluation
was the largest factor.
EPRA NTA per share (pence)
Strong and prudent balance sheet
There were no changes to our debt facilities during the year. Our year-end position is shown in
the table below:
Expiry
Facility size
(£m)
Drawn at
31 Dec 2024
(£m)
Propco interest
cover covenant
Propco LTV
covenant
Virgin Money
RCF Dec 2029 50.0 30.5 200% 50%
HSBC
RCF Apr 2026 75.0 47. 0 200% 55%
NatWest
RCF Jun 2029
1
50.0 45.3 175%
2
50%
Private
placement
Senior secured
notes Dec 2035 3 7. 0 37.0 250% 55%
Senior secured
notes Jun 2035 38.0 38.0 250% 55%
Total 250.0 197.8
1. With the option to extend for up to one year to June 2030, subject to NatWest’s agreement.
2. Interest cover covenant is 175% until June 2025, after which it will increase to 200% for the remainder of the term.
At the year end, our debt facilities had an average maturity of 5.5 years (31 December 2023:
6.3years). If we exercise the extension option on the NatWest facility, this increases to 5.7 years,
with the earliest refinancing due in April 2026.
See page 35 for more information on our debt financing, including our LTV ratio and interest
rate hedging arrangements.
We had significant liquidity at 31 December 2024, with cash and cash equivalents of
£10.5million and undrawn debt facilities of £52.2 million. This gave us total headroom of
£62.7million, before accounting for our capital commitments.
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40
Care REIT plcAnnual report and financial statements 2024
108
114
110
116
118
120
112
124
122
Opening
NTA
Adjusted
earnings
Dividends
paid
Portfolio
revaluation
Amortisation of
debt arrangement
costs
Closing
NTA
128
126
114.96
3.97
119.21
(6.90)
(0.23)
7.42
Financial review continued
Liquidity bridge (£m)
Dividends and net interest costs fully covered by operating cash flows
Our cash movements in the year show that our dividends and net annual interest payments are fully covered by operating activities.
0
50
40
20
10
70
60
30
Cash at
Dec 24
10.5
Undrawn
debts
Available cash
and debts
Capital
commitments
Headroom
80
(15.6)
62.7
52.2
47.1
(20)
(10)
60
50
40
30
20
10
0
Net cash
rental
income
Admin
expenses
Working
capital
movements
Interest
received
Interest
paid
Net
cash flow
from
operations
Dividends
paid
Net
free
cash flow
Investments,
disposals
and capex
Debt and
hedging
costs
Net cash
movement
in the
period
Finance
from
cash
Finance
from
loan
facilities
£0.2m
£(7.5)m
£0.8m
£32.1m
£3.5m
£(14.7)m
£(0.7)m
£(11.9)m
£(1.1)m
£47.2m
£(8.5)m
£(28.6)m
£13.0m
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41
Care REIT plcAnnual report and financial statements 2024
Going concern and viability
The board regularly monitors the Company
and Group’s ability to continue as a going
concern and its longer-term viability.
Thegoing concern assessment covers the
15-month period to 30 June 2026. Summaries
of the Group’s liquidity position, actual and
prospective compliance with loan covenants
and the financial strength of its tenants are
considered at the scheduled quarterly board
meetings. As part of the Group’s assessment,
the modelling includes (but is not limited to)
the identification of uncertainties facing the
Group, including:
• the risks of default of the Group’s tenants,
taking into consideration current rent cover.
We review the occupancy performance of
each tenant over the preceding 15 months
and then run sensitivities by the tenant,
including a drop in occupancy of 5%, an
increase in staff costs by 5% and other costs
by 10% and the effect these sensitivities
have on rent cover and appraise the risk of
a tenant default as low, medium or high;
and
• the risk of a fall in investment property
values. This may be because of a multitude
of risks (as outlined on pages 37 to 38).
Wereview the resulting impact on the
Group’s debt covenants and the remedial
action that may be taken, including the
extent of the resources available to the
Company to cure covenant breaches.
The Group’s forecasting model includes a
variety of stress tests including reduction in
investment property valuations, restriction
of income from tenants (i.e. non-payment of
rent), the costs associated with re-tenanting,
the inclusion of increases in underlying costs
and increases in interest rates. Reverse stress
tests have been prepared to evaluate how
much valuations or net income would need to
fall to trigger defaults in each of the security
pools.
Mitigating actions including corresponding
reductions in costs as valuations fall, the use
of unsecured properties to prevent covenant
breaches and stopping dividends were also
considered. The sensitivity scenarios reviewed
by the audit committee and the board
include:
• non-payment of rent for all medium and
high-risk tenants for six months while
increasing SONIA and bank base rates to
4.75% on variable interest rate loans;
• assessing the level of loss of rents that could
be sustained within a security group before
each covenant or default level is triggered;
and
• assessing the loss of rents or valuation
that could be sustained before the Group’s
unsecured assets would be fully utilised
in application to cure rights within debt
facilities.
The detailed scenario modelling is performed
by the IM and presented to the audit
committee and board for review, challenge
and debate. The projections and scenarios
considered in connection with the approval
of this financial information had particular
regard to stresses arising from rising inflation
and interest rates and, in particular, the
impact on the trading and financial strength
of the Group’s tenants as highlighted above.
Property values would need to fall by more
than 40% before loan-to-value covenant
breaches would arise with all facilities being
fully drawn. Rental income would need to
fall by 34% before interest cover covenant
breaches would arise, with all facilities being
fully drawn.
The board considered an extended 15-month
going concern period was appropriate, owing
to the refinancing of one £75 million revolving
credit facility in April 2026. The interest
received from current and prospective lenders
to refinance this facility, low LTV across the
Group and quantum of unsecured assets has
given the board sufficient comfort that this
does not pose a going concern issue.
Going concern statement
The board has weighed up the risks to going
concern set out above, together with the
ability of the Company to take mitigating
action in response to those risks.
The board considers that the combination of
their conclusions as to the tenants’ prospects,
the headroom available on debt covenants
and the liquidity available to the Group to
deal with stressed scenarios on income and
valuation outlook, leads to a conclusion that
the Company and the Group are each able to
continue in business for the foreseeable future.
The board therefore considers it appropriate
to adopt the going concern basis in the
preparation of this financial information.
Viability statement
The period over which the directors consider
it feasible and appropriate to report on the
Group’s viability is the five-year period to
31March 2030. This period has been selected
because it is the period that is used for the
Group’s medium-term business plans. The
board considers the resilience of projected
liquidity, as well as compliance with debt
covenants, under a range of inflation and
property valuation assumptions. These
scenarios include stress tests and reverse
stress tests consistent with those described in
the paragraphs preceding the going concern
statement and include a consideration of
mitigating actions that may be taken to avert
or mitigate potential threats to viability.
Given the longer period of assessment covered
by the viability review, further analysis is
conducted in order to test the reasonableness
of the key assumptions made and to
examine potential alternative outcomes and
mitigating actions relating to those risks and
assumptions.
These included:
• debt refinancings during the forecast
period. In relation to additional refinancing
obligations within the period of the viability
assessment, the directors have reasonable
confidence that extensions or replacement
debt facilities will be put in place; and
• furthermore, the Group has the ability to
make disposals of investment properties
to meet its future financing requirements;
however, this assessment did not assume
any disposals took place.
Having considered the forecast cash flows and
the impact of the sensitivities in combination,
the directors confirm that they have a
reasonable expectation that the Group will
be able to continue in operation and meet its
liabilities as they fall due over the five-year
period ending 31 March 2030.
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42
Care REIT plcAnnual report and financial statements 2024
Section 172 statement
Section 172 of the Companies Act 2006 gives the directors several duties relating to the matters
shown in the table below. During 2024, the directors consider that they’ve acted in good faith
and in the way that would be most likely to promote the Company’s success for the benefit
of shareholders, while also considering the broad range of stakeholders who interact with our
business.
Matter Response
a) The likely consequence of any decision
in the long term.
See page 23
b) The interests of the company’s employees. The Company doesn’t have any employees,
so this doesn’t apply.
c) The need to foster the company’s
business relationships with suppliers,
customers and others.
Tenants: see pages 14, 20 and 28.
Service providers: see pages 50 and 51.
Lenders: see page 36.
d) The impact of the company’s operations
on the community and environment.
See pages 20 and 23.
e) The desirability of the company
maintaining a reputation for high
standardsof business conduct.
See page 20, 23 and 33.
f) The need to act fairly between members
ofthe company.
The directors must ensure they treat all
shareholders fairly when making their
decisions. The board wasn’t required to make
any decisions in 2024 where any group of
shareholders could be treated differently from
others, so this issue didn’t arise.
Key board decisions
The board’s key decisions in the year included approving:
• the acquisition of two assets (page 33);
• the disposal of five assets (page 33); and
• new tenants for the homes previously operated by Silverline (page 14).
The other significant matters the directors considered are shown on pages 48 to 50.
This strategic report was approved by the board on 12 March 2025 and signed on its behalf by:
Simon Laffin
Chair
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43
Care REIT plcAnnual report and financial statements 2024
What’s in this section
Our board 45
Corporate governance review 47
Working with the Investment Manager 51
Nomination committee report 53
Audit committee report 54
Directors’ remuneration report 57
Directors’ report 60
Statement of responsibilities 64
Independent auditor’s report 65
Governance
Strategic report Governance Financial statements Additional information
44
Care REIT plcAnnual report and financial statements 2024
Our board
Simon Laffin
Chair
Rosemary Boot
Senior independent non-executive director
Appointed
1 January 2023 to the board, 1 April 2023 as Chair
Skills and experience
Experienced Chair, executive and non-executive director
in large and small, public and private companies.
Career has spanned healthcare real estate, property
development and management, retail, consumer goods,
financing, restructuring, financial services and private
equity. Corporate governance expertise from 30 years
on boards. He published a book “Behind Closed Doors.
The Boardroom: How to Get In, Get On and Make a
Difference”, mentors senior executives and presents
on governance. Former finance director of a FTSE 100
company and qualified accountant.
Previous roles
• Chair of Assura plc, Flybe Group plc and Hozelock
Group
• Non-executive director at Watkin Jones plc, Dentsu
Group Inc, Quintain Estates and Development plc,
Aegis Group plc, Mitchells & Butlers plc and Northern
Rock (as part of the rescue team)
• Adviser to CVC Capital Partners
• Group finance & property director of Safeway plc
Other current roles
None
Appointed
16 January 2017
Skills and experience
Highly experienced in corporate governance, as a board
director and committee member across a range of
sectors. Strong business, financial and capital markets
background, as a former corporate finance adviser to
large listed companies and through chief financial officer
roles. Deep interest in sustainability, having worked for
and founded organisations focused on tackling climate
change as a business issue.
Previous roles
• Chief financial officer of Future Cities Catapult and
Carbon Trust
• Executive director and strategy adviser at Circle
Housing Group
• Executive director at UBS Warburg
• Non-executive director at Southern Water
• Trustee of The Green Alliance
• Non-executive Chair of Triple Point Energy
Transitionplc
Other current roles
• Non-executive director of Urban&Civic plc
• Co-founder and director of Chapter Zero Limited
• Non-executive director and audit and risk committee
Chair of Nido Living
For more informationsee:
https://www.carereit.co.uk/
ourpeople/board-of-directors
Gender diversity
Ethnic diversity
Board tenure
Male 3
Female 2
White British or other
White (including
minority-white groups) 4
Black /African/
Caribbean/Black British 1
0-5 years 3
6-8 years 2
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45
Care REIT plcAnnual report and financial statements 2024
Our board continued
Amanda Aldridge
Independent non-executive director
Cedi Frederick
Independent non-executive director
Chris Santer
Independent non-executive director
Appointed
1 March 2019
Skills and experience
Extensive risk and governance experience including
LSE and AIM requirements, public sector governance
and reporting, M&A and fundraising. Conversant with
evolving ESG reporting requirements and best practice
approaches in a range of sectors, including government
incentives for investment to accelerate net zero.
Experience of working with listed and private companies,
public sector businesses and not-for-profit organisations.
Fellow of the Institute of Chartered Accountants in
England and Wales.
Previous roles
• Audit and advisory partner at KPMG
• Non-executive director of Headlam Group plc and
Places for People
Other current roles
• Non-executive director of The Brunner Investment
Trust Plc
• Non-executive director of Staffline Group plc
• Non-executive director of Low Carbon Contracts
Company and the Electricity Settlements Company
• Non-executive director of Helical PLC
Appointed
1 April 2024
Skills and experience
Extensive leadership and board-level experience in the
healthcare and housing sectors, gained over a 40-year
career, across the public, private and not-for-profit
arenas. Includes more than five years as chief executive
of a not-for-profit organisation that cared for and
supported older people through its residential homes
and home care support, as well as delivering services
for children, young people and families. Has a strong
understanding of the NHS, including through board
appointments at NHS Trusts.
Previous roles
• Chief executive of Avante Partnership
• Chief executive of Adepta
• Chair of North Middlesex NHS Trust
• Non-executive director at Hertfordshire Partnership
NHS Foundation Trust and Barnet Enfield and
Haringey Mental Health NHS Trust
Other current roles
• Chair of NHS Kent and Medway
• Chair of the Health and Europe Centre
• Co-Chair of Inspire for Black Londoners
• Managing Director of Article Consulting
• CEO of Consiliaris Digital Systems
Appointed
13 May 2021
Skills and experience
Around 25 years of real estate investment and
development experience in the UK and Continental
Europe, in both listed and private equity funds, making
or managing direct and indirect real estate investments.
Particular focus on healthcare real estate, including
primary care, medical centres, senior living and care
homes. Previous healthcare experience includes joint
ventures with Sunrise Senior Living Inc. to develop and
operate premium, private-pay care homes in the UK.
Member of the Royal Institution of Chartered Surveyors.
Previous roles
• Chief investment officer for Primary Health
PropertiesPLC
• Director of portfolio management at PGIM Real Estate
and MGPA
Other current roles
• Portfolio manager for Schroders Capital Real Estate
Impact Fund
Key
Audit
committee
Management
engagement
committee
Nomination
committee
Remuneration
committee
Committee Chair
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46
Care REIT plcAnnual report and financial statements 2024
Corporate governance review
We follow the AIC Code of Corporate Governance, which takes a sensible approach by adapting
the UK Corporate Governance Code to the specific circumstances of externally managed
investment companies.
In 2024, we complied with all of its principles and provisions, as shown in the table on pages 111 and 112.
You can download the AIC Code from www.theaic.co.uk.
The AIC released a new version of its Code in 2024, to align it with the latest version of the
UK Corporate Governance Code. The most significant change will extend the directors’
responsibilities relating to risk management and internal controls with effect from 1 January
2026. Theaudit committee report describes the work we’re doing here (see page 54).
Board membership
The board’s composition and succession planning are always on our agenda, as we aim to
balance continuity with continuing to refresh our membership. Philip Hall retired at the 2024
AGM and Rosemary Boot has told us that she plans to retire in 2025. They both joined the
board at the Company’s formation in 2017, andwe thank them both for their significant
contribution.
We were delighted to welcome Cedi Frederick to the board from 1 April 2024. As the Company
invests in UK healthcare real estate, it’s vital that we understand how health policy and funding
are evolving. Cedi has brought this expertise to the board and provides a valuable perspective
to our discussions. We’ve also begun the search for a new director to replace Rosemary as Senior
Independent Director and Chair of the remuneration committee.
Diverse thinking and experience are important to good decision-making. The board meets
the FCA’s targets for gender and ethnic diversity, and for having a female director in a senior
board position. An effective board also needs every director to feel included, listened to and
respected, and our board evaluation confirmed this remains the case.
All the directors will be standing for re-election at the 2025 AGM. Rosemary Boot, Amanda
Aldridge, Cedi Frederick and Chris Santer all remain independent and I was independent when
Ibecame Chair.
Our meetings
The following table shows the directors’ attendance at board and committee meetings.
Inaddition to our scheduled meetings, we call some meetings at short notice, for example
toapprove transactions or announcements. Any director who can’t attend a meeting is
invitedto give their views in advance.
Director Board
Audit
committee
Management
engagement
committee
Nomination
committee
Remuneration
committee
Simon Laffin
(Chair) 18/18 — 1/1 4/4 2/2
Rosemary Boot 17/18 5/5 1/1 4/4 2/2
Amanda Aldridge 17/18 5/5 1/1 4/4 2/2
Cedi Frederick
1
12/16 2/3 1/1 2/2 1/1
Philip Hall
2
3/6 1/2 — 1/2 0/1
Chris Santer 15/18 5/5 1/1 3/4 2/2
1. Appointed to the board with effect from 1 April 2024.
2. Stepped down from the board with effect from 21 May 2024.
All directors are members of the management engagement, nomination and remuneration
committees, and all directors, other than myself, are members of the audit committee. However,
the audit committee usually invites me to attend its meetings. We have chosen this structure to
ensure that all of us know about each committee’s work, ensuring a joined-up approach to the
work of the committees and the board as a whole.
We believe in good corporate governance because it helps us to make sound
decisions that benefitour stakeholders.
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47
Care REIT plcAnnual report and financial statements 2024
Corporate governance review continued
What the board discussed in 2024
The rest of this annual report covers many of the topics that the board discussed during the
year. Some of the highlights were:
Strategy
The long-term viability of our business depends on the quality of care our tenants provide, which
determines demand for their services and their ability to pay rent to us. Our homes provide the
setting for this care and must stay fit for purpose.
At our strategy day in October, we considered what a care home in our portfolio will need to
look like in 2035, so it continues to support quality care for people with increasingly complex
needs, while integrating technology and automation, and meeting stricter environmental
standards. At the same time, we’ll need to maintain or increase affordability for tenants, their
residents and public-sector funders, while earning an acceptable return on our capital. We
agreed that the IM will prepare a piece of research on this topic, so we can develop a plan to
ensure the portfolio continues to meet these standards over the next decade.
Tenants
We work closely with our tenants to encourage best practices and to improve our assets. We also
pay careful attention to their financial performance and the quality of care they provide at every
quarterly board meeting, as well as regularly reviewing whether they’re meeting their obligations
to keep the homes properly maintained, so they stay fit for residents and preserve the value of the
asset. The IM is responsible for day-to-day relationships with tenants but it’s also important that
the board has a direct understanding of tenants’ views, so all the directors take part in calls with
tenants each year without the IM being present. See page 14 for more information.
Approving new tenants for the former Silverline homes was one of our key decisions in the year
(see page 14). We also reflected on the lessons learned from the process and while our tenants
are in robust shape overall, we’re working with the IM to further strengthen our framework for
managing the risk of tenant default.
Acquisitions and disposals
During 2024, we approved a transaction with Prestige to acquire one of its homes and invest
in another which it’s developing. We also approved transactions to dispose of five assets, two of
which were sold to an affiliate of Minster. This required us to ensure we appropriately managed
the conflicts of interest and the sale terms were in line with the market. See pages 33 and 51 for
more information.
Asset management
We receive regular updates on the Company’s asset management strategy and progress with
key projects. In 2024, we approved an investment plan totalling £16 million, after considering
the target yield for capital expenditure and its allocation between assets run by different
tenants. For capital projects on homes with less than 15 years left on the lease, this will also
include a lease extension to preserve the long-term value of the investment. As with all board
decisions, the business case for each project looks at the impact on all stakeholders. We also
consider the benefits to the environment and how the project helps to mitigate or adapt to
climate change. In addition, we approved new ten-year leases on the assets let to the NHS in
Cumbria.
Sustainability
The key sustainability risk we face is ensuring our assets remain fit for purpose, as described
in the strategy section above. We also regularly monitor progress with the Company’s ESG
strategy. Specific discussions in 2024 included improvements to EPC ratings, where we’re
ahead of our target of having 50% of the portfolio rated at least B by 2025 (see page 29), and
tenants’ understanding of and compliance with modern slavery laws. However, we’re not on
track to meet our interim objective to reduce CO
2
emissions by 15% by 2025 and we continue to
challenge the IM on the efforts being made to get back on track by 2030 and how to engage
with tenants to get their buy-in. We also considered how the Company is progressing under the
categories set out in the TCFD framework and the results of external ESG benchmarks, such as
GRESB.
Financing
The board considered the Company’s financing and its available routes for funding growth on
several occasions. This included reviewing our debt financing strategy and current debt profile,
the size of our debt facilities and options for replacing the interest rate hedges expiring in 2025
and the debt facility maturing in 2026.
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48
Care REIT plcAnnual report and financial statements 2024
Corporate governance review continued
What the board discussed in 2024 continued
Risk appetite and management
We reviewed the Company’s risk appetite and approach to risk management at several
meetings, including a dedicated meeting in December 2024.
Our discussions covered all the principal risks, whether they remained the key risks facing the
business and whether there were any emerging risks which required inclusion. We concluded
that the principal risks were unchanged, but that we should consider including climate change
as a separate risk, and ensure we’re properly articulating specific aspects of our risks. We
compared our risk appetite to our perception of the gross and mitigated risks, challenged
whether our risk mitigations were sufficient and the extent to which they’d been tested, and
considered the measures we could take to restore our position if a risk materialised. We also
continued to improve the way risks and actions are managed and documented.
We debated the level of risk associated with tenant failure and underinvestment in care homes
and concluded that they remained outside our desired risk tolerance. This means that we have
asked the IM to do further work on these two areas to understand how we can better mitigate
them. The board also discussed whether the mitigated risks for economic disruption and
political events had increased since last year and agreed that they were marginally higher.
Pages 36 to 38 and 125 to 127 provide a full description of the Company’s risk management
framework and principal risks.
Public policy
One of the findings of last year’s board evaluation was that we wanted to spend more time
considering public policy and how it will affect healthcare and social care. As well as discussing
this in our regular meetings, we devoted a session of our strategy day to reviewing the
challenges facing the NHS, the pressures on public-sector funding for social care and how and
whether we should engage at a local level to help the funders of social care improve the way
they invest in it. Providing government with some limited support and information to help it
understand the key issues facing social care is also a priority.
Dividends
Having adjusted our dividend policy in 2023, the focus of discussion in 2024 was our dividend
target for the year. Taking into account market volatility and the uncertain economic backdrop,
we decided to set a progressive but prudent dividend target for 2024 of 6.95 pence per share,
representing year-on-year growth of 2.7%.
Policies
We continued to review and update our policies and approved new or revised policies covering
hedging, preventing tax evasion, and counterparty credit risk.
We decided we didn’t need a written policy for the tenure of the board or the Chair, given
that our active succession planning means that in practice our policy is for the non-executive
directors and the Chair to retire from the board around their sixth year, unless a slightly longer
tenure is needed to enable a smooth succession. We also concluded that we didn’t require a
formal health and safety policy, as this is managed by our tenants.
Other topics
Some of the other key topics we discussed are described in the strategic report, including the
change of Company name (see page 4) and investor relations (see page 36).
Board and committee evaluation
It’s important that we stop and think about our own performance as directors, both individually
and collectively. This year we discussed whether we wanted an externally facilitated evaluation.
We agreed that last year’s internal evaluation had worked well and the cost of an external
evaluation wouldn’t be good value for shareholders. We’ll keep this under review for future
evaluations and employ an external facilitator if any of our directors asks for one.
To make sure everyone provides candid feedback, we use an anonymous online questionnaire,
with the results collated by the Company Secretary. All the directors, plus Andrew Cowley and
David Yaldron from the IM, completed the questionnaire. All individual responses are confidential.
I reviewed the collated results and discussed the key themes with each participant. Rosemary
Boot, as our SID, discussed my performance with the other directors and fed back to me.
The evaluation showed improved scores in most categories compared with 2023, and confirmed
that the directors have a good and collaborative working relationship, and that each director was
effective and performing well. The board’s relationship with the IM was also positive.
After discussing areas for improvement, we agreed the following actions:
• continuing to engage with the IM on its succession plan;
• increasing the time in our meetings allocated to strategy;
• continuing to work with the IM to improve meeting papers; and
• holding an informal board-only lunch at least annually, excluding the IM.
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49
Care REIT plcAnnual report and financial statements 2024
Progress with the 2023 evaluation recommendations
Last year’s board evaluation produced the following recommendations, which we acted on
during the year:
Recommendation Action
Enhance our sector and policy awareness, with
the IM to keep us up to date by summarising
and sharing sector reports, as well as working
more on policy issues.
We’ve discussed sector and policy issues on
several occasions, including the session at our
strategy day described on page 49.
Appoint a new non-executive director, with
specialist knowledge of healthcare policy.
We appointed Cedi Frederick, who has
significant experience in this area (see page
46).
Enhance our risk management and think more
about our risk appetite.
Risk management has been a key theme in
our meetings throughout the year (see page
49).
Continue to improve the quality, timing and
volume of board papers.
Board papers have improved further but this
remains work in progress.
Get a better understanding of the IM’s culture,
ensure it aligns with the board’s and have more
exposure to its wider team.
We’ve had more exposure to the IM’s team
and its culture, and increasingly focused
attention on its succession planning.
Reviewing our service providers
As the Company outsources its operations, we rely heavily on our service providers. We review
their performance through the management engagement committee (MEC) and the board
evaluation, which considers how well the IM and Company Secretary support us.
Our relationship with the IM is described on page 51. At the MEC meeting in November, we
agreed that JTC was continuing to improve its service as the Administrator and Company
Secretary, discussed areas for further improvement, and decided we should continue its
appointment. We also reviewed the Company’s other service providers (other than our external
auditor, which is reviewed by the audit committee) and decided that they were effective and
their appointments should continue, with the exception of our tax adviser.
During our discussions, we noted that we’ll have to replace Cushman & Wakefield as valuer
when it reaches its ten-year tenure limit in 2026, and that we’re also required to retender the
external audit after ten years. In addition, to avoid the possibility of rotating the valuer and
external auditor at the same time, we’ve agreed to bring forward the tender for a valuer to
2025; we then plan to retender the audit in 2026.
Corporate governance review continued
Director confirmations
The directors confirm that:
• we have undertaken a robust assessment of the Group’s emerging and principal risks,
including those that could threaten its business model, performance, solvency or liquidity.
Seethe strategic report (pages 1 to 43) and how we manage risk (pages 125 to 127);
• the audit committee has reviewed the risk management and internal control systems and
confirmed to the board that they are effective. See page 55; and
• the annual report and accounts taken as a whole are fair, balanced and understandable
and provide the information necessary for shareholders to assess the Company’s position,
performance, business model and strategy. See page 55.
