Target Healthcare REIT PLC (THRL) Earnings Call Transcript & Summary

Good morning. Welcome to Target Healthcare REIT and to our webinar on the interim results for the 6 months ended 31st December, 2021. The keywords probably as we enter these discussions just now are resilience, perseverance, thinking about inflation protection, achieving scale but always with downside protection. And in particular, we have been focused on that in relation to debt costs. My name is Kenneth MacKenzie and I'm presenting today with Gordon Bland, who is the Finance Director. Gordon joined us some 9 years ago. And I'm delighted that we have a very stable team in the business. We will go through this presentation and have an opportunity for questions and answers towards the end. If I can go to the overview of what we have been doing in Target Healthcare REIT, we have been building a modern purpose-built portfolio of care homes to provide long, stable, boring, repetitive income for our investors. And we're delighted within that to have 28 years almost of income in front of us, so long income. The kind of portfolio we've been building is exclusively in the modern purpose-built homes, homes that have in all of their bedrooms on suite wet rooms. We fundamentally believe for holistic care that our dear elderly should be loved and looked after and cared for in all their personal needs. And by that, we mean really personal in areas that none of us would normally like to share in their own wet rooms, beside their bedrooms. So that's the kind of physical real estate we have. We're also favored with excellent sector dynamics. We mainly work in the private fee sector. And in terms of our concern about inflation protection, the private fee sector is able to pay -- to ask for the private resident to pay above inflation increases. And also in the sector, this is absolutely needs-based care. This is families who are finding their loved ones really difficult to look after. We have a couple of examples in our own immediate family of the management team of Target Healthcare REIT. We're also really clear on our ESG strategy with high EPC ratings with strong social impact. And of course, we've been going through the pandemic. And we're thankful that today, we only have 5 homes with 19 cases. So we're absolutely seeing an improving COVID-19 outlook despite the difficulties of Omicron. We're seeing greater staff availability in recent weeks, not yet completely resolved but definitely improving. And all of this is against this fluid macroeconomic backdrop that we're all experiencing, distressed really, prayerful really about Ukraine. Equity markets are upset, no wonder. And we're all going back to the days of inflation that I remember really well actually because my first role as a CEO was in a printing and publishing business in 1976 and guess what rate of inflation we had then? 24%. 2 years later, as the business turned around, it was at 15%. 2 years after that, it was at 17%. What do you do in inflation times? Protect your downside, protect your costs, make sure your income is flexible. So we have been really strong in ensuring that we are well protected for inflation. And as you'll see on the next slide, in terms of the physical real estate and the underlying characteristics thereof, 96% of our underlying leases and we have leases on about 98 homes, 96% are inflation-linked. Their rents go up annually tied to RPI. The portfolio value is GBP 870 million. As I said already, we have 27.5 years of income in front of us. Total contracted rent today after the various transactions that we have undertaken over these 6 months, over GBP 50 million. And we're thankful to have paid for 9 years a 6% dividend on the issue price. It's been rising every year such that today, it's at GBP 6.76p per annum. I'll now hand over to Gordon, our Finance Director, to speak about the period highlights.