Simon Laffin
Chair
12 March 2025
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Care REIT plcAnnual report and financial statements 2024
Working with the Investment Manager
The IM role includes sourcing and reviewing investment opportunities and making
recommendations to the board, carrying out approved transactions and monitoring the
progress of the Company’s assets. It also devises and implements the portfolio management
and asset management strategies.
The Investment Management framework defines how responsibilities are split between
theboard and the IM. The framework includes:
• matters reserved for the board (see page 60);
• the Investment Management Agreement (IMA); and
• delegated authorities, which set out the decisions the IM can make without needing
ourapproval.
The IM must also work within the Company’s investment policy (see page 124) and risk appetite
and comply with the board’s other policies.
Andrew Cowley and David Yaldron attend most of our board and committee meetings, together
with other members of the IM’s team as needed. The Chair has a regular monthly meeting with
Andrew, as well as ad hoc calls with other members of the IM team. Other board members also
meet individually with the IM on specific matters.
There is a potential conflict of interest as one of the IM’s Managing Partners, Mahesh Patel,
is majority owner of Minster Care Group Limited, the Company’s largest tenant. The IMA
therefore places several restrictions on the actions the IM can take without board agreement
and reserves other rights to the board, such as first refusal on investment opportunities (see
page 61 for more details). The board discussed this relationship several times through the year.
In addition to the potential conflicts, we recognise unique advantages to the relationship,
as the IM has deep insight into the operations of a care home business. Mahesh provided
great assistance by temporarily taking over running the Silverline homes after that company
defaulted on its rent, which considerably benefited all stakeholders.
In November, the MEC confirmed that the IM had complied with the IMA and the investment
policy. The committee discussed the IM’s performance and its progress with the objectives the
board set for it for 2024, and agreed that it had been broadly successful. Following the review,
the MEC concluded that it was in stakeholders’ interests for the IM to continue in office. The
board has since confirmed this decision.
Under the IMA, the IM receives a management fee, which is calculated as follows:
Net asset value (NAV) Fee
£500 million or below 1% of NAV
Above £500 million £5 million plus 0.7% of the amount by which the NAV
exceeds £500 million
The fee is calculated and paid each quarter. The Company also pays the IM £95,000 a year
to cover the costs of acting as the AIFM. The MEC reviewed the fee arrangements, compared
them with similar REITs and concluded that they were reasonable.
Our operations are outsourced to the IM, Impact Health Partners LLP.
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Working with the Investment Manager continued
Gender diversity
Male 8
Female 5
White British
or other White 9
Mixed/Multiple
ethnic groups 1
Asian/Asian British 1
Black /African/
Caribbean/
Black British 1
Other ethnic group 1
Ethnic diversity
IM team’s tenure
0-5 years 7
5+ years 6
The Investment Manager’s team
Mahesh Patel ACA
Managing Partner
Andrew Cowley MA (Oxon)
Managing Partner
David Yaldron FCA
Finance Director
Mahesh is a qualified accountant
with over 35 years’ experience in
healthcare-related industries and assets,
including positions in finance. Prior to
2006, he built up and then sold three
healthcare-related businesses.
Andrew is an experienced fund manager,
working in infrastructure and private
equity investment since 2000. He was
previously a senior managing director at
Macquarie and deputy chief executive
of the listed Macquarie Airports.
David is a chartered accountant with
more than 25 years’ experience, having
held senior financial roles in real estate
and investment companies. He was
previously a senior director at Grosvenor,
Britain and Ireland.
Alison Fu-Wreakes
Office Manager
Charlotte Finch
Investment Manager
Chris Nicholson CGMA
Accountant
Florence Kettlewell
Team Assistant
Killian Currey-Lewis CA
Investment Director
Martin Robb FRICS
Managing Director
Sam Josland CFA, ACA
Director of Commercial Finance
andReporting
Shola Oso
Property Manager
Simon Gould MRICS
Development Director
Sophie Shrestha ACCA
Financial Controller
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In 2024 we discussed the topics outlined below, as well as the board and
committeeevaluation described on page 49.
Simon Laffin
Committee Chair
Nomination committee report
Board composition and diversity
We reviewed the mix of the directors’ skills, experience, independence and knowledge, and
concluded we had an appropriate balance and the board was well constituted. We also
believe the board has reasonable diversity, based on the different perspectives of directors
with healthcare, financial and property backgrounds, as well as our compliance with the FCA’s
targets for gender and ethnic diversity. The required diversity tables can be found on page 61.
Succession planning and director recruitment
With Rosemary Boot intending to retire in 2025, we discussed succession planning and the
need to recruit a new non-executive director to be our Senior Independent Director and to
chair the remuneration committee. Nurole performed well in several previous searches for us,
most recently when we recruited Cedi Frederick (see page 57 of the 2023 annual report), and
we agreed to appoint it again to lead this process. Nurole is not a traditional head-hunter, as
it makes more use of a database and self-selection of candidates. We believe this can result in
a broader search, more diversity and good value for money. Other than providing recruitment
services, Nurole has no connection with either the Company or individual directors.
Directors’ time commitment
One of the committee’s jobs is to assess how much time the directors should devote to the
Company and whether they’re able to do so in practice. The Company Secretary presented an
analysis to the committee, which showed none of the directors are at risk of overboarding. The
directors’ attendance and contribution to board and committee meetings in 2024, as well as
the positive outcomes from the evaluation, also show that directors are providing the time and
attention needed. We specifically considered Cedi Frederick’s other time commitments during
the recruitment process and concluded he had sufficient time to devote to the Company.
Directors’ training and development
We generally expect the directors to organise their own training and development.
TheCompany Secretary keeps a register of the directors’ professional development,
which the committee reviews each year.
New directors receive a thorough induction to get them up to speed. Cedi Frederick’s
programme included meetings with:
• Philip Hall, to share Philip’s insights before he retired from the board;
• the Company Secretary, to run through board processes, the UK Market Abuse Regime and a
detailed induction pack, including key Company documents, directors’ duties, the risk register,
Company policies and matters reserved for the board;
• Jefferies, our joint financial adviser and corporate broker, to discuss the market, REIT sector,
share register and key shareholder insights;
• the IM, to provide an overview of the portfolio and the Company’s financials; and
• Cedi also visited four care homes with the IM.
Simon Laffin
Committee Chair
12 March 2025
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Care REIT plcAnnual report and financial statements 2024
During the year, we continued to play a key role in the Group’s governance
andourmain activities are summarised below.
Amanda Aldridge
Committee Chair
Audit committee report
Committee membership
I chaired the committee throughout the year and Rosemary Boot and Chris Santer were also
committee members throughout the year. Philip Hall stepped down from the committee when
he left the board in May 2024 and Cedi Frederick joined the committee when he joined the
board in April 2024. Simon Laffin, representatives of the IM, the Company Secretary and the
external auditor (BDO LLP) are invited to attend all committee meetings and our valuers,
Cushman & Wakefield (CW), are invited to attend at least twice a year.
Rosemary and I are considered to have recent and relevant financial experience, as we have
audit, accountancy and/or chief financial officer experience, as well as experience from our
other board directorships. Committee members keep up to date with financial accounting and
reporting developments by attending relevant update courses and through updates provided
to the committee by the external auditor. I am a chartered accountant.
In addition, the board has concluded that the audit committee, as a whole, has competence
relevant to the sector in which the Company operates, bringing a broad range of skills and
experience to bear.
Meetings
We met five times during 2024 and attendance is set out on page 47.
The committee met with our valuer, CW, in February 2024 and February 2025 to discuss the
respective valuations in detail. We held parts of these meetings without any other attendees
apart from Simon Laffin. CW also attended the August committee meeting, todiscuss the
Junevaluation.
I had several discussions with the IM’s Finance Director and the external auditor, to ensure
they delivered the services we required and were well placed to hold constructive discussions
with the committee. The committee also met with the external auditor twice during the year,
without other parties present.
Terms of reference
We reviewed the committee’s terms of reference and concluded that we did not need to make
any significant changes.
Financial reporting and significant judgements
One of our key responsibilities is to consider significant areas of complexity in the financial
statements, and the judgements and estimates made in preparing them. We received reports
and recommendations from the IM and the external auditor, setting out the significant areas.
We discussed the significant estimates and judgements with the IM during the year and with
the auditor, both when we reviewed and agreed the Group audit plan and when the audit
team presented its findings from the year-end audit.
The only significant judgement or estimate relates to the fair values of investment properties
and accounting for leases. The section below describes how we concluded that the relevant
judgements and estimates were appropriate.
(i) Valuation of property portfolio
CW valued the property portfolio as at the end of each quarter in 2024. We discussed the
half-year and year-end valuations with the valuers to understand CW’s approach to valuing
the assets, the assumptions underlying the property valuations and the valuation of individual
properties highlighted by the valuer and raised by committee members. We discussed the
number of properties CW had physically inspected and asked CW to confirm that the IM had
not applied undue influence in reaching its conclusion.
We and the auditor discussed its review of the valuation, referred to in the independent
auditor’s report on pages 65 to 70. The auditor’s methodology included meeting the valuer,
assessing its independence, assessing the valuation for each property against the auditor’s
expected range of values (based on its experience and externally available metrics) and
agreeing the valuation inputs to source documentation.
The committee was satisfied that the judgements and estimates underlying the valuation
reflected in the financial statements were appropriate.
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Care REIT plcAnnual report and financial statements 2024
Audit committee report continued
Financial reporting and significant judgements continued
(ii) Operating lease contracts
Our leases are accounted for as operating leases, based on an evaluation of the arrangements
with our tenants which concludes that we retain all significant risks and rewards of ownership of
our properties.
The leases, when signed, are typically for between 20 and 30 years, with a tenant-only option
to extend for one of two periods of ten years. When the leases are signed, the IM does not
judge any extension of the lease to be reasonably certain and so does not factor any lease
extension into its consideration of lease incentives and their treatment.
The committee reviewed the IM’s assessment of leases and discussed this with the auditor,
andwas satisfied that the approach taken in the accounts is appropriate.
Other areas considered by the committee
(i) Accounting for the transfer of Melrose (ex‑Silverline) properties
During the year, the Group transferred the operation of the seven care homes operated by
Melrose Holdings Limited (MHL) to We Care (three homes in Bradford) and Fulcrum (four
homes in Scotland). We considered the accounting treatment of the working capital loans,
thetreatment of the rent-free periods and variable rent arrangements, and the ongoing
accounting for rent smoothing for these properties.
(ii) Adjusted earnings per share
We considered the implications of reporting adjusted earnings per share that are different to
IFRS and EPRA calculations. We reviewed the reported adjusted earnings, to ensure that they
reflect the Company’s underlying sustainable cash earnings, and satisfied ourselves that it was
appropriate to disclose the non-statutory earnings per share measure and that its disclosure
did not have undue prominence.
(iii) TCFD disclosures
Although the Group is not required to report under TCFD, this is the third year that we have
chosen to report against the framework. The committee reviewed the relevant disclosures and
ensured that they were consistent with information presented to the board by the IM.
Fair, balanced and understandable statement
The board asked the committee to advise on whether we consider that the Company’s annual
report and accounts, taken as a whole, is fair, balanced and understandable, as required
under the AIC Code. The process for putting together the Company’s annual report and
accounts is comprehensive, with input from a range of contributors including the IM, external
consultants and the board. We considered the detailed reviews undertaken at various stages
of the production process by the IM, Administrator, external auditor and the audit committee,
whichare intended to ensure consistency and overall balance.
We discussed the process for compiling the annual report and accounts with the IM and
Administrator and received a series of drafts of the document, which we thoroughly scrutinised
and discussed.
We also sought additional comfort from the IM and Administrator, by asking them to provide
representation letters in relation to the conclusion of the board.
As a result of this work, we have concluded and reported to the board that the annual report
and accounts for the year ended 31 December 2024, taken as a whole, is fair, balanced
and understandable and provides the information necessary for shareholders to assess the
Company’s position and performance, business model and strategy. The board’s conclusions
inthis respect are set out on page 50.
Review of risk framework and internal control
The board has ultimate responsibility for effectively managing risk for the Group, including
determining its risk appetite and identifying key strategic and emerging risks. Pages 125 to 127
provide an overview of the risk management process and pages 37 and 38 discuss the principal
risks and uncertainties identified.
Internal audit
We discussed the need for an internal audit function. The IM and the external auditor
contributed to the discussion. We considered the assurance received from third parties under
the risk management framework, which includes ISAE 3402 reports for the Administrator and
the Depositary, together with the work of the IM’s risk committee and the IM’s self-assessment
of its control environment. Based on this, we were satisfied that the internal controls and risk
management were adequate and effective and decided that there was no current need for
internal audit. However, mindful of changes to the AIC Code for accounting periods starting on
or after 1 January 2025, the committee is going to commission independent assurance over the
operation of key controls at the IM in the course of 2025.
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Care REIT plcAnnual report and financial statements 2024
Audit committee report continued
External auditor
The Company appointed BDO as auditor after a formal tender, as part of the IPO in March
2017. This was a competitive process and involved BDO, EY and Grant Thornton. Charles Ellis
took over as lead audit partner for the 2022 financial year, so this is his third year in the role.
Under current FRC guidance, the next audit tender will be required in respect of the year
ending31 December 2027. Based on this, the committee intends to conduct a tender process
during 2026.
(i) Audit planning
At our meeting in November we discussed the audit plan with BDO, considering the overall
planning materiality and BDO’s assessment of the audit risks. We also discussed BDO’s analysis
of the valuation, involving its in-house valuation experts and review of independent market
data, and held separate meetings todiscuss the valuation with CW.
We considered the audit timetable and our ability to deliver the audit work streams, to satisfy
ourselves that the timetable was appropriate for meeting the reporting requirements for the
2024 annual report and accounts and the external audit.
(ii) External auditor independence and effectiveness
BDO has formally confirmed its independence as part of the annual reporting process, and
we considered and agreed that BDO, the engagement team and other partners and directors
conducting the audit had complied with relevant ethical requirements, including the FRC’s
Ethical Standard, and that we considered them independent of the Company.
The feedback to BDO LLP from the FRC’s Audit Quality Review of the seven largest accountancy
firms, published in July 2024, was received by the committee. We discussed the disappointing
key findings raised in the FRC’s review of individual audits within section 2 of their report with
our audit partner, Charles Ellis. The committee considered the impact of these areas on the
audit of the Company and specifically discussed the areas related to these findings, being the
challenge of management estimates and judgements. The committee understood the auditor’s
approach as well as the findings from the current-year audit. I look forward to BDO achieving
better results from their next FRC review.
We assessed BDO’s effectiveness as auditor, with input from the IM. In our assessment
consideration was given to: skills and knowledge of the audit team; experience of our industry
and the environment in which we operate; demonstration of professional and ethical principles;
and evidence of robust challenge to the committee and the IM over accounting judgements
and estimates.
We concluded that we had no concerns with BDO’s effectiveness.
The audit committee has recommended that a resolution to reappoint BDO is proposed to
shareholders at the next AGM.
Non-audit services
We authorised £19,000 (2023: £17,000) of non-audit fees in the year, in relation to the
agreed-upon procedures for the Company’s interim report.
Total audit fees for the period were £320,000 and non-audit fees were £19,000. Non-audit fees
as a percentage of audit fees were 5.9% (2023: 5.6%). All fees are inclusive of irrecoverable VAT.
Committee evaluation
The committee’s activities formed part of the evaluation of board effectiveness performed in
the year. Details of this process can be found in the corporate governance review on page 49.
Amanda Aldridge
Committee Chair
12 March 2025
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Care REIT plcAnnual report and financial statements 2024
We have continued to apply Principles P and Q of the AIC Code 2019, which
meanswe have a formal and transparent procedure for developing our
remuneration policy.
Rosemary Boot
Remuneration committee Chair
Directors’ remuneration report
Annual statement
No director was involved in discussing his or her own remuneration, and we have designed our
remuneration policy to support the Company’s strategy and promote its long-term success.
The committee reviewed the Company’s remuneration policy at its meeting in November and
agreed that it remained appropriate and no changes were needed. Shareholders had approved
the remuneration policy at the AGM in May 2024, as part of the usual three-year approval
cycle, and we’ll present it for approval again at the 2027 AGM, unless we need to revise the
policy in the meantime.
We also considered the directors’ fees after reviewing a peer comparison prepared by the IM,
which also referenced independent research. Our discussions included the time directors spend
on the Company’s business, their skills, experience and knowledge, and the shift in market
practice for NED fees towards annual inflationary increases. Having kept fees unchanged in
2024, we decided that an increase in line with general inflation of 2.5% would be appropriate
from 1January 2025.
In addition, we reviewed the directors’ terms of appointment and the Company’s expenses
policy, and agreed that no changes were required.
Directors’ remuneration policy
The Company’s policy is to pay the directors fixed annual fees. The Articles of Association limit
the total annual pay for the directors to £500,000.
The remuneration committee reviews the directors’ fees each year, which can include
independent benchmarking. The committee may adjust the fees so they continue to attract
and retain directors with the experience needed to oversee the Company effectively.
When setting the directors’ fees, the committee will consider:
• the experience of the board as a whole;
• the time commitment;
• the responsibilities of each role; and
• fairness and comparability to non-executive directors of similar companies.
The Chair of the board and the audit committee Chair receive additional fees, reflecting their
greater responsibilities.
The Company may pay additional fees to the directors if their duties were to go beyond those
normally expected. If this happens, the board will provide details of why the additional fees
were paid in the annual report. None were paid in either 2023 or 2024.
The directors do not receive any performance-related pay, share options or pensions from
theCompany or take part in long-term incentive plans.
The directors are entitled to be paid reasonable expenses they incur on the Company’s
business.
The directors’ appointments can be terminated without compensation.
Recruitment
We apply the same remuneration policy for recruitment purposes.
Consideration of shareholder views
We are committed to engaging with shareholders and will seek major shareholders’ views
before making any significant changes to the remuneration policy or how we implement it.
Ourshareholder engagement this year has not revealed any concerns about the directors’
feesand the votes at the AGM on the remuneration report and policy were strongly in favour
(see page 59).
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Care REIT plcAnnual report and financial statements 2024
Directors’ remuneration report continued
Company-wide considerations
The Company has no Executive Directors or employees, so there are no statements to make on
consultations, comparisons or pay and employment conditions.
Annual report on remuneration
Implementation of the remuneration policy in 2024 and 2025
The table below shows the fees the committee adopted for 2024, as set out in the 2023 annual
report, and the fees adopted for 2025:
2024 2025
Chair of the board £60,000 £61,500
Chair of the audit committee £46,000 £47,000
Non-executive director £40,000 £41,000
Directors’ fees for 2024 (audited)
The directors’ fixed fees are shown in the table below. The directors’ expenses for 2024 totalled
£299 (2023: £213) and no other remuneration or taxable benefits were paid or payable for the
year. The Company maintains and pays for directors’ and officers’ liability insurance cover on
the directors’ behalf.
2024 2023
Director
Simon Laffin
1
(Chair) £60,000 £55,068
Rosemary Boot £40,000 £40,000
Amanda Aldridge £46,000 £46,000
Cedi Frederick
2
£30,137 —
Chris Santer £40,000 £40,000
Former directors
Rupert Barclay (stepped down on 31 March 2023) — £14,795
Paul Craig (stepped down on 17 May 2023) — £15,014
Philip Hall (stepped down on 21 May 2024) £15,562 £40,000
1. Joined the board on 1 January 2023 and received the non-executive director fee of £40,000 p.a. until he became
Chair on 1 April 2023, when his fee increased to £60,000 p.a.
2. Joined the board on 1 April 2024.
Payments to past directors or for loss of office (audited)
There are no payments to disclose. Under the directors’ remuneration policy, there would be no
compensation for loss of office.
Directors’ shareholdings (audited)
At the year end, the directors’ shareholdings were as follows:
Director
1
Number of
shares
Percentage
of share
capital
Simon Laffin (Chair) 100,000 0.024%
Rosemary Boot 30,000 0.007%
Amanda Aldridge 20,000 0.005%
Cedi Frederick 11,748 0.003%
Chris Santer 14,137 0.003%
1. Includes shareholdings of directors and persons closely associated (as defined by the UK Market Abuse
Regulation).
Directors are encouraged but not required to hold shares in the Company. Their shareholdings
are not significant and do not compromise their independence. The directors’ shareholdings
were unchanged between the year end and the date of this report.
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Care REIT plcAnnual report and financial statements 2024
Directors’ remuneration report continued
Total shareholder return
The graph below shows the Company’s total shareholder return relative to a return on a
hypothetical holding in the FTSE EPRA/Nareit UK Index. The Company’s shares are included in
this index, which tracks the performance of real estate companies listed on the London Stock
Exchange, making it useful for comparing the Company’s performance:
Relative importance of spend on pay
The table below compares the directors’ remuneration to the Investment Manager’s fee and
distributions to shareholders.
2024
£m
2023
£m Change %
Directors’ remuneration 0.27 0.28 (3.8)%
Investment management fee 5.02 4.81 4.4%
Dividends 28.6 27. 8 2.9%
Committee composition and external advice
We benefit from the remuneration and nomination committees having the same membership,
giving us full visibility of succession planning. I have relevant experience to chair the committee,
having served on remuneration committees for other organisations. I am currently a member of
one other remuneration committee.
We did not seek any external advice during the year.
Statement of voting
The directors’ remuneration report was subject to an advisory vote at the 2024 AGM.
Shareholders also voted to approve the directors’ remuneration policy at the 2024 AGM.
Theresults of those votes are shown below:
Votes
for
Votes
against
Votes
withheld
Approve the directors’ remuneration report 99.98% 0.02% 115,312
Approve the directors’ remuneration policy 99.98% 0.02% 115,312
Rosemary Boot
Remuneration committee Chair
12 March 2025
60
100
80
120
140
160
Dec
2017
Dec
2023
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Dec
2024
Care REIT FTSE EPRA/Nareit UK Index
180
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Care REIT plcAnnual report and financial statements 2024
Directors’ report
Statutory information contained elsewhere in the annual report
Information required to be part of this directors’ report can be found elsewhere in the annual
report and is incorporated into this report by reference, as indicated below:
• Financial results and dividends, pages 39 to 41.
• Future developments, pages 5 to 8.
• Engagement with suppliers, customers and others with business relationships with the
Company, pages 13, 36 and 48.
• Corporate governance statement, pages 47 to 50.
• Manager and service providers, pages 51 and 52.
• Directors’ names and board of directors, pages 45 and 46.
• Directors’ and officers’ liability insurance, page 61.
• Directors’ interests in shares, page 58.
• Related-party transactions, note 23, pages 91 and 92.
• Financial instruments, note 20, pages 88 to 90.
• Share capital, note 22, page 91.
• Events subsequent to the year-end date, note 29, page 94.
• Going concern statement, page 42.
There are no disclosures required in accordance with UKLR 6.6.1 R.
Corporate governance disclosures
This section of the directors’ report contains required corporate governance disclosures that are
not covered in the corporate governance review or the committee reports on pages 47 to 59.
The tables on pages 111 and 112 set out where in the report the information required by each
principle of the AIC Code can be found.
The directors’ powers and responsibilities
The board manages the Company’s business and may exercise all the Company’s powers,
subject to the Articles of Association, the Companies Act and any directions given by the
Company by special resolution.
The board has a schedule of matters specifically reserved for its decision, which it reviews
annually. These include:
• approving the Group’s annual profit and loss and cash flow budget;
• any decision likely to have a material impact on the Group, including financial, operational,
strategic or reputational matters;
• strategic direction, objectives, budgets and forecasts, authority levels for approving
expenditure, and any material changes to them;
• starting, materially expanding, diversifying or stopping any of the Group’s activities;
• regulatory, financial and material operational policies;
• changes to the Group’s capital, corporate management or control structures;
• material capital or operating expenditures, outside predetermined criteria or the delegated
authorities;
• any material contract or joint venture and material arrangements with customers or suppliers;
• approving the financial statements and published reports;
• approving equity and debt fundraising;
• overseeing potential conflicts of interest; and
• approving new investments over 3% of net asset value that are leased to existing tenants,
and all new investments leased to new tenants.
The board may delegate some functions to its committees, which each have board-approved
terms of reference, setting out their roles and responsibilities. During 2024, the board approved
some minor amendments to the committees’ terms of reference, to align them with the new
requirements in the 2024 AIC Code of Corporate Governance.
The board also delegates to the IM, the Administrator, the Company Secretary and the
registrar. In particular, the board has delegated day-to-day management of the portfolio to
the IM, under the board’s supervision.
The responsibilities of the Chair and the Senior Independent Director (SID) have been agreed by
the board and are set out in writing.
The full set of matters reserved to the board, the responsibilities of the Chair and the SID, and
copies of the committees’ terms of reference are available at
https://www.carereit.co.uk/our-business/governance/.
The directors’ report, together with the strategic report, comprise the management
report for the purposes of Disclosure Guidance and Transparency Rule 4.1.5R.
Strategic report Governance Financial statements Additional information
60
Care REIT plcAnnual report and financial statements 2024
Directors’ report continued
Corporate governance disclosures continued
Appointment and replacement of directors
A director may be appointed by ordinary resolution of the shareholders in a general meeting
following nomination by the board or a member (or members) entitled to vote at such a
meeting. In addition, the directors may appoint a director to fill a vacancy as an additional
director, provided that the individual retires at the next AGM.
A director may be removed by the Company in certain circumstances set out in the Company’s
Articles of Association or by an ordinary resolution of the Company.
Full details of the processes by which directors can be appointed or replaced are set out in the
Articles of Association.
Directors’ contracts
The directors hold their office in accordance with the Articles and their appointment letters.
They do not have service contracts with the Company.
Diversity policy
The Company’s diversity policy applies to the board and its committees. It recognises that
diversity includes, and makes good use of, differences in knowledge and understanding of
relevant geographies, peoples and their backgrounds, including race or ethnic origin, sexual
orientation, gender, age, disability or religion, as well as individuals’ different experiences and
knowledge.
When making appointments to the board, the directors emphasise the importance of diversity
in drawing up lists of candidates, while maintaining their approach of appointing the best
possible person for the role, considered against objective criteria and in accordance with
the Equality Act 2010. The directors review diversity in the context of complementing and
expanding the skills, knowledge and experience of the board as a whole.
Board composition and diversity reporting in line with LR9
The tables below show the diversity of the board as at 31 December 2024.
Number of
board members
Percentage of
the board
Number of
senior positions
on the board
(SID and Chair)
Men 3 60% 1
Women 2 40% 1
Number of
board members
Number of
senior positions
on the board
(SID and Chair)
White British or other White
(including minority-white groups)
4 2
Black/African/Caribbean/Black British 1 —
The data was collected by asking the directors to confirm their diversity characteristics. The
Company has no executive management and these disclosures are therefore not applicable.
Directors’ indemnities and Directors’ and officers’ liability insurance
The Group maintains directors’ and officers’ liability insurance for the directors procured through a
third-party insurance broker. This is in respect of any potential exposure or liability in their capacity
as director of the Company or any of its subsidiaries. Such indemnities were in force throughout
the 2024 year and will remain in force as at the date of this report.
The Investment Management Agreement (IMA)
The IMA imposes restrictions on the IM and its associates from acquiring, developing, leasing or
operating residential healthcare services without the prior written consent of the Company. This
ensures the board can effectively manage any potential conflict of interest, given that the Group’s
largest tenant, Minster Care Group Limited, is majority owned by the principals of the IM.
The IMA also:
a) grants the Group pre-emption rights in respect of any investment opportunities within its
investment policy, of which the IM or its associates become aware;
b) grants the Group the right to terminate the agreement if:
• any tenant in which any principal of the IM (from time to time) has a beneficial interest,
fails to pay rent or any other sums due under the leases in excess of £50,000; or
• any tenant, in which any principal of the IM or any of its associates (from time to time) has
a beneficial interest, is wound up or liquidated; or
• the financial report provided to us by Minster Care Group Limited shows that its rent cover
is less than 1.1 times in two consecutive quarterly financial reports or in any two quarterly
financial reports in any 12-month period.
c) grants the Group the right to seek advice from a third-party property adviser, when the IM
is conflicted; and
d) prohibits the IM from taking any decision or making any recommendation to the board
relating to enforcement of the Group’s rights, on certain covenant breaches by a tenant in
which any principal of the IM or any of its associates (from time to time) has a beneficial
interest.
Either party may terminate the IMA on 12 months’ notice, or immediately in certain
circumstances, such as a material breach that is not remedied.
Strategic report Governance Financial statements Additional information
61
Care REIT plcAnnual report and financial statements 2024
Directors’ report continued
Corporate governance disclosures continued
Administrator and Company Secretary
JTC (UK) Limited is the Administrator and Company Secretary.
As Administrator, JTC is responsible for (on the directors’ behalf):
• maintaining books and records;
• preparing management and financial accounts;
• managing cash movements; and
• calculating the Company’s net asset value, in conjunction with the IM.
As Company Secretary, JTC ensures regulatory compliance and supports the board’s corporate
governance processes and continuing obligations. In addition, JTC liaises with the Company,
the IM and the registrar in relation to dividend payments, as well as general secretarial
functions required by the Companies Act.
Under the Administration and Company Secretarial Services Agreement, JTC is entitled to an
annual fee of £147,000, in respect of these services to the Company. JTC is also engaged to
provide accounting services to the Group.
Either party can terminate the agreement on at least three months’ written notice, or
immediately in circumstances such as a material breach or the insolvency of a party.
Advice for directors
The directors have access to JTC’s advice and services. Where necessary for carrying out
theirduties, the directors may seek independent professional advice and services at the
Company’s expense.
Depositary
Indos Financial Limited is the Company’s Depositary.
UK Alternative Investment Fund Managers Directive (UK AIFMD)
The Company is an Alternative Investment Fund for the purposes of the UK AIFMD regulation.
The IM is the Company’s AIFM.
Substantial shareholdings
The Company has one class of share. As at midday on 12 March 2025, the Company is aware
of the following substantial shareholdings, which were directly or indirectly interested in 3% or
more ofthe total voting rights in the Company’s issued share capital:
Investor
Number of
ordinary shares
Percentage
shareholding
Schroder Investment Management 25,365,000 6.12%
Gravis Capital Management 19,900,438 4.80%
Hargreaves Lansdown, stockbrokers (EO) 19,828,408 4.79%
Royal London Asset Management 18,883,571 4.56%
Transact (EO) 18,537,783 4.47%
Quilter Investors 18,144,022 4.38%
Premier Miton Investors 17, 45 0 , 1 21 4.21%
BlackRock 17, 075, 43 8 4.12%
Goldman Sachs collateral account 14,475,976 3.49%
Legal & General Investment Management 13,823,335 3.34%
Brooks Macdonald 13,738,103 3.32%
Interactive Investor (EO) 12,868,644 3.11%
Evelyn Partners Group 12,436,026 3.00%
Based on 414,368,169 ordinary shares in issue as at 31 December 2024.
No individual underlying shareholder or fund owns more than 10%.
Powers in relation to the Company issuing its shares
Subject to company law and the Articles of Association, the directors are authorised to issue
shares of such number of tranches and on such terms as they determine, provided that such
terms are consistent with the provisions of the Articles.
Non‑pre‑emptive share issuance
Over the past three financial years, the Company’s non-pre-emptive share issuance increased
the issued share capital by 8.2%.
In July 2022, 19,032,420 new ordinary shares were admitted at a placing price of 117.0 pence
per share, a discount of 4.6% at the placement proposal date. The proceeds of £22.3 million
(£21.4 million net of share issue costs) were used to repay amounts drawn under revolving credit
facilities and to fund new investments.
In January 2023, the Company issued 9,603,841 new ordinary shares at a price of 116.62 pence
per share, as part of the consideration payable for the acquisition of six care homes from Morris
Care Limited.
Strategic report Governance Financial statements Additional information
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Care REIT plcAnnual report and financial statements 2024
Directors’ report continued
Corporate governance disclosures continued
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the Company, except as a result of:
• the FCA’s Listing Rules, which require certain individuals to have approval to deal in the
Company’s shares; and
• the Company’s Articles of Association, which allow the board to decline to register a transfer
of shares or otherwise impose a restriction on shares, to prevent the Company or the IM
breaching any law or regulation.
The Company is not aware of any agreements between holders of securities that may result
inrestrictions on transferring securities in the Company.
Securities carrying special rights
No person holds securities in the Company carrying special rights with regard to control of
theCompany.
Change of control
The Company is not aware of any person who, directly or indirectly, owns or controls the
Company although, as announced on 11 March 2025, the Company’s directors have reached
agreement on the terms of a recommended cash acquisition of the ordinary share capital of the
Company by CR United Bidco Ltd, a wholly-owned subsidiary of CareTrust REIT, Inc., expected to
be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006
(the “Acquisition”). If the Acquisition is completed, this will result in a change of control of the
Company. There are no agreements between the Company and the directors for compensation
for loss of office as a result of the Acquisition or any other takeover, other than the provisions of
the existing appointment letters.
Directors’ share dealings
The directors have adopted a code of directors’ dealings in ordinary shares, which is in
accordance with the Market Abuse Regulation. The board is responsible for taking all proper
and reasonable steps to ensure any dealings by directors, or persons closely associated with
them, are in compliance with the Market Abuse Regulation.
Energy and carbon reporting
The Group is a low energy user and therefore exempt from the Streamlined Energy and
CarbonReporting regulation. During 2024, the Group had no directly reportable emissions, as:
• any emissions from the Group’s properties are the tenants’ responsibility rather than
theGroup’s, so the principle of operational control has been applied;
• any emissions produced from the Company’s registered office or from offices used to
provideadministrative support are deemed to be the IM’s responsibility; and
• the Group has not leased or owned any vehicles which fall under the requirements
ofmandatory emissions reporting.
As discussed in the sustainability section on pages 26 to 31, the Group looks to enhance the
energy efficiency of its portfolio and thereby reduce the emissions incurred by its tenants.
We voluntarily report against the TCFD framework (pages 103 to 110) and have set net zero
targets for our portfolio’s emissions (page 28). We also report information on tenant emissions
in the Group’s annual EPRA sustainability reporting, retaining the EPRA sBPR gold award for the
2023submission, which is available at https://www.carereit.co.uk/sustainability/.
Political donations
The Group made no political donations during the year.
Employees
The Group has no employees and therefore no employee share scheme, policies for the
employment of disabled persons or employee engagement.
Articles of Association
These are available on the Company’s website at http://www.carereit.co.uk/our-business/
governance/ or by application to the Company Secretary. Amendments to the Company’s
Articles of Association require a special resolution of the Company’s shareholders.
Overseas branches
The Company does not have any branches outside the UK.
Independent auditor
BDO LLP has expressed its willingness to continue as auditor for the financial year ending
31December 2025.
Disclosure of information to the auditor
The directors who were members of the board at the time of approving the directors’ report
have confirmed that:
• so far as each director is aware, there is no relevant audit information of which the
Company’sauditor is not aware; and
• each director has taken all the steps that they ought to have taken as a director in order
to make themselves aware of any relevant audit information and to establish that the
Company’s auditor is aware of that information.
Annual General Meeting
The Company’s AGM is scheduled to be held at 9:30am on 22 May 2025.
Shareholders who would like to contact the Chair or the Company before the AGM can
emailthe Company Secretary at CareREIT.CoSec@jtcgroup.com.
Signed on behalf of the board by
Simon Laffin
Chair
12 March 2025
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63
Care REIT plcAnnual report and financial statements 2024
Statement of responsibilities
Directors’ statement of responsibilities
The directors are responsible for preparing the annual report and the Group and Parent
Company financial statements in accordance with applicable law and regulations. Company
law requires the directors to prepare the Group and Company financial statements for each
financial year. The Group financial statements have been prepared in accordance with
UK-adopted international accounting standards. The Company financial statements have
beenprepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law). Under company law, the directors
must not approve the financial statements unless they are satisfied they give a true and fair
view of the state of affairs of the Group and Company and of the profit or loss for the Group and
Company for that year.
In preparing the financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• for the Group financial statements, state whether they have been prepared in accordance
with UK-adopted international accounting standards, subject to any material departures
disclosed and explained in the Group financial statements;
• for the Company financial statements, state whether they have been prepared in
accordancewith Financial Reporting Standard 102 (‘FRS 102’), subject to any material
departures disclosed and explained in the Company financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the Group’s and Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group and Company and enable them to
ensure that its financial statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and hence for taking reasonable steps for the prevention
anddetection of fraud and other irregularities. The directors are responsible for ensuring that
the annual report and accounts, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Group’s performance, business
model and strategy.
Under applicable law and regulations, the directors are also responsible for preparing
a directors’ report, a strategic report, a directors’ remuneration report and a corporate
governance statement that comply with that law and those regulations. These can be found
onpages 60 to 63, inside front cover to page 43, 57 to 59 and 47 to 50, respectively.
Website publication
The directors are responsible for ensuring the annual report, including the financial statements,
is made available on a website. Financial statements are published on the Company’s
website in accordance with legislation in the United Kingdom governing the preparation and
dissemination of financial statements, which may vary from legislation in other jurisdictions.
The maintenance and integrity of the Company’s website (at https://www.carereit.co.uk) is the
responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors’ responsibility statement, pursuant to DTR4
We confirm that to the best of our knowledge:
• the financial statements have been prepared in accordance with UK-adopted international
accounting standards and give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Company and the undertakings included in the consolidation as a
whole; and
• the management report includes a fair review of the development and performance of
the business and the financial position of the Company and the undertakings included in
the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face.
Signed on behalf of the board by:
Simon Laffin
Chair
12 March 2025
Strategic report Governance Financial statements Additional information
64
Care REIT plcAnnual report and financial statements 2024
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the
Parent Company’s affairs as at 31 December 2024 and of the Group’s profit for the year then
ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Care REIT plc (the ‘Parent Company’) and
its subsidiaries (the ‘Group’) for the year ended 31 December 2024 which comprise the
consolidated statement of comprehensive income, the consolidated statement of financial
position, the consolidated statement of cash flows, the consolidated statement of changes
in equity and notes to the consolidated financial statements, the company statement of
financial position, the company statement of changes in equity, notes to the company financial
statements, including a summary of material and significant accounting policy information. The
financial reporting framework that has been applied in the preparation of the Group financial
statements is applicable law and UK adopted international accounting standards. The financial
reporting framework that has been applied in the preparation of the Parent Company financial
statements is United Kingdom Accounting Standards, including Financial Reporting Standard
102, the Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the Auditor’s responsibilities for the audit of the financial statements section of our report.
Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is consistent with the additional report to the audit
committee.
Independence
Following the recommendation of the audit committee, we were appointed by the directors
in September 2017 to audit the financial statements for the year ended 31 December 2017
and subsequent financial periods. The period of total uninterrupted engagement including
retenders and reappointments is eight years, covering the years ended 31 December 2017
to 31December 2024. We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not provided to the
Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going
concern basis of accounting in the preparation of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going
concern basis of accounting included:
• using our knowledge of the Group and the Parent Company and its market sector together
with the current economic environment to assess the directors’ identification of the inherent
risks to the Group’s business and how these might impact the Group’s and the Parent
Company’s ability to remain a going concern for the going concern period, being the period
to 30 June 2026, which is at least 12 months from when the financial statements are
authorised for issue;
• obtaining an understanding of the directors’ process for assessing going concern, including
anunderstanding of the key assumptions used;
• assessing the appropriateness and accuracy of the directors’ cash flow forecasts by reference
to current cash reserves, available finance, contractual rental income, debt service cost
obligations and other committed or expected cash flows;
• assessing the impact of the refinancing required in April 2026, including current negotiations
with lenders;
• evaluation of the directors’ assessment of the ability of each material tenant to satisfy its
future contractual rent obligations based on historic and current occupancy and profitability
levels;
• evaluation of the sensitivity analysis and reverse stress tests performed in relation to the
Group’s and the Parent Company’s liquidity and loan covenant compliance and
• assessment of the identified options that would be available to mitigate the impact of any
future substantial non-payment of rent on the Group and Parent Company’s liquidity and the
Group’s ability to continue to operate within its loan covenants.
Based on the work we have performed, we have not identified any material uncertainties
relating to events or conditions that, individually or collectively, may cast significant doubt on
the Group or the Parent Company’s ability to continue as a going concern for a period of at
least 12 months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Independent auditor’s report
to the members of Care REIT plc
Strategic report Governance Financial statements Additional information
65
Care REIT plcAnnual report and financial statements 2024
Independent auditor’s report continued
to the members of Care REIT plc
Overview
Coverage 100% (2023: 100%) of Group profit before tax
100% (2023: 100%) of Group revenue
100% (2023: 100%) of Group total assets
Key audit matters
2024 2023
Valuation of investment properties
Materiality Group financial statements as a whole
£7.0m (2023: £6.7m) based on 1% (2023: 1%) of Group total assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment,
including the Group’s system of internal control, and assessing the risks of material
misstatement in the financial statements. We also addressed the risk of management override
of internal controls, including assessing whether there was evidence of bias by the directors
thatmay have represented a risk of material misstatement.
The Group operates in one segment, investment property, structured through a number of
subsidiary entities and therefore we treated the Group a single component. The Group is a
single component as it invests only in UK care homes with a single finance team and a common
IT system and internal control framework. The Group audit engagement team performed all the
work necessary to issue the Group and Parent Company audit opinion, including undertaking
all of the audit work on the risks of material misstatement identified in the key audit matters
section below.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the
most significant assessed risks of material misstatement (whether or not due to fraud) that
we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit, and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the scope of our audit addressed the
key audit matter
Valuation of
investment
properties
As detailed in note 13
to the consolidated
financial statements,
the Group owns a
portfolio of investment
properties which
arecarried at their
fairvalue.
The Group’s
accounting policy for
these properties is
describedin note 13
to the consolidated
financial statements.
The key judgements
and estimates in
arriving at the fair
values are set out
in notes 2.2 and 13
to theconsolidated
financial statements.
The Group owns care
home investment
properties that are
leased to tenant
operators under
long-term rental
agreements. The
properties are
independently,
externally valued
using the income
capitalisation
methodinaccordance
with RICS methodology
and IFRS 13 Fair Value
Measurement.
The valuation of
investment property
requires significant
judgement and
estimates by the
directors and their
independent external
valuer and is therefore
considered a significant
risk due to the subjective
nature of certain
assumptions inherent in
each valuation.
Our audit procedures included, but were not
restricted to, the following:
Experience of valuer and
relevance of their work
• We assessed the valuer’s competence
and capabilities (both for the firm and the
individuals) and read their terms of engagement
with the Group, to identify any matters that
could have affected their independence
and objectivity or imposed scope limitations
uponthem.
• With the assistance of our real estate
experts, we read the valuation reports and
assessed whether the valuations had been
prepared in accordance with applicable RICS
valuation guidelines and IFRS 13 and they
were appropriate for determining the carrying
valuein the Group’s financial statements.
Data provided to the valuer
• We inspected that the data provided to
the valuer by the Investment Manager was
consistent with the information provided to,
andtested by, us. This data included inputs
suchas current rent and lease term, which
wehave agreed on a sample basis to executed
lease agreements.
Strategic report Governance Financial statements Additional information
66
Care REIT plcAnnual report and financial statements 2024
Key audit matter
How the scope of our audit addressed the
key audit matter
Valuation of
investment
properties continued
Any input inaccuracies
or unreasonable bases
used in the valuation
judgements (such as in
respect of estimated
rental value and yield
profile applied) could
result in a material
misstatement of the
Group’s financial
statements.
There is also a fraud
risk that the Directors
may influence the
judgements and
estimates in respect
of property valuations
in order to achieve
property valuations
and other performance
targets to meet market
expectations.
The valuation of
investment properties
was therefore,
considered to be a key
audit matter.
Assumptions and estimates used by the
valuer
• We developed yield expectations for each
property using available independent
industry data, reports and details of relevant
comparable transactions in the market around
the year end date, and an understanding of the
properties.
• We compared the key valuation assumptions
against our independently formed market
expectations and challenged the external
valuers on those valuations which fell outside
our range of expectation. We corroborated their
responses to supporting documentation where
appropriate. The key valuation assumptions
were the net initial yields, which we evaluated
by reference to market data based on the
location and specifics of each property.
• Alongside our real estate experts, we met with
the Group’s external valuers to discuss and
challenge the valuation methodology and key
assumptions and considered if there were any
indicators of undue Director’s influence on the
valuations.
Key observations
• Based on the procedures performed, we did
not identify any indicators to suggest that the
valuation of the Group’s investment properties
was inappropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in
evaluating the effect of misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed
materiality, we use a lower materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and
the particular circumstances of their occurrence, when evaluating their effect on the financial
statements as a whole.
Independent auditor’s report continued
to the members of Care REIT plc
Based on our professional judgement, we determined materiality for the financial statements
as a whole and performance materiality as follows:
Group
financial statements
Parent company
financial statements
2024
£’m
2023
£’m
2024
£’m
2023
£’m
Materiality 7.0 6.7 5.2 4.9
Basis for determining
materiality
1% of total assets
Rationale for the
benchmark applied
We determined that total assets would be the most appropriate basis
for determining overall materiality as we consider it to be the principal
considerations for the users of the financial statements in assessing the
financial performance of the Group and Parent Company.
Performance
materiality
5.3 4.5 3.9 3.7
Basis for determining
performance
materiality
75% of materiality
Rationale for the
percentage applied
for performance
materiality
The level of performance materiality applied was set after having
considered a number of factors including our risk assessment, together
with our assessment of the Group’s and Parent Company’s overall control
environment and our past experience of the audit which has indicated a
low number of corrected and uncorrected misstatements in the prior period
and Management’s willingness to investigate and correct these.
Specific materiality
We also determined that for other account balances and classes of transactions that impact
the calculation of European Public Real Estate Association (EPRA) earnings, a misstatement
of less than materiality for the financial statements as a whole, specific materiality, could
influence the economic decisions of users. We consider EPRA earnings to be a key performance
measure of the Company. EPRA earnings excludes the impact of the net surplus on revaluation
of investment properties, profit on disposal of investment properties and changes in the fair
value of interest rate derivatives. As a result, we determined materiality for these items to
based on 5% of EPRA earnings, amounting to £1.84 million (2023: £1.73 million) for the Group.
We further applied a performance materiality level of 75% (2023: 75%) of specific materiality to
ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
An overview of the scope of our audit continued
Key audit matters continued
Strategic report Governance Financial statements Additional information
67
Care REIT plcAnnual report and financial statements 2024
Reporting threshold
We agreed with the audit committee that we would report to them all individual audit
differences in excess of £349,000 (2023: £336,000) for the financial statements as a whole,
and in excess of £91,000 (2023: £89,000) for specific items. We also agreed to report
differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report
thatfact.
We have nothing to report in this regard.
Corporate governance statement
The UK Listing Rules require us to review the directors’ statement in relation to going concern,
longer-term viability and that part of the corporate governance statement relating to the
Parent Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the
following elements of the corporate governance statement is materially consistent with the
financial statements or our knowledge obtained during the audit.
Going concern
andlonger-term
viability
• The directors’ statement with regard to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified, set out on page 42.
• The directors’ explanation as to their assessment of the Parent
Company’s prospects, the period this assessment covers and
why the period is appropriate, set out on page 42.
Other Code
provisions
• The directors’ statement on fair, balanced and
understandable, set out on page 50.
• The board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks, set out on page
50.
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems,
set out on page 50.
• The section describing the work of the audit committee, set
out on pages 54 to 56.
Independent auditor’s report continued
to the members of Care REIT plc
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68
Care REIT plcAnnual report and financial statements 2024
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the
audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions
and matters as described below.
Strategic report and
directors’ report
In our opinion, based on the work undertaken in the course of the
audit:
• the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group
and the Parent Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the strategic report or the directors’ report.
Directors’
remuneration
In our opinion, the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Matters on which
we are required to
report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company financial statements and the part of
the directors’ remuneration report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law
are not made; or
• we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and
fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s
and the Parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Parent Company or to cease operations,
orhave no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements
asa whole are free from material misstatement, whether due to fraud or error, and to issue
anauditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations.
We design procedures in line with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud. The extent to which our
proceduresare capable of detecting irregularities, including fraud, is detailed below:
Non‑compliance with laws and regulations
Based on:
• our understanding of the Group and the industry in which it operates;
• discussion with management and those charged with governance; and
• obtaining and understanding of the Group’s policies and procedures regarding
compliancewith laws and regulations,
we considered the significant laws and regulations to be UK company law, UK tax
legislation(including the REIT regime requirements) and the UK Listing Rules, and we
considered the extent to which non-compliance might have a material effect on the
Groupfinancial statements.
Our procedures in response to the above included:
• review of minutes of meeting of those charged with governance for any instances of
non-compliance with laws and regulations;
• review of correspondence with regulatory and tax authorities for any instances of
non-compliance with laws and regulations;
• review of financial statement disclosures and agreeing to supporting documentation;
• involvement of REIT tax experts in the audit; and
• review of legal expenditure accounts to understand the nature of expenditure incurred.
Independent auditor’s report continued
to the members of Care REIT plc
Strategic report Governance Financial statements Additional information
69
Care REIT plcAnnual report and financial statements 2024
Auditor’s responsibilities for the audit of the financial statements continued
Irregularities, including fraud
We assessed the susceptibility of the financial statements to material misstatement, including
fraud. Our risk assessment procedures included:
• enquiry with management and those charged with governance regarding any known or
suspected instances of fraud;
• obtaining an understanding of the Group’s policies and procedures relating to:
• detecting and responding to the risks of fraud; and
• internal controls established to mitigate risks related to fraud.
• review of minutes of meetings of those charged with governance for any known or suspected
instances of fraud;
• discussion amongst the engagement team as to how and where fraud might occur in the
financial statements;
• involvement of forensic specialists in the audit to assess the susceptibility of the financial
statements to material fraud;
• performing analytical procedures to identify any unusual or unexpected relationships that
may indicate risks of material misstatement due to fraud; and
• considering remuneration incentive schemes and performance targets and the related
financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be the
valuation of investment property and management override of controls.
Our procedures in response to the above included:
• testing a sample of journal entries throughout the year, which met a defined risk criteria, by
agreeing to supporting documentation; and
• assessing significant estimates made by management for bias, which included the valuation
of the Group’s investment property as detailed under the key audit matters.
We also communicated relevant identified laws and regulations and potential fraud risks to
all engagement team members who were deemed to have the appropriate competence and
capabilities, and remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the
financial statements, recognising that the risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the further removed
non-compliance with laws and regulations is from the events and transactions reflected in the
financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that
we might state to the Parent Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Parent Company and the
Parent Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Charles Ellis
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
12 March 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered
number OC305127).
Independent auditor’s report continued
to the members of Care REIT plc
Strategic report Governance Financial statements Additional information
70
Care REIT plcAnnual report and financial statements 2024
What’s in this section
Consolidated statement of comprehensive income 72
Consolidated statement of financial position 73
Consolidated statement of cash flows 74
Consolidated statement of changes in equity 75
Notes to the consolidated financial statements 76
Company statement of financial position 95
Company statement of changes in equity 96
Notes to the Company financial statements 97
Financial
statements
71
Care REIT plcAnnual report and financial statements 2024
Strategic report Governance Financial statements Additional information
Consolidated statement of comprehensive income
For the year ended 31 December 2024
31 December31 December
20242023
Notes£’000£’000
Gross rental income
5
5 4, 146
49,659
Bad debts written off
5
—
(236)
Insurance/service charge income
5
69 0
8 71
Insurance/service charge expense
5
(69 0)
(871)
Net rental income
5 4,14 6
4 9,4 23
Administrative and other expenses
6
(7, 4 7 6)
( 7, 1 3 7 )
Loss on disposal of investment properties
13
(20)
(16)
Operating profit before changes in fair value
4 6,650
42, 270
Changes in fair value of investment properties
13
9,4 62
14 ,78 8
Operating profit
5 6, 112
5 7, 0 5 8
Finance income
8
234
3 ,761
Finance expense
9
(11 , 328)
(11 ,9 8 8)
Profit before tax
45, 018
4 8 , 8 31
Tax charge on profit for the year
10
(57)
—
Profit and total comprehensive income (attributable to shareholders)
4 4 ,9 61
4 8 , 8 31
Earnings per share – basic and diluted (pence)
11
10. 85p
11 .79p
The results are derived from continuing operations during the year; the Group had no other comprehensive income in the current or prior year.