Thank you, Kenneth. Yes. So this has probably been our busiest 6-month period since IPO, almost 9 years ago now, certainly in capital terms. And we've been busy working on that and we've been working hard on the portfolio and with our tenants as well. I'm pleased to have maintained rent collection at that 96% for the 6 months, which is pretty impressive, given the challenges that our tenants have been facing. We've also been working hard on our debt. We've got a new GBP 100 million worth of debt long term, the 13, 14 years weighted term to maturity and that's been set at fixed rates and drawn at those fixed rates, which are set for the duration of that date, which is obviously helpful, given the interest rate and the inflation environment we are facing at the moment. And of course, we responded to the pipeline opportunities, which we were able to source by raising GBP 125 million of equity, grateful for shareholder support on that. And we've been able to convert that -- or sorry, use that to convert into acquisitions, a significant portfolio acquisition towards the period end as well as some other assets. So really, really busy, really pleased and we developed a portfolio of scale and a balance sheet of scale and balance as well. Some useful KPIs on that. We've continued NAV growth, modest this period with some acquisition costs going through. We continued the dividend and growth and we've continued total returns at 3.4% for the period. Adjusted EPS is down a bit and we'll touch on that why in the following slide. That's largely due to the capital activity and the acquisitions that we've been doing. So next slide. I thought it would be useful to give some insight into the income statement. The full interims and the full annuals, that, that statement, there's a lot going on in there. We've got the 3 columns. We've got the comparators. And I thought it would be useful to show you a simplified version and really boiling it down to what we as a management team and what the Board look at and effectively that is the revenue column. So a simplified the version of that here on the left-hand side. It represents the recurring cash earnings. And essentially, those are the adjusted EPRA earnings number, which we look at there. So the rent and a little bit of development interest on our development portfolio has come to GBP 22.3 million for the period. The [ GBP 6.2 million ] of admin and other expenses is the cost of running the business, management fee, the administrative expenses. And we do have about GBP 1 million worth of provisions on the rental income through the 6-month period there. Prudent but reflecting some of the challenges the portfolio has faced. And that gets us down following finance costs to adjusted EPRA earnings of that GBP 15.6 million number. Not to forget, first, I have simplified that on the revenue side of things, not to forget, we are seeing reflected in the total returns, we are seeing capital profits as well. So 2.2% like-for-like growth in the portfolio valuation. So just to point that out, although I am focusing on the revenue and the earnings side of things, just now excluding those capital items. Okay. So what does that look like in terms of taking earnings pounds to EPS? You can see both the EPRA earnings per share and our key adjusted EPRA earnings per share numbers there. So the GBP 2.36p adjusted EPRA earnings per share has been a bit depressed this period. The key drivers of that have been securing the equity capital in advance of the acquisition of the portfolio, the significant portfolio. We needed that to satisfy the vendor and secure that purchase. And then unfortunately, the vendor process and some COVID-related delays effectively delayed the completion of that by about a full quarter and we completed that just before the period end. So a bit depressed. But we thought it would be useful to show a pro forma income statement now to reflect but in a very different place with the portfolio and with the rent roll. So we'll show you some of those pro forma numbers. Firstly, for context, the 2 bars there are the rent rolls, which really drove the earnings results for the 6-month period under review and that [ GBP 41 million and GBP 43 million ] in June and September. And moving on, the 3 bars we've just introduced on the next slide -- on the current side show the current position now. So right now, we're at GBP 53.8 million, reflecting the portfolio completion just before Christmas. That GBP 53.8 million is about 30% higher than the 2 numbers which were driving the results. And then when we complete the developments we currently have in the portfolio, the [indiscernible] there, contractually committed, when their rent comes through, we're up to about GBP 56.5 million of contractual rent roll. So what that shows you in the pro forma numbers on getting back to that adjusted earnings, EPRA earnings number, is it really boosts those earnings up to GBP 38 million on an annualized basis and dividend cover on that gets us into the -- above the [ 0.91% ], which is a significant move forward based on where we currently are with our contracted position. Moving on just to show the effect of once we're fully invested and fully geared. We have about GBP 80 million of capital still to deploy that is allocated to pipeline deals, which are all in diligence at the moment. And John Flannelly and his investment team are working hard on bringing those to completion. Once we complete those, rent will have grown by greater than 40% on the contractual rent roll position. And you can see the pro forma P&L column on the right-hand side there, we go up to adjusted EPRA earnings of GBP 42.3 million or thereabout and where the dividend is covered on the adjusted EPRA EPS basis. So in conclusion, just on that section, we thought it would be insightful and useful to show these pro forma numbers given the significant changes in the portfolio and the business right at the end of the period we've just gone through, the 6 months under review. A couple of balance sheet points. Just flipping on to the next slide, please. Yes. So just to highlight the properties number. It's just shy of GBP 900 million now. That has grown by 27% in the period, given the acquisitions and the like-for-like growth. Next point is just to make on the borrowings number. So the debt drawn is now about GBP 223 million. And an important point there is, 81% of that drawn debt is at long-term fixed rates. So what we have left to borrow is that or what to draw, sorry, is the flexible variable rates on their banking facilities. And then a final point just on the balance sheet on the LTV position. We're now up at 21%. We have been lower than that through the history but the 21% now is into the 20s, as you saw in the pro forma, we should push it up to 23% on the contracted position and 28%, 29% on a fully invested position. I think the 20s now is where that should stay and that will help us drive earnings to the level we want to be at but still within a conservative balance sheet and a conservative business model. And we've made really good progress on the debt over the last 6 months. We've got a great mix now. We've been focused on improving the mix between the flexible shorter-term facilities and the longer-term institutional fixed rate facilities. And we've done that with really pleasing results over the period. We now have a longer duration. We have more diversity and the maturity profile of our debt facilities and we've retained the flexibility to allow us to manage the pipeline and our development portfolio, which will help boost our earnings and help achieve dividend cover as we move towards [indiscernible]. And a couple of key metrics just to show up there in the key numbers. Our total facility is now at GBP 320 million available, weighted average terms of maturity overall is up to 7.5 years. It was shy of 5 years only 6 months ago. So we're continuing to make great progress there. And the average cost of drawn debt is still pretty good at just over 3%. We've fixed rates at a good time. That is the [indiscernible] all-in rate with amortization of costs. What we have available to draw is slightly cheaper, flexible. So that could come down a little bit as we draw down the facilities to convert the pipeline that we do have. So much better position now with debt, really pleased with that, good progress and good to have that significant proportion fixed for the long term at fixed rates of interest.