The accompanying notes to the consolidated statement of comprehensive income can be found on pages 76 to 94.
Strategic report Governance Financial statements Additional information
72
Care REIT plcAnnual report and financial statements 2024
Consolidated statement of financial position
As at 31 December 2024
31 December31 December
20242023
Notes£’000£’000
Non-current assets
Investment property
13
63 0,788
616 , 0 0 6
Interest rate derivatives
19
—
1,75 0
Trade and other receivables
15
51 , 511
39,2 37
Total non-current assets
68 2,29 9
65 6 ,9 93
Current assets
Assets held-for-sale
14
4 ,17 5
—
Trade and other receivables
15
5 65
9 07
Interest rate derivatives
19
48 4
—
Cash and cash equivalents
16
10 ,492
9, 3 89
Total current assets
15 ,716
10, 29 6
Total assets
69 8, 015
6 6 7, 2 8 9
Current liabilities
Trade and other payables
17
(6 ,8 91)
(6, 915)
Total current liabilities
(6 , 8 91)
(6 ,91 5)
Non-current liabilities
Borrowings
18
(193 ,4 0 8)
(17 9,9 37)
Trade and other payables
17
(3 ,260)
(2 , 330)
Total non-current liabilities
(19 6, 66 8)
(18 2, 267)
Total liabilities
(203 ,559)
(189,182)
Total net assets
49 4,45 6
47 8 , 107
31 December31 December
20242023
Notes£’000£’000
Equity
Share capital
22
4, 14 4
4, 14 4
Share premium reserve
22
376 ,7 16
376,716
Capital reduction reserve
22
24,077
24 , 077
Retained earnings
8 9, 519
7 3,17 0
Total equity
49 4,45 6
47 8 ,1 07
Net asset value per ordinary share (pence)
24
11 9. 33p
11 5. 3 8p
The accompanying notes to the consolidated statement of financial position can be found on
pages 76 to 94.
The consolidated financial statements for Care REIT plc (registered number: 10464966) were
approved and authorised for issue by the board of directors on 12 March 2025 and are signed
on its behalf by:
Simon Laffin
Chair
Strategic report Governance Financial statements Additional information
73
Care REIT plcAnnual report and financial statements 2024
Consolidated statement of cash flows
For the year ended 31 December 2024
31 December31 December
20242023
Notes£’000£’000
Cash flows from operating activities
Profit for the year (attributable to equity
shareholders)
4 4, 9 61
4 8 , 8 31
Finance income
8
(2 34)
(3, 761)
Finance expense
9
11 , 328
11, 98 8
Loss on disposal of investment properties
13
20
16
Changes in fair value of investment
properties
13
(9,4 62)
(14 ,78 8)
Net cash flow before working capital changes
4 6 ,613
42 , 28 6
Working capital changes
Increase in trade and other receivables
(7, 0 6 8 )
(6 ,3 0 8)
Increase/(decrease) in trade and other
payables
1 ,10 4
(2 ,618)
Net cash flow generated from operating
activities
4 0,6 49
33, 36 0
Investing activities
Purchase of investment properties
—
(4 4 ,79 9)
Proceeds on sale of investment property
4,48 0
1, 234
Acquisition costs capitalised
—
(1 ,76 5)
Capital improvements
(14,225)
(3, 375)
Loan advanced to operator
—
(1 ,6 0 0)
Loan advanced to operator for development
funding
15
(5,0 00)
—
Interest received
290
3,695
Net cash flow used in investing activities
(14 ,45 5)
(4 6 ,610)
31 December31 December
20242023
Notes£’000£’000
Financing activities
Issue costs of ordinary share capital
22
—
(30)
Borrowings drawn
18
44 ,000
82,5 0 0
Borrowings repaid
18
(3 1, 000)
(40 , 000)
Loan arrangement fees paid
(714)
(2, 827)
Loan commitment fees paid
(58 9)
(528)
Purchase of derivative
19
—
(3,238)
Interest payments received on interest rate
derivatives
19
1 , 676
1 ,035
Interest paid on bank borrowings
(9, 852)
(8,9 90)
Dividends paid to equity holders
12
(28 ,61 2)
(2 7, 8 1 4 )
Net cash flow (used in)/generated from
financing activities
(2 5, 0 91)
10 8
Net increase/(decrease) in cash and cash
equivalents for the year
1 ,103
(1 3,142)
Cash and cash equivalents at the start of
theyear
9, 389
2 2 , 531
Cash and cash equivalents at the end of
theyear
16
10 ,492
9, 3 89
The accompanying notes to the consolidated statement of cash flows can be found on
pages76 to 94.
Strategic report Governance Financial statements Additional information
74
Care REIT plcAnnual report and financial statements 2024
Consolidated statement of changes in equity
For the year ended 31 December 2024
Capital
Share Share reduction Retained
capitalpremiumreserveearningsTotal
Notes£’000£’000£’000£’000£’000
1 January 2024
4, 14 4
376 ,716
24,077
73 , 170
47 8 , 10 7
Total comprehensive income
—
—
—
4 4 , 961
4 4 ,9 61
Transactions with owners
Dividends paid
12
—
—
—
(28,612)
(28,612)
31 December 2024
4, 14 4
376 ,716
24,077
8 9, 51 9
494 ,456
For the year ended 31 December 2023
Capital
Share Share reduction Retained
capitalpremiumreserveearningsTotal
Notes£’000£’000£’000£’000£’000
1 January 2023
4,0 4 8
3 65,6 42
24 ,07 7
52 ,15 3
4 45,920
Total comprehensive income
—
—
—
4 8 , 8 31
4 8 , 8 31
Transactions with owners
Dividends paid
12
—
—
—
(2 7, 8 1 4)
(2 7, 8 1 4)
Share issue
22
96
11 ,10 4
—
—
11, 2 0 0
Share issue costs
22
—
(30)
—
—
(30)
31 December 2023
4 ,14 4
376,716
24 ,07 7
7 3, 170
47 8 ,1 07
The accompanying notes to the consolidated statement of changes in equity can be found on pages 76 to 94.
Strategic report Governance Financial statements Additional information
75
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements
For the year ended 31 December 2024
1. Basis of preparation
General information
The consolidated financial statements for the year ended 31 December 2024 are prepared in
accordance with UK-adopted international accounting standards.
The consolidated financial statements have been prepared on a historical cost basis, except for
investment properties and interest rate derivatives, which have been measured at fair value.
The Group has chosen to adopt EPRA best practices recommendations guidelines for
calculating key metrics such as EPRA earnings per share, most recently updated in
September 2024.
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.
The registered address of the Company is disclosed in the corporate information.
Convention
The consolidated financial statements are presented in Sterling, which is also the Group’s
functional currency, and all values are rounded to the nearest thousand (£’000), except when
otherwise indicated.
Going concern
The strategic report describes the Group’s financial position, cash flows and liquidity position.
The principal risks are set out on pages 37 and 38 and note 20 to the financial statements also
provides details of the Group’s financial instruments and its exposure to liquidity and credit risk.
The ongoing effect of inflated costs and the high-interest rate environment has been
considered by the directors. The directors have reviewed the forecasts for the Group taking into
account the impact of heightened interest rates and costs on trading over the 15 months from
the date of signing this annual report. The forecasts have been assessed against a range of
possible downside outcomes incorporating significantly lower levels of income and higher costs.
The expiry of one of the Group’s revolving credit facilities in April 2026 has been considered by
the directors in the extended 15-month going concern review period; see going concern and
viability on page 42 for further detail.
The directors believe that there are currently no material uncertainties in relation to the Group’s
ability to continue for a period of at least 15 months from the date of approval of the Group’s
financial statements. The board is, therefore, of the opinion that the going concern basis
adopted in the preparation of the annual 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.
Information about significant areas of estimation, uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amounts recognised
in the financial statements are disclosed below.
2.1. Judgements
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 typically for between 20 and 30 years, typically with a tenant-only
option to extend for one or two periods of ten years. At the inception of the lease, management
do not judge any tenant-only option to extend the leases to be reasonably certain and, as
such, do not factor these lease extensions into their considerations of lease incentives and their
treatment.
2.2. Estimates
Fair valuation of investment property
The valuations have been prepared in accordance with the RICS Valuation – current edition of
the global and UK standards as at the valuation date, or the RICS “Red Book” as it has become
widely known.
The basis of value adopted is that of fair value being “the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date” in accordance with IFRS 13. The concept of fair value is considered to
be consistent with that of market value.
The significant methods and assumptions used by the valuers in estimating the fair value of the
investment properties are set out in note 13.
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
counting, 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 guaranteed minimum
rent uplifts at the inception of the lease.
The nature of uncertainty regarding the estimation of fair value as well as sensitivity analysis
has been considered as set out in note 13.
Strategic report Governance Financial statements Additional information
76
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
5. Property income
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Rental income cash received in the year
47,162
42,513
Rent received in advance of recognition
1
78
141
Rent recognised in advance of receipt
2
7,0 95
7,145
Rental lease incentive amortisation
3
(189)
(140)
Gross rental income
54,146
49,659
Bad debts written off
—
(236)
Insurance/service charge income
690
871
Insurance/service charge expense
(690)
(871)
Net rental income
54,146
49,423
1. This relates to movement in rent premiums received in prior periods as well as any rent premiums received during
the year, deemed to be a premium over the term of the lease.
2. Relates to movement in rent-free periods being recognised on a straight-line basis over the term of the lease and
rent recognised in the period to reflect the minimum uplift in rents over the term of the lease on a straight-line
basis.
3. Lease incentives relate to the amortisation of payments made to tenants that are not part of any acquisition
contractual obligations. These payments are made in return for an increase in rent.
For accounting purposes, premiums received are reflected on a straight-line basis over the term
of the lease. In addition, the Group benefits from a minimum annual rental uplift of 1% or 2%
on most of its leases. For accounting purposes, these uplifts are also incorporated to recognise
income on a straight-line basis.
Insurance/service charge relates to property insurance that is paid by the Group and recharged
to tenants.
Minster Care Management Limited and Croftwood Care UK Limited are both part of the
Minster Care Group Limited and together represent 35.6% (2023: 38.4%) of gross rental income:
2024
2023
Minster Care Management Limited
22.5%
24.9%
Welford
20.7%
17.1%
Croftwood Care UK Limited
13.1%
13.5%
Holmes Care Group
14.6%
12.5%
Others
29.1%
32.0%
3. Summary of material accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below or alongside the relevant note.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and
all of its subsidiaries drawn up to 31 December 2024. Subsidiaries are those entities, including
special purpose entities, controlled by the Company. Control exists when the Company is
exposed, or has rights, to variable returns from its investment with the investee and has the
ability to affect those returns through its power over the investee. In assessing control, potential
voting rights that presently are exercisable are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
Segmental information
The board is of the opinion that the Group is engaged in a single segment business, being
the investment in the United Kingdom in healthcare assets. The board considers that these
properties have similar economic characteristics and as a result these individual properties have
been aggregated into a single reportable operating segment. Reporting on tenants providing
greater than 10% of revenue is included in note 5.
4. New standards issued
4.1. New standards issued with effect from 1 January 2024
No new standards have been applied that have had a material effect on the financial position
or performance of the Group.
4.2. New standards issued but not yet effective
There are no new standards issued but not yet effective that are expected to have a material
effect on the Group.
Strategic report Governance Financial statements Additional information
77
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
6. Administrative and other expenses
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Investment Manager fees (see note 23)
5,022
4,810
Directors’ remuneration (see note 7)
265
276
Auditor’s fees
– Statutory audit of the Company and Group
294
250
– Statutory audit of the subsidiaries
51
52
– Agreed-upon procedures for the Company’s interim report
19
17
Total auditor’s fees
364
319
Administration fees
399
523
Regulatory fees
25
34
Legal and professional
1,003
912
Recruitment services and remuneration committee advice
7
32
Other administrative costs
391
231
7,476
7,137
The amounts shown above include irrecoverable VAT as appropriate. The 2024 audit fee above
includes £17,000 in respect of overruns relating to 2023.
5. Property income continued
Accounting policy
Rental income
Rental income arising on investment properties is included in gross rental income in the consolidated
statement of comprehensive income and is accounted for on a straight-line basis over the lease term.
The change in the RPI is reviewed annually, with the minimum uplifts being taken into consideration
when accounting for the rental income on a straight-line basis upon inception of the lease. The resulting
asset or liability is reflected as a receivable or payable in the consolidated statement of financial position.
When a contract includes both lease and non-lease components, the Group applies IFRS 16 to allocate
the consideration under the contract to each component.
The valuation of investment properties is increased or reduced by the total of the unamortised lease
incentive and straight-line receivable or payable balances. Any remaining balances in respect of
properties disposed of are included in the calculation of the profit or loss arising at disposal.
The initial lease rental payments and guaranteed rental uplifts are spread evenly over the lease term,
even if payments are not made on such a basis. The lease term is the non-cancellable period of the
lease together with any further term for which the tenant has the option to continue the lease, except
for where, at the inception of the lease, the directors have no certainty that the tenant will exercise
that option.
Increased rental payments arising from lease variations following the completion of agreed capital
improvements are spread evenly over the remaining lease term from the date of the lease variation.
At each rent review, the uplift in rent is calculated in accordance with the terms of the lease. If greater
than the minimum uplift then the uplift above and beyond the minimum recognised is calculated and
recognised in the period in which it arises, with there being no rebasing of the amounts to recognise over
the remaining lease.
Service charges, insurance and other expenses recoverable from tenants
Income arising from expenses recharged to tenants is recognised in the year which the compensation
becomes receivable. Service, insurance and other similar charges that are recoverable are included in
gross rental income as the directors consider that the Group acts as principal in this respect.
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Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
9. Finance expenses
Year ended Year ended
31 December 31 December
2024 2023
Note £’000 £’000
Interest payable on bank borrowings
10,113
9,584
Commitment fee payable on borrowings
589
528
Amortisation of loan arrangement fee
955
1,418
Changes in fair value of interest rate
derivatives
19
(329)
458
11,328
11,988
The total interest payable on financial liabilities carried at amortised cost comprises interest
payable on borrowings, which was £177.6m at 31 December 2024 (2023: £184.8m). Amortisation
on loan arrangement fees relates to capitalised fees being amortised over the term of the
facility; in the year ended 31 December 2024 £0.5m was capitalised (2023: £1.2m).
10. 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 year ended 31 December 2024 and the year ended 31 December 2023, the Group did
not have any non-qualifying profits except interest income.
Tax charge in the consolidated statement of comprehensive income:
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
UK corporation tax
57
—
Accounting policy
Finance expenses
Finance expenses consist principally of interest payable, amortisation of loan arrangement fees and fair
value movements on interest rate derivatives.
Loan arrangement fees are expensed over the term of the relevant loan. Interest payable and other
finance costs which the Group incurs on bank facilities are expensed in the period to which they relate.
7. Directors’ remuneration
The Group had no employees in the current or prior year. The directors, who are key
management personnel of the Company, are appointed under letters of appointment for
services. Directors’ remuneration, all of which represents their fees for services provided during
the year, is as follows:
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Simon Laffin (Chair)
60
55
Rupert Barclay (resigned)
—
15
Rosemary Boot
40
40
Philip Hall (resigned)
16
40
Paul Craig (resigned)
—
15
Amanda Aldridge
46
46
Chris Santer
40
40
Cedi Frederick
30
—
232
251
Employer’s National Insurance
33
25
265
276
Directors’ remuneration payable at 31 December 2024 amounted to £12,868 (2023: £18,440).
8. Finance income
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Bank interest
168
55
Loan interest
66
3,706
234
3,761
Loan interest income relates to interest on working capital loans made to operators.
Accounting policy
Finance income
Finance income is accounted for on an accruals basis.
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Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
11. 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.
Year ended Year ended
31 December 31 December
2024
2023
1
£’000 £’000
Total comprehensive income (attributable to shareholders)
44,961
48,831
Adjusted for:
– Revaluation movement
(18,227)
(21,934)
– Rental lease incentive
1,592
(140)
– Rental income arising from recognising rental premiums
and future guaranteed rent uplifts
7,173
7, 2 8 6
Change in fair value of investment properties
(9,462)
(14,788)
Loss on disposal of investment property
20
16
Interest received on interest rate cap
1,595
1,393
Change in fair value of interest rate derivative
(329)
458
EPRA earnings
36,785
35,910
Adjusted for:
Rental income arising from recognising rental premiums and
future guaranteed rent uplifts
(7,173)
(7,287)
Amortisation of lease incentives
189
141
Amortisation of loan arrangement fees
955
1,418
Loss on disposal of investment property
(20)
(16)
Adjusted earnings
30,736
30,166
Average number of ordinary shares
414,368,169
414 ,157, 674
Basic and diluted earnings per share (pence)
10.85p
11.79p
EPRA basic and diluted earnings per share (pence)
1
8.89p
8.67p
Adjusted basic and diluted earnings per share (pence)
7.42 p
7.28 p
1. The 2023 EPRA earnings has been restated in line with updated guidance from EPRA released in 2024 revising
the calculation to include cash income received on interest rate derivatives.
10. Taxation continued
Reconciliation of the corporation tax charge:
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Profit before tax
45,018
48,831
Theoretical tax at UK corporation tax rate 25% (2023: 23.5%)
11,255
11,475
Effects of:
REIT exempt profits
(8,750)
(8,860)
Non-taxable items
(2,448)
(2,615)
Total tax charge
1
57
—
1. Tax charge relates to taxable interest income which was not offset by Group losses.
Under the UK REIT rules within which the Group operates, capital gains on the Group’s UK
properties are generally exempt from UK corporation tax, provided they are not held for
trading.
Accounting policy
Taxation
The Group is a REIT in relation to its property investments and is therefore exempt from tax, subject to
the Group maintaining its REIT status.
Current tax is the expected tax payable on any non-REIT taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date.
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Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
12. Dividends
Year ended Year ended
31 December 31 December
Dividend rate 2024 2023
(pence per share) £’000 £’000
Fourth interim dividend for the period
ended 31 December 2022 (ex-dividend –
31 January 2023)
1 .635 0p
—
6,775
First interim dividend for the period
ended 31 December 2023 (ex-dividend –
25 April 2023)
1.69 25p
—
7,013
Second interim dividend for the period
ended 31 December 2023 (ex-dividend –
9 August 2023)
1 .6925p
—
7,013
Third interim dividend for the period ended
31 December 2023 (ex-dividend –
20 October 2023)
1 .6925p
—
7,013
Fourth interim dividend for the period ended
31 December 2023 (ex-dividend –
8 February 2024)
1.69 25p
7,012
—
First interim dividend for the period ended
31 December 2024 (ex-dividend –
2 May 2024)
1 .7375p
7,20
0
—
Second interim dividend for the period ended
31 December 2024 (ex-dividend –
1 August 2024)
1 .7375p
7, 20 0
—
Third interim dividend for the period ended
31 December 2024 (ex-dividend –
7 November 2024)
1 .7375p
7, 20 0
—
Total dividends paid
28,612
27,814
Total dividends paid in respect of the year
5.2125p
5.0775p
Total dividends unpaid but declared in respect
of the year
1 .7375p
1.69 25p
Total dividends declared in respect of the
year – per share
6. 95p
6 .77p
On 30 January 2024, the Company declared an interim dividend of 1.6925 pence per share for
the period from 1 October 2023 to 31 December 2023 which was paid on 23 February 2024.
On 25 April 2024, the Company declared an interim dividend of 1.7375 pence per share for the
period from 1 January 2024 to 31 March 2024 which was paid on 17 May 2024.
On 24 July 2024, the Company declared an interim dividend of 1.7375 pence per share for the
period from 1 April 2024 to 30 June 2024 which was paid on 16 August 2024.
11. Earnings per share continued
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 changes in fair value of investment
properties and interest rate derivatives, and removal of profit or loss on disposal of investment
properties.
The effect of the most recent change in guidelines resulted in the interest received on the
interest rate cap of £1,595,000 (2023: £1,393,000) being recognised in EPRA earnings rather
than only in adjusted earnings.
Adjusted earnings
Adjusted earnings is used by the board to help assess the Group’s ability to deliver a cash
covered dividend from recurring net income. The metric adjusts EPRA earnings by other
non-cash items credited or charged to the Group statement of comprehensive income
including the effect of straight-lining of rental income from fixed rental uplift adjustments and
amortisation of loan arrangement fees. The metric also adjusts for any one-off costs that are
not expected to be recurring and for cash items which are excluded from the EPRA earnings
calculation such as interest income on hedging arrangement.
Fixed rental uplift adjustments relate to adjustments to net rental income on leases with
minimum uplifts embedded within their review profiles. The total minimum income recognised
over the lease term is recognised on a straight-line basis and therefore not supported by cash
flows during the early term of the lease, but this reverses towards the end of the lease.
The board uses the adjusted earnings alongside the available distributable reserves in its
consideration and approval of dividends.
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81
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
In the absence of reliable benchmarking data and indices for estimating costs, specialist advice
on cost management may be required which is usually agreed with the valuer in the terms
of engagement and without reasonable estimates/assumptions may be needed to properly
reflect market expectations in arriving at the valuation.
The valuations are the ultimate responsibility of the directors. Accordingly, the critical
assumptions used in establishing the independent valuation are reviewed by the board.
As at As at
31 December 31 December
2024 2023
£’000 £’000
Opening value
651,313
532,479
Property additions
—
91,688
Property disposals
1
(4,500)
(1,250)
Acquisition costs capitalised
—
1,765
Capital improvements
13,996
4,697
Revaluation movement
18,227
21,934
Closing value per independent valuation report
679,036
651,313
Transfer to assets held-for-sale (note 14)
(4,175)
—
Guaranteed rent reviews debtor
(42,353)
(35,258)
Lease incentive debtor
(3,971)
(2,379)
Rent premium creditor
2,251
2,330
Closing fair value per consolidated statement of
financial position
630,788
616,006
1. In 2024 the carrying value of disposals was £4,500,000 (2023: £1,250,000). This, combined with the loss on
disposal of £20,000 (2023: £16,000 profit) makes up the total net proceeds shown in the consolidated statement
of cash flows.
There were no additions during the current year. During the prior year, the Group acquired an
additional £91.7m assets, of which £35.7m relates to a portfolio which was purchased via a loan
to operator in December 2021 where the Group had an option to acquire, this option was
exercised in June 2023, and £56m relates to the purchase of a portfolio in 2023 where 20% of
the consideration was made up of shares in the Company. During the year the Group disposed
of £4.5m of property (2023: £1.25m property).
The majority of the properties owned are freehold except for 11 properties which are long
leasehold; eight of these are under a minimum of 999-year leases at a peppercorn rent and the
remaining three are under 125-year leases at a peppercorn rent.
12. Dividends continued
On 24 October 2024, the Company declared an interim dividend of 1.7375 pence per share for
the period 1 July 2024 to 30 September 2024 which was paid on 22 November 2024.
On 24 January 2025, the Company declared an interim dividend of 1.7375 pence per share for
the period 1 October 2024 to 31 December 2024 which was paid on 21 February 2025.
13. Investment property
In accordance with the RICS “Red Book” the properties have been independently valued
on the basis of fair value by Cushman & Wakefield, an accredited independent valuer with
a recognised professional qualification. They have recent and relevant experience in the
locations and categories of investment property being valued and skills and understanding to
undertake the valuations competently. The properties have been valued on an individual basis
and their values aggregated rather than the portfolio valued as a single entity. The valuers
have used recognised valuation techniques in accordance with those recommended by the
International Valuation Standards Committee and are compliant with IFRS 13. Factors reflected
include current market conditions, annual rentals, lease lengths, property condition including
improvements effected during the year, rent coverage, location and comparable evidence.
The valuers of the Group property portfolio have a working knowledge of the various ways that
environmental, social and governance factors can impact the value of property:
• environmental and sustainability standards, which vary across parts of the UK, are also
referenced within the valuers’ report. The valuers also note that they continue to monitor
the wider property market for evidence of transactional activity that evidences the views of
market participants in this area;
• with regard to social, there are fewer established benchmarks in this area but the valuers are
aware that care homes generally meet a social need to residents and are also employment
providers; and
• concerning governance, within the care sector in the UK, the valuers reflect the latest
available regulatory reports from the various regulatory bodies within the UK (being CQC,
Care Inspectorate and RQIA).
The Group continues to share recently conducted physical climate and transitional risk
assessments with the valuers, which they have reviewed and reflected in their valuations to the
extent that current market participants would do so.
Valuers observe, assess and monitor evidence from market activities, including market
sentiment on issues such as longer-term obsolescence and, where known, future environmental,
social and governance related risks and issues which may include, for example, the market’s
approach to capital expenditure required to maintain the utility of the asset.
Accounting policy
Dividends
Dividends are recognised when they become legally payable.
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82
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
Descriptions and definitions relating to valuation techniques and key unobservable inputs made
in determining fair values are as follows:
Valuation techniques used to derive fair values
The valuations have been prepared on the basis of fair value which is defined in the RICS “Red
Book” as the “price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date” in accordance
with IFRS 13. The concept of fair value is considered to be consistent with that of market value.
The valuation takes into consideration the current market conditions including improvements
effected during the year, annual rentals, lease lengths, property condition, rent coverage and
location.
Unobservable inputs
These include: estimated average increase in rent based on both market estimations and
contractual situations; equivalent yield (defined as the weighted average of the net initial yield
and reversionary yield); estimated rental value (ERV) based on market conditions prevailing at
the valuation date; and the physical condition of the property determined by inspections on a
rotational basis. A decrease in the ERV would decrease fair value. A decrease in the equivalent
yield would increase the fair value. An increase in the remaining lease term would increase the
fair value.
Sensitivity of measurement of significant unobservable inputs
Year ended Year ended
31 December 31 December
2024 2023
Significant unobservable inputs
Initial yield ranges
2.3% - 15.5%
3.5% - 12.5%
EPRA topped-up net initial yield
6.96%
6.92%
Annual rent roll
£49.2m
£47. 2 m
ERV
£50.2m
£48.2m
ERV per bed ranges
£2,600/bed
£2,300/bed
to to
£13,000/bed £12,000/bed
Sensitivity to a 0.25% movement in valuation yield
Change in investment property valuation
£23.5m
£22.6m
Sensitivity to a 1% movement in rental income
Change in investment property valuation
£6.8m
£6.5m
13. Investment property continued
Change in fair value of investment properties
The following elements are included in the change in fair value of investment properties
reported in the consolidated financial statements:
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Revaluation movement
18,227
21,934
Rental lease incentive
1
(1,592)
140
Rental income arising from recognising rental premiums and
guaranteed rent uplifts
(7,173)
(7,286)
Change in fair value of investment properties
9,462
14,788
1. Lease incentives relate to the amortisation of payments made to tenants that are not part of any acquisition
contractual obligations. These payments are made in return for a variation to the rent.
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. Rent premiums received
are being reflected on a straight-line basis over the term of the lease. In addition, the Group
benefits from a minimum annual rental uplift of 1% or 2% on the majority of leases. These uplifts
are also incorporated to recognise income on a straight-line basis. The elements are reported
in the table below. Capital improvements funded by the Group are undertaken under Deeds of
Variation to the leases. The period between signing the Deed of Variation and rent commencing
is a rent-free period and rent is recognised on a straight-line basis from the signing of the Deed
of Variation.
Note
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Rent received in advance of recognition
1
5
78
140
Rent recognised in advance of receipt
2
5
7,095
7,14
6
Rental income arising from recognising rental
premium and future guaranteed rent uplifts
7,173
7, 2 8 6
1. Rent premiums received in prior periods as well as any rent premiums received during the year, deemed to be a
premium over the term of the lease.
2. Relates to both rent-free periods being recognised on a straight-line basis over the term of the lease and
rent recognised in the period to reflect the minimum 1% or 2% uplift in rents over the term of the lease on a
straight-line basis.
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83
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
14. Assets held-for-sale
During the year the Group exchanged contracts for sale on three properties. As this highly
probably sale had not completed at year end, these assets were transferred from investment
property to assets held-for-sale.
As at As at
31 December 31 December
2024 2023
£’000 £’000
Opening value
—
—
Transfer from investment property
4,175
—
Assets held-for-sale
4,175
—
Accounting policy
Assets held-for-sale
If management have committed to a plan to sell an investment property, the asset is being actively
marketed at a reasonable price and its sale is highly probable within the following 12 months, this asset
transfers from investment property to assets held-for-sale.
Investment properties are carried at fair value before being initially classified as held-for-sale. After being
transferred to assets held-for-sale, the investment property continues to be carried at fair value.
13. Investment property continued
Fair value hierarchy
The Group is required to classify fair value measurements of its investment properties using a
fair value hierarchy, in accordance with IFRS 13: Fair Value Measurement. This hierarchy reflects
the subjectivity of the inputs used, and has the following levels:
• Level 1 – unadjusted quoted prices in active markets;
• Level 2 – observable inputs other than quoted prices included within level 1; and
• Level 3 – unobservable inputs.
The following table provides the fair value measurement hierarchy for investment property:
Date of Total Level 1 Level 2 Level 3
valuation £’000 £’000 £’000 £’000
Assets
measured at
fair value:
Investment 31 December
properties
2024
630,788
—
—
630,788
Assets 31 December
held-for-sale
2024
4,175
—
—
4,175
Investment 31 December
properties
2023
616,006
—
—
616,006
There have been no transfers between any of the levels during the year.
Accounting policy
Investment properties
Investment properties consist of land and buildings (principally care homes) which are held to earn rental
income and for capital growth potential.
Investment properties are initially recognised at cost, being the fair value of consideration given,
including transaction costs associated with the investment property. Investment properties are
recognised when the risk and rewards on the acquired properties pass to the Group on completion of the
purchase. Any subsequent capital expenditure incurred in improving investment properties is capitalised
in the period incurred and included within the book cost of the property.
After initial recognition, investment properties are measured at fair value, with gains and losses
recognised in the consolidated statement of comprehensive income in the period in which they arise.
Fair value measurement takes into consideration the improvements to the investment property during
the year taking into account the future cash flows from increases in rent that have been contracted in
relation to the improvement and discounting them at an appropriate rate to reflect the percentage of
completion of the works being undertaken and the risk to completion that remains.
Gains and losses on disposals of investment properties are determined as the difference between
net disposal proceeds and the carrying value of the asset. These are recognised in the consolidated
statement of comprehensive income in the period in which they arise.
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84
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
16. Cash and cash equivalents
As at As at
31 December 31 December
2024 2023
£’000 £’000
Cash and cash equivalents
10,492
9,389
None of the Group’s cash balances are held in restricted accounts. £1.0m of cash and cash
equivalents as at 31 December 2024 relates to rental deposits, see note 17.
17. Trade and other payables
As at As at
31 December 31 December
2024 2023
£’000 £’000
Non-current
Rent received in advance of recognition
2,251
2,330
Rental deposits
1
1,009
—
3,260
2,330
Current
Trade and other payables
1,528
1,686
Interest payable
2,006
1,745
Withholding tax payable – (PID dividends)
628
606
Rental received in advance
80
—
Capital improvements payable
2,649
2,878
6,891
6,915
10,151
9,245
1. In accordance with the terms of certain lease agreements, a rent deposit can be payable when tenant
profitability exceeds a defined level.
To reconcile working capital changes in the consolidated statement of cash flows, the interest
payable and capital improvements payable movements are excluded, as these are allocated to
financing activities and investing activities respectively.
Accounting policy
Cash and cash equivalents
Cash and cash equivalents include cash at bank and deposits with maturities of three months or less,
held at call with banks.
Accounting policy
Trade payables
Trade payables are initially recognised at their fair value and are subsequently measured at amortised cost.
15. Trade and other receivables
As at As at
31 December 31 December
2024 2023
£’000 £’000
Non-current
Rent recognised in advance of receipt
42,353
35,258
Rental lease incentive
3,971
2,379
Loan receivable
1,2
5,187
1,600
51,511
39,237
Current
Interest receivable on interest rate derivatives
277
358
Interest receivable on operator loan
10
66
Accrued income
—
142
Prepayments
32
196
Other receivables
246
145
565
907
52,076
40,144
1. In November 2024, the Group entered into a loan agreement with Prestige, in which the Group provided £5m.
The funds were lent to Prestige to develop a new home. Upon certain conditions being met, a put and call option
for the Group to acquire the development for an additional payment of £3.7m is exercisable. If these options
aren’t exercised the loan becomes repayable in June 2026 with interest of 7.7%.
2. In June 2023, the Group entered into a loan agreement with Melrose Holdings Limited, a related party, where the
Group provided a working capital loan of £1.6m. On transfer of the leases to third-party operators, We Care and
Fulcrum, during 2024, £1.4m of this balance was recognised as a lease incentive as part of the lease negotiations
with the incoming tenants. There is an outstanding working capital facility with Fulcrum of up to £450,000 which
bears interest at 10% per annum on drawn amounts; £187,000 was drawn at the year end.
No impairment losses have been recognised as at 31 December 2024 (2023: £nil), refer to note
20 for further detail.
Accounting policy
Trade and other receivables
Trade receivables comprise mainly lease income receivable.
Trade and other receivables are initially recognised at fair value plus transaction costs and subsequently
measured at amortised cost less impairment.
The Group applies the amortised cost basis as trade and other receivables are normally held with an
objective to collect contractual cash flows, i.e. “held to collect”; which comprises payment of principal
and interest on the principal amount outstanding.
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85
Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
18. Borrowings
A summary of the bank borrowings drawn in the period is shown below:
As at As at
31 December 31 December
2024 2023
£’000 £’000
At the beginning of the year
184,760
142,260
Borrowings drawn in the year
44,000
82,500
Borrowings repaid in the year
(31,000)
(40,000)
Total bank borrowings drawn
197,760
184,760
As at 31 December 2024, the Group had £250m (2023: £250m) of available facilities, of which £52.2m was undrawn (2023: £65.2m).
A summary of the bank borrowings by lender is shown below:
As at 31 December 2024:
National
Clydesdale HSBC UK Westminster Senior secured Senior secured
Bank PLC Bank Plc Bank Plc loan notes loan notes
(‘Virgin’) (‘HSBC’) (‘NatWest’) (tranche A)
(tranche B)
Total
Private Private
Facility type
RCF
RCF
RCF
placement placement
Size (£m)
50.0
75.0
50.0
37.0
38.0
250.0
Drawn debt (£m)
30.5
47.0
45.3
37.0
38.0
197.8
Start date
December 2022
April 2020
June 2021
December 2021
December 2021
Expiry date
December 2029
April 2026
June 2029
December 2035
June 2035
Margin
2.00%
2.00%
2.00%
N/A
N/A
Fixed interest rate
N/A
N/A
N/A
2.93%
3.00%
Independent valuation of secured properties (£m)
126.1
175.4
135.4
175.3
612.2
Financial covenants:
LTV
1
50%
55%
50%
55%
Interest cover
2
2.00x
2.00x
1.75x
2.50x
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
18. Borrowings continued
As at 31 December 2023:
National
Clydesdale HSBC UK Westminster Senior secured Senior secured
Bank PLC Bank Plc Bank Plc loan notes loan notes
(‘Virgin’) (‘HSBC’) (‘NatWest’) (tranche A)
(tranche B)
Total
Private Private
Facility type
RCF
RCF
RCF
placement placement
Size (£m)
50.0
75.0
50.0
37.0
38.0
250.0
Drawn debt (£m)
32.5
47. 0
30.3
37.0
38.0
184.8
Start date
December 2022
April 2020
June 2021
December 2021
December 2021
Expiry date
December 2029
April 2026
June 2028
December 2035
June 2035
Margin
2.00%
2.00%
2.00%
N/A
N/A
Fixed interest rate
N/A
N/A
N/A
2.93%
3.00%
Independent valuation of secured properties (£m)
118.2
163.6
129.2
171.3
582.3
Financial covenants:
LTV
1
50%
55%
50%
55%
Interest cover
2
2.00x
2.00x
1.75x
2.50x
1. Loan to value must not exceed the stated percentage.
2. Net rent from ringfenced properties divided by interest expense must exceed the stated cover ratio.
In September 2024, the Group agreed a one-year extension option to its NatWest RCF to June 2029. There is a further option to extend to June 2030, subject to lender approval, exercisable
during 2025.
The Group has been in compliance with all of the financial covenants of the loan facilities as applicable throughout the year covered by these financial statements.
Any fees associated with arranging the borrowings unamortised as at the year end are offset against amounts drawn on the facilities as shown in the table below:
As at As at
31 December 31 December
2024 2023
£’000 £’000
Borrowings drawn
197,760
184,760
Arrangement fees – brought forward
(4,823)
(5,064)
Arrangement fees incurred during the year
(484)
(1,177)
Amortisation of loan arrangement fees
955
1,418
Borrowings at amortised cost
193,408
179,937
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
In January 2023, the Group purchased a two-year interest rate cap for £1.5m, which caps
SONIA at 3% for a notional amount of £50m. Following the year end, this interest rate cap was
renewed at the same rate for an additional year, see note 29 for further detail.
In August 2023, the Group purchased a two-year interest rate cap for £1.8m, which caps SONIA
at 4% for a notional amount of £50m.
At 31 December 2024, the Group had loans of £122.8m (2023: £109.8m) which were exposed to
interest rate risk.
20. Financial instruments and financial risk management
The Group’s principal financial assets and liabilities are those that arise directly from its
operations: trade and other receivables, trade and other payables and cash held at bank.
The Group’s other principal financial assets and liabilities are borrowings and interest rate
derivatives, the main purpose of which is to finance the acquisition and development of the
Group’s investment property portfolio and hedge against the interest rate risk arising.
Set out below is a comparison by class of the carrying amounts of the Group’s financial
instruments:
As at As at
31 December 31 December
2024 2023
£’000 £’000
Financial assets at amortised cost:
Loan receivable
5,187
1,600
Cash and cash equivalents
10,492
9,389
Trade and other receivables
533
711
Financial assets at fair value:
Interest rate derivative
484
1,750
Financial liabilities at amortised cost:
Borrowings
193,408
179,937
Trade and other payables
7,192
6,309
The interest rate derivative and put option are the only financial instruments that are measured
at fair value through the Group’s consolidated statement of comprehensive income.
Accounting policy
Interest rate derivatives
Derivative financial instruments, comprising interest rate caps for hedging purposes, are recognised at
fair value.
Changes in fair value of interest rate derivatives are recognised within the consolidated statement of
comprehensive income in the period in which they occur.
The Group does not apply hedge accounting in accordance with IFRS 9.
18. Borrowings continued
Maturity analysis of borrowings:
As at As at
31 December 31 December
2024 2023
£’000 £’000
Repayable within one year
—
—
Repayable between one and two years
47,000
—
Repayable between two and five years
75,760
7 7, 26 0
Repayable in over five years
75,000
107, 5 0 0
Total
197,760
184,760
The weighted average term of the Group’s committed facilities (excluding extension options) is
5.5 years (2023: 6.8 years).
As at 31 December 2024, the nominal value of the Group’s loans equated to £197.8m; the fair
value of these loans, based on a discounted cash flow using relevant rates based on market
conditions as at 31 December 2024, totalled £177.6m. This is categorised as level 2 in the fair
value hierarchy (see note 13 for further detail of the hierarchy).
19. Interest rate derivatives
As at As at
31 December 31 December
2024 2023
£’000 £’000
At the beginning of the year
1,750
363
Purchase of derivative
—
3,238
Change in fair value of interest rate derivatives
329
(458)
Payments received and accrued on interest rate derivatives
(1,595)
(1,393)
484
1,750
To mitigate the interest rate risk that arises as a result of entering into variable rate linked
loans, the Group has entered into interest rate caps.
Accounting policy
Borrowings
All borrowings are initially recognised at fair value net of attributable transaction costs. After initial
recognition, all 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
prepayment 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.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
The loan is guaranteed by Prestige Group and the agreement stipulates that the funds can
only be used for development costs, hence the value of the entity in which the money is loaned
to, and the property developed, should have assets of at least £5m whether in cash or in a
under-development home. This, along with reporting requirements to provide assurance of the
value of the development, gives the Group comfort that there are no expected credit losses in
association with this loan.
The Group is exposed to credit risks from its leasing activities and working capital loans to
operators. Credit risk is reduced by requiring tenants to pay rentals in advance under their lease
obligations. The credit quality of the tenant is also assessed based at the time of entering into
a lease agreement, thereby reducing credit risk. Outstanding trade receivables are regularly
monitored. There were no outstanding trade receivables and £0.2m in working capital loans to
operators as at 31 December 2024.
Credit risk also arises with the cash balances held with banks and financial institutions. The
board believes that the credit risk on current account cash balances is limited because the
counterparties are reputable banks with high credit ratings assigned by international credit
rating agencies. The impairment loss identified on cash balances was considered immaterial.
20. Financial instruments and financial risk management continued
The following table provides the fair value measurement hierarchy for the interest rate
derivative and put option:
Date of Total Level 1
Level 2
1
Level 3
1
valuation £’000 £’000 £’000 £’000
Assets measured at
fair value:
Interest rate 31 December
derivative
2024
484
—
484
—
Interest rate 31 December
derivative
2023
1,750
—
1,750
—
1
1. The fair value categories are defined in note 13.
Risk management
The Group is exposed to market risk (including interest rate risk), credit risk and liquidity risk.
The board oversees the management of these risks. The board reviews and agrees policies for
managing each of the risks that are summarised below.
Market risk (including interest rate risk)
Market risk is the risk that the fair values or future cash flows of financial instruments will
fluctuate because of changes in market prices. The financial assets held by the Group that are
affected by interest rate risk are principally the Group’s cash balances and the interest rate
derivative.
The Group monitors its interest rate exposure on a regular basis. A sensitivity analysis performed
to ascertain the impact on profit or loss and net assets of a 50-basis point shift in interest rates
on the Group’s cash balances would result in a movement of £52,461 (2023: £46,945) in interest
receivable for the year.
The financial liabilities held by the Group that are affected by interest rate risk are principally
the Group’s borrowings. The Group has entered into interest rate derivatives to reduce its
exposure to interest rate risk on its floating-rate debt (refer to note 18). A sensitivity analysis
performed to ascertain the impact on profit or loss and net assets of a 50-basis point shift in
interest rates on the Group’s unhedged borrowings would result in a movement of £113,800
(2023: £48,800) in interest payable for the year.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial
instrument or customer contract, leading to a financial loss.
In 2024, the Group entered into a new loan agreement with Prestige Group, in which the Group
provided a £5m term loan to fund Prestige Group’s development of a new care home.
Accounting policy
Expected credit losses
The Group applies the IFRS 9 simplified approach to measuring the expected credit losses (ECLs) for trade
receivables whereby the allowance or provision for all trade receivables is based on the lifetime ECLs.
The Group applies the general approach for initial recognition and subsequent measurement of ECL
provisions for the loan receivable and other receivables which have maturities of 12 months or more and
have a significant finance component.
This approach comprises of a three-stage approach to evaluating ECLs. These stages are classified
as follows:
Stage one
12-month ECLs are recognised in profit or loss at initial recognition and a loss allowance is established.
For financial instruments that have not deteriorated significantly in credit quality since initial recognition
or that have low credit risk at the reporting date, the loss allowance for 12-month ECLs is maintained and
updated for changes in amount. Interest revenue is calculated on the gross carrying amount of the asset
(i.e. without reduction for ECLs).
Stage two
If the credit risk increases significantly and the resulting credit quality is not considered to be low credit
risk, full lifetime ECLs are recognised and includes those financial instruments that do not have objective
evidence of a credit loss event. Interest revenue is still calculated on the gross carrying amount of the asset.
Stage three
If the credit risk of a financial asset increases to the point that it is considered credit impaired (there is
objective evidence of impairment at the reporting date), lifetime ECLs continue to be recognised. For
financial assets in this stage, lifetime ECLs will generally be individually assessed. Interest revenue is
calculated on the amortised cost net carrying amount (amortised cost less impairment).
Rent smoothing adjustments are not considered to be financial assets as the amounts are not yet
contractually due. As such, the requirements of IFRS 9 (including the expected credit loss method) are not
applied to those balances, although the credit risk is considered in the determination of the fair value of
the related property.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
20. Financial instruments and financial risk management continued
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due, as the majority of
the Group’s assets are property investments and are therefore not readily realisable. The Group’s objective is to ensure it has sufficient available funds for its operations and to fund its capital
expenditure. This is achieved by regular monitoring of forecast and actual cash flows by the AIFM ensuring the Group has appropriate levels of cash and available drawings to meet liabilities as
they fall due.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
<3 months 3-12 months 1-2 years 2-5 years >5 years Total
£’000 £’000 £’000 £’000 £’000 £’000
31 December 2024:
Borrowings
—
—
47,000
75,760
75,000
197,760
Interest and commitment fees on borrowings
927
2,853
3,293
8,017
12,718
27,808
Trade and other payables
6,183
—
—
—
1,009
7,192
31 December 2023:
Borrowings
—
—
—
77, 2 6 0
107, 5 0 0
184,760
Interest and commitment fees on borrowings
937
2,853
3,790
9,318
15,382
32,280
Trade and other payables
6,309
—
—
—
—
6,309
21. Capital management
The objective of the Group is to acquire, own, lease, renovate, extend and redevelop high-quality healthcare real estate assets in the UK and lease those assets, under full repairing and insuring
leases, primarily to healthcare operators providing residential healthcare services. This provides ordinary shareholders with an attractive level of income together with the potential for income and
capital growth from investing in a diversified portfolio of freehold and long leasehold care homes.
The board has responsibility for ensuring the Group’s ability to continue as a going concern and continues to qualify for UK REIT status. This involves the ability to borrow monies in the short and
long term and pay dividends out of reserves, all of which are considered and approved by the board on a regular basis.
The Company achieved its increased targeted aggregate dividend of 6.95 pence per share for the year ended 31 December 2024 and its target aggregate dividend of 6.77 pence per share for the
year ended 31 December 2023.
As at 31 December 2024, the Group remained within its maximum loan to value (LTV) covenant, which is 35% of gross asset value of the Group as a whole. The Group has a further £52.2m of
RCF facilities available from which it can draw.
To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares or buy back shares for cancellation or
for holding in treasury. Capital consists of ordinary share capital, other capital reserves and retained earnings.
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
22. Share capital, share premium and capital reduction reserve
Capital
Shares in Share Share reduction
issue capital premium reserve Total
Number £’000 £’000 £’000 £’000
As at 31 December 2022
404,764,328
4,048
365,642
24,077
393,767
Share issue
9,603,841
96
11,104
—
11,200
Share issue cost
—
—
(30)
—
(30)
As at 31 December 2023
414,368,169
4,144
376,716
24,077
404,937
As at 31 December 2024
414,368,169
4,144
376,716
24,077
404,937
The Company had 414,368,169 shares of nominal value of 1 pence each in issue at the end of the year (2023: 414,368,169).
Accounting policy
Share capital
The share capital relates to amounts subscribed for share capital at its par value.
Share premium
The surplus of net proceeds received from the issuance of new shares over their par value is credited to this account and the related issue costs are deducted from this account. The reserve is
non-distributable.
Capital reduction reserve
The capital reduction reserve is the result of the transfer of a portion of share premium into a distributable reserve.
23. Transactions with related parties
Investment Manager
The fees calculated and paid for the year to the Investment Manager were as follows:
Year ended Year ended
31 December 31 December
2024 2023
£’000 £’000
Amounts payable to Impact Health Partners LLP
Net fee
5,022
4,810
Gross fee
5,022
4,810
For the year ended 31 December 2024, the principals and Finance Director of Impact Health Partners LLP, the Investment Manager, are considered key management personnel. Mr Patel and Mr
Cowley are the principals and Mr Yaldron is the Finance Director of Impact Health Partners LLP and they own 2.60%, 0.39% and 0.06% respectively (either directly, with related parties or through
a wholly owned company) of the total issued ordinary share capital of Care REIT plc. Mr Patel also (directly and/or indirectly) holds a majority 72.5% stake in Minster Care Group Limited (MCGL).
Mr Cowley also holds a 20% interest in MCGL. 35.6% of the Group’s rental income was received from MCGL or its subsidiaries. No trade receivables were outstanding at the year end (2023: £nil).
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
The Group has chosen to adopt EPRA net tangible assets (EPRA NTA) as its primary EPRA NAV
measure as it most closely aligns with the business practices of the Group. The adjustments
between NAV and EPRA NTA are reflected in the following table:
As at As at
31 December 31 December
2024 2023
£’000 £’000
Net assets per consolidated statement of financial position
494,456
478,107
Fair value of derivatives
(484)
(1,750)
EPR A NTA
493,972
476,357
Issued share capital (number)
414,368,169
414,368,169
Basic NAV per share
119.33p
115.38p
EPRA NTA per share
119.21p
114.96p
25. Operating leases
The following table sets out the maturity analysis of leases receivables, showing the
undiscounted lease payments under non-cancellable operating leases receivable by the Group:
As at As at
31 December 31 December
2024 2023
£’000 £’000
Year one
50,036
48,541
Year two
50,958
49,409
Year three
51,898
50,158
Year four
52,856
51,046
Year five
53,832
51,761
Onwards
984,049
986,920
Total
1,243,629
1, 2 37, 8 35
The Group’s investment properties are leased to tenants under the terms of property leases that
include upward-only rent reviews that are performed annually. These are annual inflation uplifts
linked to either CPI or RPI. RPI-linked leases have a floor and cap at either 2% and 4% or 1%
and 5%.
23. Transactions with related parties continued
Investment Manager continued
During the year the key management of Impact Health Partners LLP received the following
dividends from Care REIT plc: Mahesh Patel £743,333 (2023: £722,610); Andrew Cowley £112,584
(2023: £109,445); and David Yaldron £13,236 (2023: £11,137).
During the year the directors, who are considered key management personnel, received the
following dividends from the Company: Simon Laffin £6,905 (2023: £5,078); Rosemary Boot
£2,072 (2023: £2,014); Amanda Aldridge £1,381 (2023: £nil); Cedi Frederick £612 (2023: £nil);
Chris Santer £976 (2023: £949); and Philip Hall (resigned) £1,029 (2023: £2,014).
Directors’ remuneration for the year is disclosed in note 7 as well as in the directors’
remuneration report.
Minster Care Group Limited (MCGL)
MCGL, a tenant of the Group, is considered a related party as it is majority owned by the
principals of the Investment Manager. As at 31 December 2024, the Group leased 56 properties
to MCGL (2023: 58); all properties owned for over one year underwent an inflation-linked rent
review in line with their lease provisions. In 2024, the Group extended the leases on five properties
by ten years, entered into no new leases with MCGL (2023: no new leases), disposed of two
properties to an affiliate of Minster and exchanged on the sale of three properties which was
pending completion at the year end; these three properties were classified as assets
held-for-sale (2023: disposed of one property). In 2024, the Group spent £7.6m on approved
capital expenditure on seven homes operated by
MCGL (2023: £nil). These transactions were fully
compliant with the Company’s related party policy.
During the year all seven homes operated by Melrose Holdings Limited (MHL), an entity wholly
owned by connected parties of Mahesh Patel, were re-tenanted to third-party operators on
new long-term leases. As at 31 December 2024, the Group had no further engagement and
no outstanding assets, liabilities or obligations with MHL.
24. Net asset value (NAV) per share
Basic NAV per share is calculated by dividing net assets in the consolidated statement of
financial position attributable to ordinary equity holders of the Company by the number
of ordinary shares outstanding at the end of the year. As there are no dilutive instruments
outstanding, basic and diluted NAV per share are identical.
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Care REIT plcAnnual report and financial statements 2024
Notes to the consolidated financial statements continued
For the year ended 31 December 2024
26. Reconciliation of liabilities to cash flows from financing activities
Interest rate Interest
Borrowings derivative payable Total
Notes £’000 £’000 £’000 £’000
As at 1 January 2023
137, 196
(363)
1,149
137,982
Cash flows from financing activities:
Borrowings drawn
18
82,500
—
—
82,500
Borrowings repaid
18
(40,000)
—
—
(40,000)
Loan arrangement fees paid
(2,827)
—
—
(2,827)
Interest received
19
—
1,035
—
1,035
Interest and commitment fees paid
—
—
(9,518)
(9,518)
Purchase of interest rate derivatives
19
—
(3,238)
—
(3,238)
Non-cash movements:
Amortisation of loan arrangement fees
18
1,418
—
—
1,418
Fair value movement
19
—
458
—
458
Loan arrangement fees – reversal of accrual
1,650
—
—
1,650
Interest and commitment charge
—
—
10,114
10,114
Accrued interest receivable on interest rate derivatives
—
358
—
358
As at 31 December 2023
179,937
(1,750)
1,745
179,932
Cash flows from financing activities:
Borrowings drawn
18
44,000
—
—
44,000
Borrowings repaid
18
(31,000)
—
—
(31,000)
Loan arrangement fees paid
(714)
—
—
(714)
Interest received
19
—
1,676
—
1,676
Interest and commitment fees paid
—
—
(10,441)
(10,441)
Non-cash movements:
Amortisation of loan arrangement fees
18
955
—
—
955
Fair value movement
19
—
(329)
—
(329)
Loan arrangement fees – reversal of accrual
230
—
—
230
Interest and commitment charge
—
—
10,702
10,702
Accrued interest receivable on interest rate derivatives
—
(81)
—
(81)
As at 31 December 2024
193,408
(484)
2,006
194,930
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Notes to the consolidated financial statements continued
For the year ended 31 December 2024
27. Capital commitments
At 31 December 2024, the Group had loaned £5m to an existing operator for the development
of a new home; on practical completion of this development the Group has an option to
acquire this home for an additional payment of £3.7m. The Group also exchanged contracts
to purchase one property for a purchase price of £3.8m; this had not completed at the year
end. The Group had capital commitments in relation to the improvements to eight existing
properties (2023: three); this amounted to £1.6m (2023: £9.5m).
The Group has committed to deferred payment agreements on three acquisitions (including the
aforementioned exchanged transaction which had not completed at the year end) in return for
increased rent based on certain trading performance conditions being met by the tenant. As at
31 December 2024, the total capital commitment for these deferred payments is estimated at
£6.7m (2023: £4.6m).
28. Controlling parties
The Company is not aware of any person who, directly or indirectly, owns or controls the
Company. The Company is not aware of any arrangements the operations of which may give
rise to a change in control of the Company.
29. Subsequent events
In January 2025, the Group purchased a one-year interest rate cap for £0.7m, which caps
SONIA at 3% for a notional amount of £50m.
As announced on 11 March 2025, the Company’s directors have reached agreement on the
terms of a recommended cash acquisition of the entire issued and to be issued ordinary share
capital of the Company by CR United Bidco Ltd, a wholly-owned subsidiary of CareTrust REIT,
Inc., expected to be effected by means of a Scheme of Arrangement under Part 26 of the
Companies Act 2006 (the “Acquisition”). If the Acquisition is completed, this will result in a
change of control of the Company. There are no agreements between the Company and the
directors for compensation for loss of office as a result of the Acquisition or any other takeover,
other than the provisions of the existing appointment letters.
No other significant events have occurred between the statement of financial position date and
the date when the financial statements have been authorised by the directors, which would
require adjustments to, or disclosure in, the financial statements.
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Care REIT plcAnnual report and financial statements 2024
Company statement of financial position
As at 31 December 2024
Company Registration Number: 10464966
Notes
31 December
2024
£’000
31 December
2023
£’000
Non-current assets
Investment in subsidiaries 6 474,041 418,861
Total non-current assets 474,041 418,861
Current assets
Trade and other receivables 7 36,360 60,994
Cash and cash equivalents 8 8,203 7,773
Total current assets 44,563 68,767
Total assets 518,604 4 87,628
Current liabilities
Trade and other payables 9 (24,148) (9,521)
Total liabilities (24,148) (9,521)
Total net assets 494,456 478,107
Equity
Share capital 10 4,144 4,144
Share premium reserve 10 376,716 376,716
Capital reduction reserve 10 24,077 24,077
Retained earnings 89,519 73,170
Total equity 494,456 478,107
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own statement of comprehensive income in these
financial statements. The profit attributable to the Parent Company for the year ended 31 December 2024 amounted to £44 ,961, 000 (2023: profit of £57,247,000).
The financial statements were approved and authorised for issue by the board of directors on 12 March 2025 and are signed on its behalf by:
Simon Laffin
Chair
The accompanying notes form an integral part of these financial statements.
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Care REIT plcAnnual report and financial statements 2024
Company statement of changes in equity
For the year ended 31 December 2024
Notes
Share
capital
£’000
Share
premium
£’000
Capital
reduction
reserve
£’000
Retained
earnings
£’000
Total
£’000
1 January 2024 4,144 376,716 24,077 73,170 478,107
Total comprehensive income — — — 44,961 44,961
Transactions with owners
Dividends paid 5 — — — (28,612) (28,612)
31 December 2024 4,144 376,716 24,077 89,519 494,456
For the year ended 31 December 2023
Notes
Share
capital
£’000
Share
premium
£’000
Capital
reduction
reserve
£’000
Retained
earnings
£’000
Total
£’000
1 January 2023 4,048 365,642 24,077 43,737 437, 5 0 4
Total comprehensive income — — — 57, 247 57, 247
Transactions with owners
Dividends paid 5 — — — ( 27, 814 ) (27,814)
Share issue 10 96 11,104 — — 11,200
Share issue costs 10 — (30) — — (30)
31 December 2023 4,144 376,716 24,077 73,170 478,107
The accompanying notes form an integral part of these financial statements.
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Care REIT plcAnnual report and financial statements 2024
Notes to the Company financial statements
For the year ended 31 December 2024
Convention
The financial statements are presented in Sterling, which is also the Company’s functional
currency, and all values are rounded to the nearest thousand (£’000), except when otherwise
indicated.
Going concern
After making enquiries and bearing in mind the nature of the Company’s business and assets,
the directors consider that the Company has adequate resources to continue in operational
existence for the next 15 months from the date of approval of these financial statements.
For this reason, they continue to adopt the going concern basis in preparing the financial
statements.
The ongoing effect of inflated costs and the high-interest rate environment has been
considered by the directors. The directors have reviewed the forecasts for the Company taking
into account the impact of heightened interest rates and costs on trading over the 15 months
from the date of signing this annual report. The forecasts have been assessed against a
range of possible downside outcomes incorporating significantly lower levels of income and
higher costs. The expiry of one of the Group’s revolving credit facilities in April 2026 has been
considered by the directors in the extended 15-month going concern review period; see going
concern and viability on page 42 for further detail.
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 15 months from the date of approval
ofthe Company’s financial statements. The board is, therefore, of the opinion that the going
concern basis adopted in the preparation of the annual report is appropriate.
1. Basis of preparation
General information
The financial statements for the year ended 31 December 2024 are prepared in accordance
with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the
United Kingdom and the Republic of Ireland (‘FRS 102’) and in accordance with the Companies
Act 2006, with comparatives presented for the year ended 31 December 2023.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure
exemptions conferred by FRS 102.
In preparing the separate financial statements of the Company, advantage has been taken of
the following disclosure exemptions available in FRS 102:
• a reconciliation of the number of shares outstanding at the beginning and end of the period
has not been presented as the reconciliations of the Group and the Company would be
identical;
• no statement of cash flows has been presented for the Company;
• disclosures in respect of the Company’s financial instruments have not been presented as
equivalent disclosures have been provided in respect of the Group as a whole;
• the requirement to present related party disclosures between the Company and fellow
subsidiaries where ownership is all 100%; and
• no disclosures have been given for the aggregate remuneration of the key management
personnel of the Company as their remuneration is included in the totals for the Group
asawhole.
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Notes to the Company financial statements continued
For the year ended 31 December 2024
5. Dividends
Details of dividends paid by the Company are included in note 12 to the consolidated financial
statements.
During 2023, the Company received a dividend in the amount of £54,388,000 from one of its
wholly owned subsidiaries, Impact Property 6 Limited, £51,693,000 of which was declared in the
absence of adequate distributable reserves. Impact Property 6 Limited has taken the required
steps to regularise this dividend and has created adequate distributable reserves during the
year, by way of a cancellation of its non-distributable share premium reserve and the creation
of a distributable capital reduction reserve.
Accounting policy
Dividends
Dividends are recognised when they become legally payable.
6. Investment in subsidiaries
31 December
2024
£’000
31 December
2023
£’000
At the beginning of the year 418,861 430,079
Additions 80,373 165,234
Impairment (25,193) (176,452)
At the end of the year 474,041 418,861
Provisions provided reflect any reduction in net asset value ofsubsidiaries in the year, typically
as a result of dividends declared in the year. The net assetsof the subsidiaries are effected by
the same estimates of the Group’s investment propertyportfolio. Additions are primarily a result
of capital injections from the Company into its direct subsidiaries via the subsidiaries’ issuance
of new share capital.
2. Significant accounting judgements, estimates and assumptions
The preparation of the Company’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.
The most significant estimates, assumptions and judgements relate to the determination of
carrying value of unlisted investments in the Company’s subsidiary undertakings. The nature,
facts and circumstance of the investment are taken into account in assessing whether there
areany indications of impairment.
3. Summary of material accounting policies
The principal accounting policies applied in the preparation of these financial statements are
set out alongside the relevant note.
4. Taxation
The Company 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.
Any non-qualifying profits and gains, however, will continue to be subject to corporation tax.
Tax charge included in total comprehensive income:
Year ended
31 December
2024
£’000
Year ended
31 December
2023
£’000
UK corporation tax — —
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Notes to the Company financial statements continued
For the year ended 31 December 2024
6. Investment in subsidiaries continued
The Company has the following subsidiaries:
Principal activity Country of incorporation Ownership %
Impact Property 1 Limited (‘Propco 1’)
1
Real estate investment England and Wales 100
Impact Property 2 Limited (‘Propco 2’)
1
Real estate investment England and Wales 100
Impact Property 3 Limited (‘Propco 3’)
1
Real estate investment England and Wales 100
Impact Property 4 Limited (‘Propco 4’)
1
Real estate investment England and Wales 100
Impact Property 5 Limited (‘Propco 5’) Real estate investment England and Wales 100
Impact Property 6 Limited (‘Propco 6’) Real estate investment England and Wales 100
Impact Property 7 Limited (‘Propco 7’)
1
Real estate investment England and Wales 100
Impact Property 8 Limited (‘Propco 8’)
1
Real estate investment England and Wales 100
Impact Finance 1 Limited (‘Finance 1’)
1
Financing company England and Wales 100
Impact Finance 2 Limited (‘Finance 2’)
1
Financing company England and Wales 100
Impact Finance 3 Limited (‘Finance 3’)
1
Financing company England and Wales 100
Impact Finance 4 Limited (‘Finance 4’)
1
Financing company England and Wales 100
Impact Finance 5 Limited (‘Finance 5’)
1
Financing company England and Wales 100
Impact Holdco 1 Limited (‘Holdco 1’) Investment holding company England and Wales 100
Impact Holdco 2 Limited (‘Holdco 2’) Investment holding company England and Wales 100
Impact Holdco 3 Limited (‘Holdco 3’) Investment holding company England and Wales 100
Impact Holdco 4 Limited (‘Holdco 4’) Investment holding company England and Wales 100
Impact Holdco 5 Limited (‘Holdco 5’) Investment holding company England and Wales 100
The Holmes Care Holdings Limited
1,2
Property holding company England and Wales 100
Tower Bridge Homes Care Limited
1,2
Property holding company England and Wales 100
The Holmes Care Group GB Limited
1,2
Property holding company England and Wales 100
Romney Care Home Limited
1,2
Property holding company England and Wales 100
Hillcrest House Limited
1,2
Property holding company England and Wales 100
Carlton Hall (Lowestoft) Limited
1,2
Property holding company England and Wales 100
Abingdon Manor Care Centre Limited
1,2
Property holding company Northern Ireland 100
Larne Care Centre Limited
1,2
Property holding company Northern Ireland 100
Larne C C Limited
1,2
Property holding company Northern Ireland 100
Butterfly Cumbria Properties Limited
1,2
Property holding company England and Wales 100
Welford Bidco 5 Midco Limited
1,2
Investment holding company England and Wales 100
Morris Care Limited
1,2
Property holding company England and Wales 100
Kingdom Finco 1 Limited
1,2
Investment holding company England and Wales 100
Kingdom Homes Limited
1,2
Property holding company Scotland 100
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Notes to the Company financial statements continued
For the year ended 31 December 2024
Principal activity Country of incorporation Ownership %
Barrogil Limited
1,2
Property holding company Scotland 100
Eastleigh Care Group Limited
1,2
Property holding company England and Wales 100
Woodleigh Christian Care Home Limited
1
Property holding company England and Wales 100
Welford Bidco 2 Midco Limited
1,2
Investment holding company England and Wales 100
Welford Bidco 4 Midco Limited
1,2
Investment holding company England and Wales 100
1. As at 31 December 2024 these entities were held indirectly by the Company.
2. As at 31 December 2024 these entities are in the process of winding up.
The registered address for the above subsidiaries incorporated in England and Wales is:
The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF, England
The registered address for the above subsidiaries incorporated in Northern Ireland is:
21 Arthur Street, Belfast, BT1 4GA, Northern Ireland
The registered address for the above subsidiaries incorporated in Scotland is:
177 Bothwell Street, Glasgow, G2 7ER, Scotland
Where the entity is in the process of winding up, the registered address is that of the liquidator appointed by the Company.
Accounting policy
Investments in subsidiaries
The investments in subsidiary companies are included in the Company’s statement of financial position at cost less provision for impairment.
7. Trade and other receivables
As at
31 December
2024
£’000
As at
31 December
2023
£’000
Loan to Group companies 36,046 60,797
Prepayments 314 197
36,360 60,994
As at 31 December 2024, there were no trade receivables past due or impaired (2023: none). Loans to subsidiaries are interest-free, repayable on demand and management expect them to be
settled within the next 12 months.
6. Investment in subsidiaries continued
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Notes to the Company financial statements continued
For the year ended 31 December 2024
10. Share capital, share premium and capital reduction reserve
Details on movements in share capital, share premium and capital reduction reserve of the
Company are the same as that of the Group and are included in note 22 to the consolidated
financial statements.
11. Transactions with related parties
The Company has taken advantage of the exemption provided by FRS 102 not to disclose
transactions with other members of the Group as the Company’s own financial statements are
presented together with its consolidated financial statements.
See note 23 of the consolidated financial statements for disclosure of related party transactions
of the Group.
12. Capital commitments
There were no capital commitments held by the Company (2023: £nil).
13. Contingent liabilities
On 21 December 2021, the Company guaranteed a long-term loan note issue made by a
wholly owned subsidiary. The loan notes total £75m and mature in 2035. See note 18 of the
consolidated financial statements for further detail.
14. Subsequent events
Significant events after the reporting period are the same as those of the Group. See note 29 to
the consolidated financial statements.
No other significant events have occurred between the statement of financial position date and
the date when the financial statements have been authorised by the directors, which would
require adjustments to, or disclosure in, the financial statements.
Accounting policy
Share capital
The share capital relates to amounts subscribed for share capital at its par value.
Share premium
The surplus of net proceeds received from the issuance of new shares over their par value is credited to
this account and the related issue costs are deducted from this account. The reserve is non-distributable.
Capital reduction reserve
The capital reduction reserve is the result of the transfer of a portion of the share premium into a
distributable reserve.
7. Trade and other receivables continued
Accounting policy
Trade and other receivables
Trade and other receivables are recognised and carried at the lower of their original invoiced value and
recoverable amount. Where the time value of money is material, receivables are initially recognised at
fair value and subsequently measured at amortised cost. A provision for impairment is made when there
is objective evidence that the Company will not be able to recover balances in full.
Balances are written off when the probability of recovery is assessed as being remote.
8. Cash and cash equivalents
As at
31 December
2024
£’000
As at
31 December
2023
£’000
Cash and cash equivalents 8,203 7,773
None of the Company’s cash balances are held in restricted accounts.
9. Trade and other payables
As at
31 December
2024
£’000
As at
31 December
2023
£’000
Loan from Group companies 22,525 7,781
Trade and other payables 995 1,134
Withholding tax payable – (PID dividends) 628 606
24,148 9,521
Loans from Group companies are unsecured, interest-free and are repayable on demand.
Accounting policy
Cash and cash equivalents
Cash and cash equivalents include cash at bank and deposits with maturities of three months or less,
heldat call with banks.
Accounting policy
Trade and other payables
Trade payables are initially recognised at their fair value and are subsequently measured at cost.
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Care REIT plcAnnual report and financial statements 2024
What’s in this section
Reporting against the Task Force on Climate-Related
FinancialDisclosures framework 103
Applying the AIC Code Principles 111
EPRA performance measures 113
Notes to the EPRA performance measures 116
Alternative performance measures 119
Our portfolio 120
AIFM statement 123
Investment policy 124
How we manage risk 125
Glossary 128
Corporate information 129
Financial calendar 129
Additional
information
102
Care REIT plcAnnual report and financial statements 2024
Strategic report Governance Financial statements Additional information
Reporting against the Task Force on Climate-Related Financial Disclosures framework
In this report we disclose the climate-related risks and opportunities and our overarching
approach to the risk management in line with the recommendations of the TCFD.
Asisreferenced throughout the report, we have continued to take action to improve
theenvironmental performance of our portfolio and the IM works in partnership with tenants
tohelpthem reduce their energy consumption and CO
2
e emissions. We have fully reported
ourScope3emissions, which represents the bulk of our emissions (see page 110) andhave
already exceeded our 2025 target for EPC improvement across our portfolio.
Although our like-for-like CO
2
emissions have declined in 2024, we are aware that our target
of a 15% decrease from our 2022 baseline by 2025 is unlikely to be met. The assumptions
we made about the UK grid in the shorter term may have been too ambitious when our
pathway was modelled, but the current plans from the Department for Energy Security and
Net Zero, combined with the development and affordability of energy-efficient and renewable
technologies, should support our decarbonisation efforts in the medium term.
Building on the work we undertook in 2023, where we considered a 1.5–2 degrees warming
scenario, based on the Intergovernmental Panel on Climate Change’s (IPCC) defined
Representative Concentration Pathway 2.6 and assessed the associated physical and transition
risks, the IM has undertaken more granular analysis on flood risk across our portfolio based on
Environment Agency data.
Our IM’s ESG committee, established in 2023, met on a quarterly basis andcontinues to provide
us with a structure through which to embed our strategy, track our progress and ensure that
thenecessary discussions and decisions take place at the board level.
The IM has also started considering IFRS S1 and S2 and the UK government’s Transition
Pathway Taskforce framework to ensure that we are heading in the right direction in terms
offuturereporting.
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
TCFD compliance statement
The table below highlights how we have reported in line with the 11 recommendations of
TCFD and includes our own assessment of our level of compliance. We recognise that this is an
iterative process and have highlighted those areas where we still need to make improvement or
continue to progress.
Recommended disclosure
Current
status
Comment
Page
ref
Governance
Describe the board’s oversight of
climate-related risks and opportunities
We have included these disclosures
in the report
125-127
Describe management’s role
in assessing and managing
climate-related risks and opportunities
We have included these disclosures
in the report
125-127
Strategy
Describe the climate-related risks
andopportunities the organisation
hasidentified over the short, medium
and long term
We have included these disclosures
in this report, please see previous
annual reports for further detail
107-108
Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy
andfinancial planning
We have assessed the impacts
of climate-related risks and
opportunities from a qualitative
perspective but have yet to
translate this fully into quantifiable
financial impacts. This will continue
to be reviewed during 2025
107-108
Describe the resilience of the
organisation’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario
We consider ourselves resilient to
transition risks associated with
1.5-2 degrees warming scenarios.
Flooding and heatwaves are
our main two physical risks and
we continue to gain insight to
understand the specific risks and
impacts at each of our locations
107-108
Recommended disclosure
Current
status
Comment
Page
ref
Risk management
Describe the organisation’s processes
for identifying and assessing
climate-related risks
We have included these disclosures
in the report
125-127
Describe the organisation’s processes
formanaging climate-related risks
We have included these disclosures
in the report
125-127
Describe how processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overall risk
management
We have included these disclosures
in the report
125-127
Metrics and targets
Disclose the metrics used by the
organisation to assess climate-related
risks and opportunities in line with
its strategy and risk management
processes
We have included these disclosures
in the report
109-110
Describe Scope 1, Scope 2 and, if
appropriate, Scope 3 greenhouse gas
(GHG) emissions, and the related risks
We continue to improve the
accuracy of our reported Scope3
emissions, which represents a
significant proportion of our total
emissions. We now collect over 93%
of Scope 3 emissions data from our
tenants (2023: 85%) and continue
to explore ways to improve the
quality and quantity of this data
capture and disclosure
109-110
Describe the targets used by
the organisation to manage
climate-related risks and
opportunitiesand performance
against targets
We have set ourselves targets on
CO
2
emissions and EPC ratings
across our portfolio. Performance is
reviewed annually
109-110
Key:
Reporting in line with the recommendations. We have made disclosures but are not yet fully reporting in line with the recommendations.
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Governance
In 2023 the Investment Manager’s ESG committee, with associated terms of reference, wasestablished. It meets on a quarterly basis and documents minutesand actions, is responsible for
reviewing and advising on the recommendations made by the IM’s ESG working group, also established in 2023, chaired by the IM’s Development Director.
The ESG committee is chaired by the IM’s Finance Director who, in partnership with the Development Director, oversees the operational and financial aspects of our sustainability programme and
reports directly into the board and consults with the audit committee around assurance matters. ESG/sustainability isaregular item on the board agenda.
We have updated our ESG policy, reinforcing our commitment to working with our tenants to become energy efficient. Energy efficiency, renewables and physical climate risks, principally flooding,
are regular agenda items in the IM’s quarterly reviews with our tenants.
More information on our governance of climate change considerations can be found within ourreporting on principal risks (page 37) and our “How we manage risk” section (page 125).
Board
Overall accountability for ESG strategy, targets and monitoring deliverables
Audit committee
Identification and management of climate risks
Risk committee
Identification and management of climate risks
TCFD working group
Initial assessment of risks and opportunities linked
toclimate change
ESG committee
Review and advise on climate strategy
ESG working group
Accountability for execution of Sustainability/ESG strategy
Key:
Board level Investment Manager
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Strategy
The IM has continued to make good progress in terms of ensuring that the necessary
improvements are being made to our properties to ensure that they comply with future
MEESregulation.
As our tenants are responsible for procuring energy for heating and power, we are not directly
able to implement energy efficiency measures. However, the IM can continue to engage
with alltenants to raise awareness, for example by holding an ESG webinar and including
sustainability as a standing agenda item in regular review meetings.
The IM continues to model the energy usage and carbon emissions from our portfolio, and
this enables them to identify underperforming assets and assess short and long-term options
for reducing consumption and emissions. When undertaking asset management projects,
improving the environmental sustainability of the asset is a key deliverable. During 2024,
projects have included fabric upgrades, solar panels and air source heat pumps.
The IM has an energy efficiency engagement plan in place with our tenants which is leading
to greater collaboration on initiatives such as the development of solar PV roll-out across
properties where it is commercially viable.
We are conscious that flooding remains a risk for our business in the short, medium and longer
term, be that as an acute or chronic physical risk. During the year we experienced two flood
events during periods of exceptional rainfall. The most serious of these events was at a home
which was at high risk of flooding and where we had previously invested in flood defences
which did not operate effectively due to accidental intervention. The IM is investigating what
additional physical and operational measures are required to improve the home’s resilience.
Risk management
Climate change is integrated and clearly articulated across our principal risks, specifically
within “Underinvestment in care homes” and “Reputational damage”. You can read more
about how we assess climate-related risks on pages 125-127.
The Investment Management team has a risk committee which assesses and reviews the
Company’s risk register on a quarterly basis and reports to the audit committee. Prioritised
risksare discussed and considered by the audit committee and board twice a year.
As part of the due diligence process for potential new acquisitions, environmental performance
has already been assessed on all acquisitions since 2020. This includes a review of the asset’s,
current and potential energy efficiency CRREM stranding risk, and, where required, a pathway
towards achieving an EPC of B or above. We also review other climate-related risks such as
exposure to flooding.
Looking ahead, this due diligence will continue to factor in possible identified risks and
opportunities associated with climate change and a decarbonisation pathway.
To align with our business strategy, we have defined short term as one to threeyears, medium
term as five to ten years (aligned to our business plan and various climate-related targets) and
a long-term timeframe as up to 25 years (new lease length aligned to longer-term transition
planning objectives).
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Extreme weather/flood
Probability: Medium
Impact: Moderate
Change in the year: Slight increase
Risk tolerance: Cautious
Timescale: Short/Medium/Long
Disruption to provision of care or possible closure
ofcare home
How we are assessing the risk
The IM has reviewed Environment Agency (EA) data for all care
homes within the portfolio. 12 assets have been identified as
potentially at risk of flooding. The IM has also reviewed data from
our insurers, who have identified six assets where an excess applies
in the event of a claim for flood damage. The IM has engaged with
tenants to ensure that they have flood resilience protocols in place
and will review if any further measures are required.
How we manage this risk
All our homes are fully insured against damage, including loss
of rent. Our tenants separately have business interruption and
contents insurance, for the losses to their own business. In addition,
we benefit from the size of our operators’ businesses and profits
should this insurance be insufficient. Where flood risk has been
identified, or occurred, the IM works with our tenants and insurers
to enhance the flood defences and safety for residents.
During the year we had two flood events; in both cases our
losses have been fully recoverable. In relation to the flood at Old
Prebendal House, which was extensive, our operator’s business
interruption insurance is not expected to fully cover the cost;
however, the broader operator business is capable of absorbing
these losses.
Opportunity
Increased investment in our homes and capital deployed in return
for increased rent.
Improved resilience of assets from physical risks.
Additional capital expenditure
Probability: High
Impact: Moderate
Change in the year: No change
Risk tolerance: Cautious
Timescale: Medium/Long
Additional costs required to improve energy
efficiency and realise net zero targets
How we are assessing the risk
The IM has mapped and estimated a capex profile from the
present day until 2045, when we plan to be net zero. We are
targeting approximately 15% of asset management budget
towards energy-efficiency improvements. We are not on track to
meet our 2025 targets so additional capex may be required to
catch up on our energy and carbon reduction target.
The IM has also assessed all 57 assets with EPCs of C or below
(English equivalent) to understand how these can be improved to
a B or above. Of these clear pathways have been developed for all
except 14, which we believe will require a transition away from their
current energy source to a fully electric supply such as air source
heat pumps.
How we manage this risk
Our leases with our tenants are fully insuring and repairing and
require tenants to ensure the property is compliant with legislation.
Therefore, as legislation comes in to align with these targets, our
tenants will be responsible for the cost and could factor this into
the cost of their services.
The IM is working with our tenants to ensure our buildings are well
prepared for future legislation and our ESG targets. They do this by
having a good understanding of the environmental performance
of our homes We also ensure that any capital improvements that
require our permission include environmental enhancements.
Opportunity
Increased investment in our homes and capital deployed in return
for increased rent.
Ability to utilise improvements in technology to help reduce the
carbon footprint of our portfolio.
Improved long-term care of residents.
Regulation
Probability: High
Impact: Moderate
Change in the year: No change
Risk tolerance: Cautious
Timescale: Medium/Long
Potential loss of value for assets not meeting
expected future standards. Assets may become
“stranded” by evolving environmental legislation
How we are assessing the risk
The IM works closely with environmental consultants to help
understand future potential for any changes in regulation and the
IM appraises our portfolio against these possible regulations.
The IM uses the CRREM tool to risk assess our current and
prospective assets to understand the pathway needed to reach
net zero in accordance with the Paris climate treaty. We are
working with our tenants to develop a transition plan to reduce
energy consumption and mitigate climate change impacts.
Our approach is that no asset with an EPC below C can be
acquiredunless a demonstrable EPC improvement plan is
developed, the cost of which is reflected in the investment case
forthe asset acquisition. Opportunities for the installation of
energy efficiency and renewable technology in support of the
netzero transition (such as rooftop solar PV and EV charging)
arealso considered as part of the investment case.
We now have full visibility of EPCs across our entire portfolio
of properties and the IM has an active asset management
improvements schedule in place to ensure we are compliant with
anticipated 2030 MEES regulation. Our leases require our tenant
operators toensure the buildings are in compliance with legislation.
How we manage this risk
As explained above, our leases require our tenant operators to
ensure the buildings are following legislation.
Opportunity
Increased investment in our homes and capital deployed in return
for increased rent.
Ability to utilise improvements in technology to help reduce the
carbon footprint of our portfolio.
Risk management continued
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Cost of carbon
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk tolerance: Cautious
Timescale: Medium
Introduction of carbon levy by the government
toencourage reduction in carbon emissions that
results in additional taxation liability for the
Company
How we are assessing the risk
The IM has held two workshops to discuss the possible options
regarding carbon pricing/taxation and how or whether to
introduce this into our business strategy and financial planning.
The IM continues to ensure they are capturing as much underlying
data from our tenants on our Scope 3 emissions. This means that
the effect of different carbon pricing levels and approaches can
bemodelled.
We will continue to monitor the situation in 2025 and ensure that
we are compliant with future financial and sustainability disclosure
requirements. We will start to embed an internal carbon price
within our planning to inform decision-making.
How we manage this risk
By understanding the legislation being applied in other countries
the IM can model similar legislation being applied in the UK and
ensure this can be incorporated into our risk modelling in 2025.
Opportunity
None identified.
Market
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk tolerance: Cautious
Timescale: Medium
Investors and markets have increasing their
awareness ofenvironmental performance. If we
fail to communicate a strategy and implications
for our portfolio, investors are less likely to want to
invest in our business
How we are assessing the risk
As explained throughout our reporting against the TCFD
framework, the IM is undertaking a significant amount of work
to ensure we can deliver against our net zero objective and
2030 interim milestones and we communicate the risks and
opportunities that come with this.
We regularly engage with investors and ensure we are open
andtransparent about our business in our reporting to ensure
weunderstand any investor concerns and address these.
How we manage this risk
Alongside investor engagement we have already achieved
EPRAGold for our sustainability reporting and have made
submissions toGRESB and achieving a D rating with the
CarbonDisclosure Project.
The Investment Manager is a signatory to the UN Principles
for Responsible Investment, demonstrating its commitment to
long-term stewardship of the portfolio.
Opportunity
By taking our environmental targets seriously and transparent
reporting, more investors could be interested in investing in
ourbusiness.
Reputation
Probability: Medium
Impact: Moderate
Change in the year: No change
Risk tolerance: Minimalist
Timescale: Short
Investors, tenants and commissioners may have
increasing expectations of real estate owners for
environmental issues and if we fail to meet these
or deliver against our commitments our reputation
would be damaged and stakeholders less willing
toengage with us
How we are assessing the risk
We regularly engage with stakeholders to understand their
expectations and aspirations regarding climate risk and
environmental sustainability. Our tenant survey specifically
references energy efficiency and how we, as a long-term landlord,
can assist tenants in meeting their own objectives for reducing
energy and carbon.
How we manage this risk
By engaging with our stakeholders, we can seek to align our
environment objectives or use our influence to raise awareness
of climate change risk. We seek to be transparent and open
about our environmental targets and activities to demonstrate
our commitment to improving environmental performance on
acommercial sustainable basis for ourselves and our tenants.
Opportunity
If we are successful in communicating and delivering against these
targets, existing stakeholders will want to continue to work with
usand, potentially, more will be keen to work with us.
Risk management continued
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Metrics and targets
As part of our EPRA reporting responsibilities, we have been disclosing our energy consumption
data since 2019 in accordance with the EPRA Best Practice Sustainability Requirements.
OurScope 1 and 2 emissions are minimal, with all reported emissions relating to tenant-
obtained energy consumption falling under Scope 3. In this report we have included our GHG
emissions for the 12 months to 30 September 2024.
We have already exceeded our 2025 target of having at least 50% of our care homes rated
EPC B or better. You can read more about our progress on page 30.
Our key climate-related metrics are:
• EPC ratings (page 29)
• Energy intensity per bed (kWh per bed) (page 110)
• GHG emissions intensity (CO
2
e per bed) (page 110)
• Capex deployed on sustainability improvements (£pa) (page 28)
• Interim net zero targets (page 28)
• Proportion of leases with “Green” obligations (page 28)
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Reporting against the Task Force on Climate-Related Financial Disclosures framework continued
Metrics and targets continued
We measure performance on a range of metrics for our Scope 3 emissions (tenant-procured energy) and the IM’s Scope 1 and 2 emissions.
Performance measure Unit Scope 2024
2023
adjusted Change
Electricity absolute consumption kWh 3 18,423 21,000 (12)%
Electricity total and like-for-like consumption kWh 3 18,423 18,776 (2)%
Gas absolute consumption kWh 3 53,154 58,974 (10)%
Gas total and like-for-like consumption kWh 3 53,154 55,365 (4)%
Other fuels absolute consumption
1
kWh 3 7,072 5,235 35%
Other fuels like-for-like consumption
1
kWh 3 7,072 5,105 39%
Building energy intensity absolute
1
kWh/bed/year 3 10,850 11,036 (2)%
Building energy intensity like-for-like
1
kWh/bed/year 3 10,850 10,932 (1)%
Building energy intensity like-for-like kWh/m
2
/year 3 284 289 (2)%
Total indirect greenhouse gas (GHG) emissions from tenant-obtained fuel usage tCO
2
e 3 14,143 15,568 (9)%
Total indirect greenhouse gas (GHG) emissions from tenant-obtained fuel usage like-for-like
1
tCO
2
e 3 14,143 14,413 (2)%
Greenhouse gas (GHG) emissions intensity from building energy consumption tCO
2
e/bed/year 3 1.95 2.02 (3)%
Total indirect greenhouse gas (GHG) emissions from tenant-obtained fuel usage kg CO
2
e/m
2
/year 3 51 53 (4)%
Greenhouse gas (GHG) emissions intensity from building energy consumption like-for-like
1
tCO
2
e/bed/year 3 1.95 1.99 (2)%
Total indirect greenhouse gas (GHG) emissions from tenant-obtained fuel usage like for like kg CO
2
e/m
2
/year 3 51 53 (3)%
Performance measure Unit Scope 2024 2023 Change
Total electricity consumption kWh Total Investment Manager electricity 7,100 7,336 (3)%
Investment Manager energy intensity kWh/FTE Average kWh electricity consumption perFTEinyear 710 733 (5)%
Total indirect greenhouse gas (GHG) emissions tCO
2
e Indirect – Scope 2 (location-based) 1.4 1.5 (7)%
Business travel – Land – Car tCO
2
e Scope 3 – Private vehicles (incl. WTT
2
) 4.5 4.0 13%
Business travel – Land – Air tCO
2
e Scope 3 – Flights (with raw fuel incl. WTT
3
) 4.1 1.7 141%
Business travel – Land – Rail tCO
2
e Scope 3 – Rail (incl. WTT
3
) 0.2 0.2 —
Total emissions tCO
2
e 9.9 7.4 38%
1. Like-for-like figures adjusted to exclude seven homes in Q4 2022 to Q3 2023 for which data was not available in the corresponding period Q4 2023 to Q3 2024.
2. Well-to-tank (WTT) business travel – air conversion factors are used to account for the upstream Scope 3 emissions associated with extraction, refining and transportation of the aviation fuel to the plane before take-off.
3. Well-to-tank (WTT) conversion factors for passenger vehicles and business travel on land are used to report the upstream Scope 3 emissions associated with extraction, refining and transportation of the raw fuels before they are used
to power the transport mode.
4. Time period adjusted from calendar year to October to September to allow for availability of data from tenants.
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Applying the AIC Code Principles
The table below explains how we applied the AIC Code’s Principles during 2024.
Board leadership and Company purpose
Principle A – A successful company is
led by an effective board, whose role is
to promote the long-term sustainable
success of the Company, generating value
for shareholders and contributing to wider
society.
Corporate governance review, pages
47 to 50
Business model, page 9
Principal risks, pages 37 and 38
Investment policy, page 124
Principle B – The board should establish
the Company’s purpose, values and
strategy, and satisfy itself that these and
its culture are aligned. All directors must
act with integrity, lead by example and
promote the desired culture.
Corporate governance review, pages
47 to 50
Our values, page 2
Our purpose, page 2
Board and committee evaluation, page 49
Principle C – The board should ensure that
the necessary resources are in place for
the Company to meet its objectives and
measure performance against them. The
board should also establish a framework
of prudent and effective controls, which
enable risk to be assessed and managed.
Strategic report, inside front cover to
page 43
How we manage risk, pages 125 to 127
Principal risks, pages 37 and 38
Working with the Investment Manager,
page 51
Audit committee report, pages 54 to 56
Principle D – In order for the Company to
meet its responsibilities to shareholders
and stakeholders, the board should
ensure effective engagement with, and
encourage participation from, these
parties.
Corporate governance review, pages
47 to 50
Strategic report, inside front cover to
page 43
Section 172 statement, page 43
Division of responsibilities
Principle F – The Chair leads the
board and is responsible for its overall
effectiveness in directing the Company.
They should demonstrate objective
judgement throughout their tenure and
promote a culture of openness and
debate. In addition, the Chair facilitates
constructive board relations and the
effective contribution of all non-executive
directors, and ensures that directors
receive accurate, timely and clear
information.
Directors’ report, pages 60 to 63
Corporate governance review, pages
47 to 50
Principle G – The board should consist of
an appropriate combination of directors
(and, in particular, independent non-
executive directors) such that no one
individual or small group of individuals
dominates the board’s decision-making.
Board of directors, pages 45 and 46
Nomination committee report, page 53
Directors’ report, pages 60 to 63
Principle H – Non-executive directors
should have sufficient time to meet their
board responsibilities. They should provide
constructive challenge, strategic guidance,
offer specialist advice and hold third-party
service providers to account.
Corporate governance review, pages
47 to 50
Nomination committee report, page 53
Audit committee report, pages 54 to 56
How we work with the Investment
Manager, pages 51 and 52
Principle I – The board, supported by the
Company Secretary, should ensure that it
has the policies, processes, information,
time and resources it needs in order to
function effectively and efficiently.
Corporate governance review, pages
47 to 50
Directors’ report, pages 60 to 63
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Applying the AIC Code Principles continued
Composition, succession and evaluation
Principle J – Appointments to the board
should be subject to a formal, rigorous and
transparent procedure, and an effective
succession plan should be maintained.
Both appointments and succession plans
should be based on merit and objective
criteria and, within this context, should
promote diversity of gender, social and
ethnic backgrounds, cognitive and
personal strengths.
Corporate governance review, pages
47 to 50
Nomination committee report, page 53
Principle K – The board and its committees
should have a combination of skills,
experience and knowledge. Consideration
should be given to the length of service
of the board as a whole and membership
regularly refreshed.
Board of directors, pages 45 and 46
Corporate governance review, pages
47 to 50
Nomination committee report, page 53
Principle L – Annual evaluation of the
board should consider its composition,
diversity and how effectively members
work together to achieve objectives.
Individual evaluation should demonstrate
whether each director continues to
contribute effectively.
Corporate governance review, pages
47 to 50
Audit, risk and internal control
Principle M – The board should establish
formal and transparent policies and
procedures to ensure the independence
and effectiveness of external audit
functions and satisfy itself on the integrity
of financial and narrative statements.
Audit committee report, pages 54 to 56
Notes 2 and 3 to the financial statements,
pages 71 to 101
Principle N – The board should present
a fair, balanced and understandable
assessment of the Company’s position and
prospects.
Strategic report, inside front cover to
page43
Corporate governance review, pages
47 to 50
Audit committee report, pages 54 to 56
Independent auditor’s report, pages
65 to 70
Financial statements, pages 71 to 101
Audit, risk and internal control
Principle O – The board should establish
procedures to manage risk, oversee the
internal control framework, and determine
the nature and extent of the principal risks
the Company is willing to take in order to
achieve its long-term strategic objectives.
How we manage risk, pages 125 to 127
Principal risks, pages 37 and 38
Viability statement, page 42
Audit committee report, pages 54 to 56
Note 20 to the financial statements,
pages 88 to 90
Remuneration
Principle P – Remuneration policies
and practices should be designed to
support strategy and promote long-term
sustainable success.
Directors’ remuneration report, pages
57 to 59
Principle Q – A formal and transparent
procedure for developing remuneration
policy should be established. No director
should be involved in deciding their own
remuneration outcome.
Directors’ remuneration report, pages
57 to 59
Principle R – Directors should exercise
independent judgement and discretion
when authorising remuneration outcomes,
taking account of Company and individual
performance, and wider circumstances.
Directors’ remuneration report, pages
57 to 59
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EPRA performance measures (unaudited)
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.
1. EPRA earnings per share
1
£36.8m
8.89p
per share
for the year to 31 December 2024
(for the year to 31 December 2023:
£35.9m/8.67p)
2023 8.67p
2022 8.40p
2021 8.05p
2024 8.89p
Definition
Earnings from operational activities. The
EPRA calculation removes revaluation
movements in the investment portfolio and
interest rate derivatives, but includes rent
smoothing.
Purpose
A key measure of a company’s underlying
operating results is an indication of the
extent to which current dividend payments
are supported by earnings.
1. The comparative EPRA earnings have been
restated in line with updated guidance from
EPRA released in 2024 revising the calculation
to include cash income received on interest rate
derivatives.
2.1 EPRA net reinstatement value
(NRV)
£538.2m
129.90p
per share
as at 31 December 2024
(as at 31 December 2023:
£518.8m/125.20pper share)
2023 125.20p
2022 118.51p
2021 120.84p
2024 129.90p
Definition
Net asset value adjusted for fair value of
derivatives and transaction costs under the
assumption they will not crystallise if the
Company never sells assets.
Purpose
The aim of this measure is to represent the
value required to rebuild the entity.
2.2 EPRA net tangible assets
(NTA)
£494.0m
119.21p
per share
as at 31 December 2024
(as at 31 December 2023:
£476.4m/114.96pper share)
2023 114.96p
2022 110.08p
2021 112.41p
2024 119.21p
Definition
Net asset value adjusted for fair value of
derivatives as these will not crystallise if
held to maturity.
Purpose
This represents the value of the Company
assuming assets are bought and sold.
2.3 EPRA net disposal value
(NDV)
£510.3m
123.15p
per share
as at 31 December 2024
(as at 31 December 2023:
£496.3m/119.77pper share)
2023 119.77p
2022 108.92p
2021 111.16p
2024 123.15p
Definition
Net asset value adjusted to align
borrowings to their fair value. It should be
noted that this should not be viewed as a
“liquidation NAV” because, in many cases,
such as with the fair value adjustment to
borrowings, fair values do not represent
liquidation values. In the case of our
borrowings, in a liquidation scenario we
would not benefit from the fair value
adjustment to reduce our borrowings.
Purpose
This measure aims to show the
shareholders’ value, should assets and
liabilities not be held to maturity.
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3.1 EPRA net initial yield (NIY)
6.79%
as at 31 December 2024
(as at 31 December 2023: 6.69%)
2023 6.69%
2022 6.98%
2021 6.71%
2024 6.79%
Definition
Annualised rental income based on the
cash rents passing at the balance sheet
date, less non-recoverable property
operating expenses, divided by the market
value of the property, increased with
(estimated) purchasers’ costs.
Purpose
This measure should make it easier for
investors to judge for themselves how the
valuation of one portfolio compares with
another portfolio.
EPRA performance measures (unaudited) continued
3.2 EPRA “topped-up” NIY
6.96%
as at 31 December 2024
(as at 31 December 2023: 6.92%)
2023 6.92%
2022 6.98%
2021 6.71%
2024 6.96%
Definition
This measure adjusts the EPRA NIY in
respect of the expiration of rent-free
periods (or other unexpired lease
incentives, such as discounted rent
periodsand step rents).
Purpose
This measure should make it easier for
investors to judge for themselves how the
valuation of one portfolio compares with
another portfolio.
4. EPRA vacancy rate
0.00%
as at 31 December 2024
(as at 31 December 2023: 0.00%)
2023 0.00%
2022 0.00%
2021 0.00%
2024 0.00%
Definition
Estimated market rental value (ERV) of
vacant space divided by the ERV of the
whole portfolio.
Purpose
A “pure” (%) measure of investment
property space that is vacant, based
onERV.
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6. Like-for-like rental growth
6.32%
for the year to 31 December 2024
(2023: 4.67%)
2023 4.67%
2022 5.07%
2021 5.74%
2024 6.32%
Definition
Rental growth on the portfolio of properties
that have been owned and operational for
two full reporting cycles.
Purpose
Growth of rental income excludes
acquisitions and disposals, but includes
increases in rent from inflationary uplifts
and rentalised capital expenditure. This
allows stakeholders to estimate the
organic income growth.
EPRA performance measures (unaudited) continued
7. EPRA (net) LTV
28.42%
As at 31 December 2024
(2023: 27.85%)
2023 27.85%
2022 24.10%
2021 23.17%
2024 28.42%
Definition
Debt drawn at nominal value net of cash
and net payables divided by portfolio
value.
Purpose
To assess the gearing of the shareholder
equity within a real estate company.
5. EPRA cost ratio
13.81%
for the year to 31 December 2024
(2023: 14.37%)
2023 14.37%
2022 16.59%
2021 15.84%
2024 13.81%
Definition
Administrative and operating costs
(including, and excluding, direct vacancy
costs) divided by gross rental income.
Purpose
A key measure to enable meaningful
measurement of the changes in a
company’s operating costs.
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Notes to the EPRA performance measures (unaudited)
For the year ended 31 December 2024
1. EPRA earnings per share
31 December
2024
£’000
31 December
2023
1
£’000
Total comprehensive income (attributable to shareholders) 44,961 48,831
Adjusted for:
– Revaluation movement (18,227) (21,934)
– Rental lease incentives 1,592 (140)
– Rental income arising from recognising rental premiums
andfuture guaranteed rent uplifts 7,173 7, 2 8 6
Change in fair value of investment properties (9,462) (14,788)
Change in fair value of put option — —
Loss on disposal of investment property 20 16
Interest received on interest rate cap 1,595 1,393
Change in fair value of interest rate derivatives (329) 458
EPRA earnings 36,785 35,910
Weighted average number of ordinary shares
(basic and diluted) 414,368,169 414 ,157,674
EPRA earnings per share – basic and diluted 8.89p 8.67p
1. 2023 has been restated to reflect the new guidelines regarding the calculation of EPRA earnings and EPRA
earnings per share released by EPRA in 2024.
2. EPRA NAV measures
The Group has adopted EPRA NTA as its primary EPRA NAV measure as it most closely aligns
with the Group’s business practices.
As at 31 December 2024:
EPRA NRV
£’000
EPRA NTA
£’000
EPRA NDV
£’000
Net assets at end of year 494,456 494,456 494,456
Exclude:
Fair value of derivatives (484) (484) —
Include:
Fair value of debt
1
— — 15,851
Transaction costs
2
44,273 — —
Net assets (per EPRA measure) 538,244 493,972 510,307
Shares in issue at 31 December
(basic and diluted) 414,368,169 414,368,169 414,368,169
Net assets per share (per EPRA measure) 129.90p 119.21p 123.15p
As at 31 December 2023:
EPRA NRV
£’000
EPRA NTA
£’000
EPRA NDV
(restated)
£’000
Net assets at end of year 478,107 478,107 478,107
Exclude:
Fair value of derivatives (1,750) (1,750) —
Include:
Fair value of debt
1
— — 18,177
Transaction costs
2
42,452 — —
Net assets (per EPRA measure) 518,809 476,357 496,284
Shares in issue at 31 December
(basic and diluted) 414,368,169 414,368,169 414,368,169
Net assets per share (per EPRA measure) 125.21p 114.96p 119.77p
1. Difference between interest-bearing loans and borrowings included in the balance sheet at amortised cost, and
fair value of interest-bearing loans and borrowings at drawn amount.
2. NTA and NDV are calculated using property values in line with IFRS, where values are net of real estate transfer
tax and other purchasers’ costs. These transaction costs are added back for NRV.
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3. EPRA net initial yield (NIY) and EPRA “topped-up” NIY
31 December
2024
£’000
31 December
2023
£’000
Investment property – wholly owned 679,036 651,313
Less capital improvements under construction (14,161) (9,669)
Completed property portfolio 664,875 641,644
Allowance for estimated purchasers’ cost
1
41,887 40,424
Gross up completed property portfolio valuation (B) 706,762 682,068
Annualised cash passing rental income 47,991 45,601
Property outgoings (non-recoverable insurance) — —
Annualised net rents (A) 47,991 45,601
Add:
Contractual rent on properties with interim variable rents
whilst in turnaround 1,227 1,617
Topped-up net annualised rent (C) 49,218 47, 218
EPRA net initial yield (A/B) 6.79% 6.69%
EPRA topped-up net initial yield (C/B) 6.96% 6.92%
1. Assumes a purchaser of the Company’s portfolio would pay SDLT and transaction costs equal to 6.5% of the
portfolio’s value.
4. EPRA vacancy rate
31 December
2024
£’000
31 December
2023
£’000
Estimated rental value of vacant space — —
Estimated rental value of the whole portfolio 50,202 48,154
EPRA vacancy rate 0.00% 0.00%
5. EPRA cost ratio
31 December
2024
£’000
31 December
2023
£’000
Administrative and other expenses 7,476 7, 1 37
Net service charge cost — —
Total costs including and excluding vacant property costs 7,476 7, 1 37
Gross rental income 54,146 49,659
Total EPRA cost ratio (including, and excluding, direct
vacancy costs) 13.81% 14.37%
None of the costs in this note have been capitalised. Only costs directly associated with the
purchase of properties as well as subsequent value-enhancing capital expenditure qualify
asacquisition costs and are capitalised.
Notes to the EPRA performance measures (unaudited) continued
For the year ended 31 December 2024
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6. Like-for-like rental growth
This note shows the rental income and market value for property assets that have been
ownedand operational for two full reporting periods, hence all the below information relates to
the property portfolio that has been owned and operational since 31 December 2022. It therefore
excludes any rental increases or values in relation to properties acquired after 31December2022.
Six properties whose leases were modified upon re-tenanting during this period have not been
included as they do not reflect a stabilised operational lease across this period.
Rent
£’000
Market value
£’000
Property portfolio as at 31 December 2022 36,793 508,306
Inflation-linked rental uplifts 1,537
Rental uplifts in return for capital improvements
or deferred payments 162
Increase/(decrease) due to vacancy rate —
Property portfolio as at 31 December 2023 38,492 533,860
Inflation-linked rental uplifts 1,436
Rental uplifts in return for capital improvements
or deferred payments 995
Increase/(decrease) due to vacancy rate —
Property portfolio as at 31 December 2024 40,923 565,380
All properties operate within the same sector, UK healthcare.
7. EPRA (net) LTV
31 December
2024
£’000
31 December
2023
£’000
Gross debt 197,760 184,760
Include:
Net payables 7,14 9 6,009
Less:
Cash and cash equivalents (10,492) (9,389)
EPRA net debt 194,417 181,380
Investment properties at fair value 679,036 651,313
Financial assets 5,000 —
Total property value 684,036 651,313
EPRA (net) LTV 28.42% 27. 8 5%
Notes to the EPRA performance measures (unaudited) continued
For the year ended 31 December 2024
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The other alternative performance measures may not be comparable with similarly titled
measures presented by other companies. Alternative performance measures should not be
viewed in isolation but as supplementary information.
1. Total expense ratio (TER)
Total recurring administration costs as a percentage of average NAV throughout the period.
Year ended
31 December
2024
£’000
Year ended
31 December
2023
£’000
Opening NAV 478,107 445,920
Closing NAV 494,456 478,107
Average NAV for the year 486,281 462,013
Administrative expenses 7,476 7,137
One-off costs — —
Recurring expenses 7, 476 7,137
TER 1.54% 1.54%
2. Total accounting return
The growth in NAV per share plus dividends paid expressed as a percentage of NAV per share at
the beginning of the period.
Year ended
31 December
2024
Year ended
31 December
2023
Opening NAV per share (pence) 115.38 110.17
Closing NAV per share (pence) 119.33 115.38
NAV growth for the year (pence) 3.95 5.21
Dividends per share paid in the year (pence) 6.91 6.71
Total return (pence) 10.86 11.92
Total accounting return 9.41% 10.82%
Alternative performance measures (unaudited)
3. Gross loan to value (LTV)
The gross debt as a percentage of our gross asset value.
As at
31 December
2024
£’000
As at
31 December
2023
£’000
Gross debt 197,760 184,760
Gross assets 698,015 6 67,28 9
LTV 28.33% 27.69 %
4. Property investments
This relates to the portfolio valuation along with investments via loans to operators for the
acquisition of property portfolios.
As at
31 December
2024
£’000
As at
31 December
2023
£’000
Investment property valuation 674,861 651,313
Assets held-for-sale 4,175 —
Property investments 679,036 651,313
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Our portfolio (unaudited)
At 31 December 2024, the Group owned the homes listed in the table below:
Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
Belmont Healthcare
Madeira Lodge South East Nov 2023 48
Wombwell Hall South East Nov 2023 120
Value at 31 December 2024: £17.0m
Careport
Briardene North East Aug 2018 60
Derwent North East Aug 2018 45
Holly Lodge North East Nov 2018 41
Kingston Court North West Jun 2019 80
Old Prebendal House and Court South East Jun 2019 40
Riverwell Beck North West Dec 2020 60
Sovereign Court and Lodge
4
North East Aug 2018 60
The Grove North East Sep 2018 57
Value at 31 December 2024: £37.9m
Carlton Hall
Carlton Hall East of England Sep 2021 86
Oasis Development Site East of England Sep 2021 —
Value at 31 December 2024: £14.2m
Croftwood Care
*
Ancliffe North West 40
Astbury Lodge North West 41
Croftwood North West 47
Crossways North West 39
Elm House North West 40 +18
Florence Grogan North West 40
Garswood North West 53
Gleavewood North West 32
Golborne House North West 45
Greenacres North West 40
Hourigan North West 40
Ingersley Court North West 46
Lakelands North West 40
Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
Leycester House North West 40 +5
Loxley Hall North West 40
Lyndhurst North West 40
New Milton House North West 39
Parklands North West 40
The Cedars North West 27
The Elms North West 41
The Hawthorns North West 39
The Laurels North West 40
Thorley House North West 40
Turnpike Court North West 53 +8
Wealstone North West 42
Westhaven North West 52
Whetstone Hey North West 42
Woodlands Court North West 40
Value at 31 December 2024: £83.4m
Electus Care
Abingdon Manor Northern Ireland Feb 2023 60
Cedarhurst Lodge Northern Ireland Dec 2020 67
Edgewater Lodge Northern Ireland Dec 2020 75
Larne Northern Ireland Feb 2023 87
Saintfield Lodge Northern Ireland Dec 2020 51
Value at 31 December 2024: £23.9m
Fulcrum Care
Baillieston Scotland Aug 2022 60
Cardonald Scotland Aug 2022 31
Springhill Scotland Nov 2021 61
Stobhill Scotland Aug 2022 60
Value at 31 December 2024: £10.2m
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Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
Holmes Care Group
Alexander House Scotland Dec 2021 40
Almond Court Scotland Aug 2020 42
Almond View Scotland Aug 2020 78
Bankview (& BVDC) Scotland Aug 2020 65
Barrogil House Scotland Dec 2021 40
Beechwood Scotland Aug 2020 90
Camilla Scotland Dec 2021 40
Craigie House Scotland Dec 2021 30
Cragielea Scotland Aug 2020 85
Fernlea House Scotland Dec 2021 36
Finavon Court Scotland Dec 2021 24
Grandholm Scotland Aug 2020 79
Heatherfield Scotland Aug 2020 60
Larkfield Scotland Aug 2020 90
Lomond View Scotland Dec 2021 50
Methven House Scotland Dec 2021 60
Preston House Scotland Dec 2021 60
Roselea House Scotland Dec 2021 20
Three Towns Scotland Aug 2020 60
Walton House Scotland Dec 2021 40
Willow House Scotland Dec 2021 40
Value at 31 December 2024: £93.8m
Maria Mallaband and Countrywide Group (MMCG)
Belmont House Yorkshire & The Humber May 2019 106
Croft House Yorkshire & The Humber Mar 2020 68
Howgate House Yorkshire & The Humber Mar 2020 63
Manor Park Yorkshire & The Humber Mar 2020 75
Parksprings Scotland May 2019 96
Thorntree Mews Scotland May 2019 40
Wallace View Scotland May 2019 60
Value at 31 December 2024: £35.5m
Our portfolio (unaudited) continued
Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
Minster Care
*
Abbeywell West Midlands 45
Amberley South West 30 +7
Ashgrove
5
Yorkshire & The Humber 56
Broadgate East Midlands 40
Carnbroe Scotland May 2018 76
Craigend Scotland 48
Diamond House East Midlands 74
Duncote Hall East Midlands 40 +1
Duncote, The Lakes East Midlands 47
Emmanuel
5
Yorkshire & The Humber 44
Falcon House East Midlands 46
Freeland House South East 111
Gray’s Court East of England 87
Grenville East of England May 2018 64
Hamshaw Court
5
Yorkshire & The Humber 45
Hillcrest South West Nov 2021 88
Ideal West Midlands 50
Karam Court West Midlands 47
Littleport Grange East of England 80
Meadows & Haywain East of England 65
Mowbray West Midlands 39
Red Hill West Midlands Jan 2020 90
Rydal North East 60
Saffron East Midlands Jun 2017 48
Sovereign House West Midlands 60
Three Elms North West 60
Waterside West Midlands 47
Wordsley West Midlands 44
Value at 31 December 2024: £136.1m
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Care REIT plcAnnual report and financial statements 2024
Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
NCUH NHS Trust
Reiver House North West Jun 2019 —
Surgical Unit North West Jun 2019 —
Value at 31 December 2024: £5.8m
Optima
Barham East of England Aug 2019 44
Baylham East of England Aug 2019 55
Value at 31 December 2024: £16.1m
Prestige Group
Merlin Manor Care Centre North East Mar 2020 94
Parkville North East Mar 2018 94
Roseville North East Mar 2018 103
Sandbanks North East Oct 2018 77
Yew Tree North East Jan 2019 101
Value at 31 December 2024: £38.8m
Renaissance Care
Croftbank Scotland Nov 2018 68
Rosepark Scotland Nov 2018 60
Value at 31 December 2024: £13.5m
We Care
Laurel Bank Yorkshire & The Humber Mar 2020 63
The Beeches Yorkshire & The Humber Mar 2020 60
Willow Bank Yorkshire & The Humber Mar 2020 59
Value at 31 December 2024: £6.0m
Our portfolio (unaudited) continued
Tenant and home Region
Acquisition
date
1
Beds
2
Capital
projects
3
Welford
Argentum Lodge South West Sep 2019 56
Baily House East Midlands Jun 2023 66
Birchlands Yorkshire & The Humber Jun 2019 54 +2
Corbrook Park North West Jan 2024 80
Eastleigh – East Street &
Rossiter House South West May 2023 54
Eastleigh – Periton Road South West May 2023 69
Eastleigh – Raleigh Mead South West May 2023 62
Fairview Court and House South West Mar 2018 81
Isle Court West Midlands Jan 2024 82
Mavern House South West Jan 2021 55
Morris Care Centre West Midlands Jan 2024 96
Oldbury Grange West Midlands Jan 2024 69
Radbrook West Midlands Jan 2024 63
Stretton Hall West Midlands Jan 2024 50
St Peter’s House East of England Dec 2020 66
Vale View Heights Care Home South West Jun 2019 55
Woodleigh Christian Care Home East Midlands Jun 2023 44
Value at 31 December 2024: £146.8m
1. May 2017 unless stated.
2. Number of registered beds.
3. Capital improvement bed additions under development.
4. Treated as two properties.
5. Assets held-for-sale at year end.
* Croftwood Care and Minster Care are both part of Minster Care Group Limited.
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AIFM statement (unaudited)
Impact Health Partners LLP have served as the Alternative Investment Fund Manager since
15March 2019; references in this statement to “AIFM” are to Impact Health Partners LLP.
Quantitative remuneration disclosure for the AIFM
Information in relation to the remuneration paid by the AIFM is available upon request.
Liquidity
At the date of this annual report there are no assets held by the Company which are subject
to special arrangements arising from their illiquid nature. There has been no change to the
liquidity management system and procedures during the period since incorporation. Please
refer to note 20 in the financial statements for an analysis of the Company’s liabilities and their
maturity dates at 31 December 2024.
The current risk profile of the Company and the risk management systems
employed by the AIFM to manage those risks
The Company’s risk management framework and risk appetite are set out in “Audit, risk and
internal control” on pages 125 to 127 of the annual report.
Please refer to pages 37 and 38 for the board’s assessment of the principal risks and
uncertainties facing the Company. The AIFM has assessed the current risk profile of the
Company to be low.
Leverage
The Group’s maximum and actual leverage levels at 31 December 2024 are shown below:
Leverage exposure Gross method
Commitment
method
Maximum limit 200.0% 200.0%
Actual 147.8 % 149.9%
For the purposes of (i) the EU Alternative Investment Fund Managers Directive (Directive
2011/61/EU) (the ‘EU AIFMD’); and (ii) the UK version of EU AIFMD as it forms part of UK law
by virtue of the European Union (Withdrawal) Act 2018, and as implemented by the Financial
Conduct Authority in the UK (the ‘UK AIFMD’), leverage is any method that increases the
Group’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as
a percentage of the Group’s exposure to its net asset value and is calculated on both a gross
andcommitment method.
Under the gross method, exposure represents the sum of the Group’s positions after deduction
of cash balances, without taking account of any hedging or netting arrangements. Under the
commitment method, exposure is calculated without the deduction of cash balances and after
certain hedging and netting positions are offset against each other. Both methods include the
Group’s interest rate swaps measured at notional value.
There has been no change to the maximum level of leverage that the AIFM may employ on
behalf of the Company. The Company’s investment policy has a maximum gross leverage ratio
of 35% at the time of drawdown and the AIFM is required under the IMA to comply with this
limit. The actual level of gearing employed by the Company at 31 December 2024 was 28.33%.
Material changes to information
Article 23 of the EU AIFMD (in respect of the marketing of the Company in the EU) and FUND
3.2.2, 3.2.5 and 3.2.6 of the UK AIFMD (in respect of the marketing of the Company in the UK)
require certain information to be made available to investors before they invest (the “Required
Information”) and require material changes to the Required Information to be disclosed to
investors. An updated copy of the Company’s disclosure schedule containing the Required
Information was published on 27 January 2023. There have been no other material changes
tothe Required Information.
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Care REIT plcAnnual report and financial statements 2024
Investment policy
The Company’s investment policy is to acquire, own, lease, renovate, extend and redevelop
high-quality healthcare real estate assets in the UK, in particular elderly care homes, and to
lease those assets to care home operators and other healthcare service providers under full
repairing and insuring leases.
The Company pursues the investment policy as follows:
Policy Status
In order to manage risk in the portfolio, at the time of investment, no single
asset shall exceed in value 15% of the total gross asset value of the Group.
No single customer paying for care provided in assets owned by the Group
will account for more than 15% of the aggregate revenues of the tenants to
whom the Group’s assets are leased from time to time, measured at the time
of acquisition.
The annual contracted rent from any single tenant is not expected to exceed
40% of the total annual contracted rent of the Group, measured at the time
of investment.
The portfolio will be diversified by location across the UK with focus on areas
where there is a good balance of supply and demand for the provision of care
and assets are available at attractive valuations.
Within these locations, the Group will acquire existing modern buildings or
those that are currently considered fit for purpose by occupiers, but in respect
of which the Investment Manager has developed a plan to add value to,
and improve the environmental sustainability of, the asset through targeted
capital expenditure.
Leases granted by the Group will be linked to inflation, have long duration
(with an unexpired lease term of at least 20 years) and will not be subject to
break clauses. The Group will seek to amend any future leases acquired by
the Group to obtain similar terms.
The Group will not undertake speculative development (that is, development
of property which has not been leased or preleased), subject to the limitation
in the final bullet below, so as to reposition a home in its local market and
thus to increase the rent due.
The Group may invest in forward-funding agreements or forward
commitments to pre-let developments, or as part of a structured acquisition
of an asset, subject to the limitation in the final bullet below, where the Group
will own the asset on the completion of the work, or has the ability to acquire
the asset upon agreed conditions being satisfied.
The gross budgeted development costs of any refurbishment, extension
or replacement of existing holdings and/or forward funding and forward
commitments, is limited to 25% of the Company’s gross assets at the time of
commitment.
The Group is permitted to generate up to 15% of its gross income in any financial year from
non-rental revenue or profit-related payments from the tenants in addition to the rental
income due under the leases. The Group is also permitted to invest up to:
(i) 10% of its gross assets, at the time of investment, in non-residential healthcare real
estate assets, such as properties which accommodate GP or dental practices and other
healthcare-related services including occupational health and physiotherapy practices,
pharmacies and hospitals or in non-healthcare-related residential assets attached to
residential healthcare real estate assets;
(ii) 25% of its gross assets, at the time of investment, in indirect property investment funds
(including joint ventures) with a similar investment policy to that of the Company; and
(iii) 15% of its gross assets, at the time of investment, in other closed-ended investment funds
listed on the Official List. The directors have no current intention to acquire non-residential
healthcare real estate assets or indirect property investment funds.
The Group may also acquire or establish companies, funds or other SPVs which themselves own
assets falling within the Company’s investment policy.
The Group will not acquire any asset or enter into any lease or related agreement if that would:
(i) result in a breach of the conditions applying to the Company to hold real estate investment
trust (REIT) status; or
(ii) result in any investment by the Group in assets located outside of the UK.
The Company may invest cash held for working capital purposes and awaiting investment
in cash deposits, gilts and money market funds. It will not invest in derivatives but it may use
derivatives for hedging purposes.
The Group is permitted to borrow up to a maximum of 35% of the gross asset value of the
Group as a whole, calculated at the time of drawdown.
Any material change to the investment policy will require the prior approval of shareholders.
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Care REIT plcAnnual report and financial statements 2024
Overview
The directors are responsible for maintaining
our system of internal control and risk
management, in order to safeguard our
assets. This system is designed to identify,
manage and mitigate the financial,
operational and compliance risks we face,
and to manage rather than eliminate the risk
of failing to achieve our business objectives.
Risk profile
Our principal risks and uncertainties are set
out on pages 37 and 38. The directors have
performed robust reviews of our principal
and emerging risks during the year, with
the Investment Manager’s support. We also
consider our principal risks in the context
of the UK AIFMD, which sets out certain
categories of risk that the Investment
Manager must take into account, in
monitoring and managing risk on our behalf.
The risk register details our principal risks and
our mitigations to control them. It measures
each risk’s inherent likelihood and impact, and
the residual likelihood and impact assuming
our controls operate effectively. The board
updates and approves the risk register at
least annually.
The board has procedures in place to ensure
that we monitor and manage risks on an
ongoing basis and that it receives adequate
assurance that our systems and controls are
operating effectively.
Risk appetite
Our risk appetite reflects the risks the board
is willing to take to achieve our investment
objectives, as set out on page 3. We
continued to review and update our risk
appetite framework during the year, as well
as assessing our current and past compliance
with our risk appetite.
Risk processes
Our risk governance structure is summarised
on page 127:
Board
• Has ultimate responsibility for our risk
management and internal control.
• Delegates certain responsibilities to the
audit and management engagement
committees.
• Reviews the Company’s liquidity each
quarter.
• Assesses our principal emerging risks
twiceayear.
• Assesses and articulates our risk appetite.
Audit committee
• Keeps our internal financial controls and
internal control and risk management
systemsunder review. Receives reports
from the risk committee, and from service
providers, and reports exceptions to the
board and follows up queries with the
riskcommittee.
• Reviews the effectiveness of the risk
management framework each year.
• Reviews and approves the statements to
be included in the annual report concerning
internal controls and risk management.
• Reviews and approves statements
explaining how assets have been invested,
with a view to spreading investment risk.
Management engagement committee
• Considers risk issues arising from the
functions performed by service providers
and reported to the management
engagement committee or board
asnecessary.
Investment Manager
• Performs portfolio and risk management
functions, including monitoring the systems
and controls for managing risk.
• Oversees operational risks and reviews
principal risks.
• Forecasts cash flows and monitors
compliance with debt covenants.
• Monitors our compliance with the qualifying
conditions set out in the UK REIT rules
(Corporation Tax Act 2010).
• Has appointed Carne Global AIFM Solutions
(C.I.) Limited to carry out risk management
on its behalf.
Risk committee of the Investment
Manager
• Identifies key and emerging risks and
the controls to mitigate those risks
(documented in the risk register).
• Assesses the materiality of each risk,
according to its likelihood and potential
impact (documented in the risk register).
• Assesses control effectiveness each quarter,
via reporting on key risks by the Investment
Manager, Administrator, registrar and
Depositary.
• Agrees actions for risks that are outside our
tolerance, ensures that risk events, errors
and breaches are appropriately remedied,
andthat controls are enhanced to prevent
reoccurrence.
• Reviews risks to our business model, future
performance, solvency or liquidity, in the
context of the going concern and long-term
viability statements.
• Reviews counterparty credit risk, with
reference to our financing arrangements
and policies.
• Reviews regulatory risk via the
Administrator’s compliance monitoring and
the Investment Manager’s monitoring of the
REIT conditions.
• Assesses service provider risk via Service
Organisation Control reports and due
diligence reviews.
• Reports key matters to the audit
committee.
Company Secretary and Administrator
• Monitors compliance with the UK Listing
Rules and the Disclosure Guidance and
Transparency Rules.
• Prepares quarterly management accounts.
Depositary
• Reviews risks relevant to the depositary
function in accordance with the
requirements of UK AIFMD.
• Includes verification of assets, payment
of expenses, leverage limits, investment
restrictions, cash flow monitoring and good
title to assets.
Service providers
• Responsible for monitoring their own
internal control systems, to ensure they
properly manage risk when performing
services for us.
How we manage risk
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Care REIT plcAnnual report and financial statements 2024
How we manage risk continued
Internal control processes
The audit committee, working with the Investment Manager and Administrator, reviews
theGroup’s systems of risk management and their effectiveness, on behalf of the board.
Thesesystems and processes were in place for the year under review and remained in place
upto the date of approval of the annual report and accounts.
Our internal control systems include a detailed authorisation process, formal documentation
of all transactions, a robust system of financial planning (including cash flow forecasting
and scenario testing) and a robust appraisal process for all property investments, including
compliance with our conflicts policy.
In addition, the board has a Financial Position & Prospects Procedures board memorandum,
which the audit committee reviews annually and updates when required. This sets out our
procedures for identifying the information needed to monitor the business and manage risk,
so we can make proper judgements on our financial position and prospects. It also details our
procedures to identify, assess and document the risk factors likely to affect our financial position
and prospects and any changes, and the preparation and communication to the directors of
related information. This was last reviewed at the audit committee meeting in November 2023.
The risk committee of the Investment Manager addresses changes to our internal controls,
or controls to respond tochanging risks, and escalates to the audit committee or board as
required.
The directors, along with the Investment Manager and Administrator, have established an
internal control framework to provide reasonable assurance on the effectiveness of our internal
controls. This covers capital expenditure approval and authorisation of capital funding,
investment acquisition and disposal approval, annual budget approval, expenditure and
supplier contract approval, NAV and dividend authorisation, equity and debt approval, and
formal communications with investors.
During the year, the directors received a report from the Investment Manager that summarises
its internal controls and confirms that the controls are operating effectively. The directors have
also received bridging letters from service providers to provide assurance that their controls
continued to operate effectively throughout the period under review, where the service
providers’ own review of their internal controls is not coterminous with our reporting period.
Financial reporting
We have internal control and risk management arrangements relating to our financial
reporting processes and preparing our consolidated accounts, with the Investment
Manager and Administrator’s support. We have established and documented our internal
management reporting and external statutory reporting timetables and delivery requirements.
TheAdministrator controls these and communicates them regularly.
The arrangements include the Administrator’s procedures to maintain records that accurately
and fairly reflect transactions. The Investment Manager reviews and comments on the records,
toconfirm the appropriate treatment.
Where we are adopting new reporting standards or financial reporting approaches, due to
either changing regulation or new contractual arrangements, the Administrator, in collaboration
with the Investment Manager, prepares an assessment of this treatment and discusses it with
the audit committee. Where required, third-party advisers are consulted. This enables us to
prepare financial statements in accordance with UK-adopted International Financial Reporting
Standards (IFRS), or FRS 102, as appropriate, with reasonable assurance. Reported data is
reviewed and reconciled by the Administrator, in collaboration with the Investment Manager,
with appropriate monitoring internally and by the audit committee.
We monitor our ongoing financial performance through the Administrator reporting regularly
tothe Investment Manager, with performance then reported to the board.
We regulate our capital investment and all revenue expenditure through our budget process
and authorisation levels. The Investment Manager prepares a budget which the board
approves annually, and the board receives quarterly reports of performance against budget.
The Administrator also tracks expenditure and investment against budget. Payment of
Investment Manager fees are presented to an individual director for sign off.
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How we manage risk continued
Board
Responsible for the long-term success of the Company, the Company’s strategic aims, risks and values. It sets the Company’s investment objectives and investment
policyand is responsible for the Company’s investment decisions, other than those delegated to the Investment Manager.
Investors
Investment Manager
Impact Health Partners LLP (IHP) is appointed by the Group to be the AIFM and
providesdiscretionary investment management responsibilities, including portfolio and risk
management services.
Company Secretary
JTC is responsible for ensuring good information flows within the board and its
committeesand between the AIFM/Investment Manager and non-executive directors,
aswell as advising the board on governance matters.
Brokers
Winterflood and Jefferies
Depositary
Indos
Registrar
Computershare
Administrator
JTC is responsible for the maintenance of the books and financial accounts of the Company and the calculation, in conjunction with
theInvestment Manager, of the net asset value of the Company and the ordinary shares.
Internal controls
Investment Audit
committee
Management
engagement
committee
Nomination
committee
Remuneration
committee
Operational/StrategyRisk ESG
1. Decision-making responsibilities.
2. Independent support, review and advice.
See pages 45 and 46
111
1
2 2
2
2
1
1
2
See page 53See pages 57 to 59See pages 54 to 56
See pages 51 and 52
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Care REIT plcAnnual report and financial statements 2024
Glossary
(Acquisition) yield: Initial rent divided by the
consideration paid on acquisition (or cash
outlay for capex projects)
Adjusted EPS: Adjusted earnings per share
Administrator: JTC (UK) Limited
AIC: Association of Investment Companies
AIFM: Alternative Investment Fund Manager
BDO: BDO LLP
BREEAM: Building Research Establishment
Environmental Assessment Method
Capex: Capital expenditure
CMA: Competitions and Markets Authority
Contracted rent: The annualised rent
adjusting for rent due following rent-free
periods, expected stabilised rent under profit
share agreements and including post-tax
income from interest received from property
investments made via loans to operators for
the acquisition or development of property
Contracted yield: Contracted rent divided by
the independent market value of the portfolio
CQC: Care Quality Commission
CRREM: Carbon Risk Real Estate Monitor
EBITDARM: Earnings before interest, tax,
depreciation, amortisation, rent and
management charges
EPC: Energy performance certificate
EPRA: European Public Real Estate
Association
EPS: Earnings per share
ESG: Environmental, social and governance
FCA: Financial Conduct Authority
GHG: Greenhouse gas
ICSA: The Chartered Governance Institute
Investment Manager: Impact Health Partners
LLP
IPO: Initial public offering
LTV: Gross loan to value
Management report: As defined by the
FCA handbook and governed by DTR 4.1.8,
incorporated within the strategic report and
governance section of this annual report
MMCG: Maria Mallaband and Countrywide
Group
NAV: Net asset value
NIY: Net initial yield
Premium Listing/Premium List: The transfer
of our shares to the Premium Listing segment
of the London Stock Exchange’s main market
and admitted to the Premium Listing segment
of the FCA’s Official List
Property investments: This relates to the
portfolio valuation along with investments
via loans to operators for the acquisition of
property portfolios
RCF: Revolving credit facility
REIT: Real estate investment trust
Rent cover: EBITDARM for the year divided by
total annual rent. Operator EBITDARM, where
there is a guarantee from the parent entity,
will include net income from all operations of
the Group (where reported). This is consistent
with prior year reporting
RICS “Red Book”: RICS Valuation – Current
edition of the global and UK standards as at
the valuation date
RPI: Retail Price Index
Seed portfolio: Initial portfolio of 56 assets
(including two option assets) acquired in
May2017
SONIA: Sterling Over Night Index Average
SPV: Special purpose vehicle
Total accounting return: The growth in NAV
per share plus dividends paid expressed as a
percentage of NAV per share at the beginning
of the period
WAULT: Weighted average unexpired
leaseterm
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128
Care REIT plcAnnual report and financial statements 2024
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charity World Land Trust.
Both printer and paper mill are
certified to ISO 14001, thestandard for
environmental management.
Designed and produced by
www.lyonsbennett.com
Corporate information
Directors
Amanda Aldridge Non-executive director
Rosemary Boot Senior independent
non-executive director
Cedi Frederick Non-executive director
Simon Laffin Non-executive Chair
Chris Santer Non-executive director
Registered office
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
Telephone: +44 (0)207 409 0181
Investment Manager and AIFM
Impact Health Partners LLP
149-151 Regent Street
London
W1B 4JD
Joint Financial Advisers and
Corporate Brokers
Jefferies International Limited
100 Bishopsgate
London
EC2N 4JL
Winterflood Securities Limited
The Atrium Building
Cannon Bridge
25 Dowgate Hill
London
EC4R 2GA
Legal Advisers
Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Independent Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Administrator and Secretary
JTC (UK) Limited
The Scalpel
18th Floor
52 Lime Street
London
EC3M 7AF
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
United Kingdom
Depositary
Indos Financial Limited
54 Fenchurch Street
London
EC3M 3JY
Valuer
Cushman & Wakefield
43-45 Portman Square
London
W1A 3BG
Communications Adviser
H/Advisors Maitland
3 Pancras Square
London
N1C 4AG
Company Registration Number
10464966
Website
www.carereit.co.uk
Financial calendar
Announcement of full-year results 13 March 2025
Annual General Meeting 22 May 2025
Half year end 30 June 2025
Announcement of half-year results August 2025
Full year end 31 December 2025
www.carereit.co.uk
Care REIT plc
The Scalpel, 18th Floor,
52 Lime Street, London
EC3M 7AF