Thank you, Gordon. I said at the start of this presentation that we would -- we were keen to achieve scale at something that a number of investors have spoken to me about in the many fundraises I have done over the last 9 years. And we are continuing towards that goal in a cautious and can we not subject to some of the deals that others may perhaps want to do, particularly in relation to rent levels. Investors understand that yield is all important for the dividend that we were able to achieve in the business. But actually, in the acquisition process, almost -- not almost, more of our work is done on what is a sustainable rent figure. And we have seen investors over this last year, arrive at rents as they seek to buy assets, which can be 15%, 20%, 25% ahead of what we considered to be sustainable rents. So that is a key concern for us. We will stick with our view of what sustainable rent is and we anticipate in 5 to 8 years that some of the assets that others may be buying at unsustainable rent levels will come back towards us as they get tired of the challenges of some of these kinds of assets. For us anyway, during this period, as I say, we have been able to buy an asset of some scale. The asset of some scale when we were doing the fund raise last year, I wasn't able to name it directly but we are now able to do so. Back in 2010, when I founded the business, the first fund that got launched became known as the Kames Target Healthcare Fund. Kames Capital, where the fund manager, we were the asset manager. By that, we mean that we selected the assets and we manage the operations of the asset and we collected the rent. So we had good relationships with many -- with the tenants in that fund. The underlying shareholders in the Kames Target Healthcare Fund had come to the end of their lives. And so the directors of the fund, independent directors decided that the fund should be sold in the spring of last year. They went through a formal sales process. We had to create an ethical wall within Target. Our asset management team working for the seller, our investment team and myself working for the buyer. And we bid for this. The rent was at levels that we had originally considered sustainable. And so we were not in a situation where we were competing with others on the basis of future rents. It was much more what is an appropriate yield and we knew the assets really well. We were delighted just before the September fund raise to be awarded exclusivity to go and buy and we proceeded to enter into that exclusivity arrangement and then to raise the money because that was obviously important in terms of this year capacity that was required. We had originally hoped that the asset would be -- these assets would have been acquired in October, not long after the fund raise. That would have helped us a lot in cash drag terms. But COVID interjected and the seller had some challenges, allowing access to the surveyor that we had appointed because we wanted to be at complete arm's length process here. And that all delayed the acquisition so that it took until the 19th of December before it was concluded. But we're in a good place today. We acquired it, in other words, 12 days before the year-end, so only 12 days of income in these results. But we acquired an additional GBP 9.3 million of rent. We acquired additional 18 homes, you'll see where they are on the map and we acquired 3 new tenants to the group. There were 8 tenants in total in the 18 assets. So we are thankful to have it. That is good, modern purpose-built care homes that we bought really in the period 2010 to 2013. It's slightly lower private fee but still a good proportion of private fees but excellent real estate that we're delighted to own and mature homes with a strong trading history. I'll now transfer to Gordon to speak about COVID.

Yes. So thank you, Kenneth. The next 4 slides just cover a bit more detail on portfolio matters as we stand with the overall care home portfolio. Many of you will have seen this chart before. It's the number of homes with COVID within a home at any point in time. It follows the 3-wave pattern, we're all familiar with. So COVID is still here. I think 2 important points here that recently, over the last number -- significant number of months, we haven't been reported by our tenants any significant excess debt. So COVID has -- residents are protected and COVID is as severe across the portfolio, which is great news. And -- but what it does mean, flipping to the next slide, if there is COVID in our home, that home goes embargoed to new admissions. So that has impacted occupancy levels. So our occupancy had started to increase during the 6-month period and then the Omicron emergence, as COVID increased again, stalled our occupancy levels. We're pleased to report the occupancy is starting to tick up again. We've seen 2 or 3 weeks of consistent, steady growth. And so the spot position is around about 80%, which is good news. The key takeaway from the chart on the left there is the occupancy numbers on the bar and the rent cover on the line. These are rolling last 12 months basis. We always report that we have to take out seasonal variations. But I think the key takeaway, as I mentioned, is the rent covers have been resilient despite this decrease in occupancy that our tenants have faced. And what we expect to see now is occupancy start to tick up, the commercial agility of our tenants to maintain that profitability, meet their obligations, pay their rent and still have a level of profit has been very impressive over the last 2 years. And that is being maintained with government support dropping away with occupancy remaining low and with the inflationary environment we're seeing. So it's still at 1.4x now, great scope for that improving going forward. And whilst that portfolio is still not out of the woods and there will still be some challenges. Overall, what we're hearing from our tenants is very positive. And what we're seeing in the monthly [ EMI ] we are collecting would suggest that looking forward, portfolio is in good shape to continue occupancy growth and maintain that profitability and rent collection.

I spoke at the top of this program about inflation protection. And when we originally created this portfolio in our heads, one of the attractions was that every lease is linked to RPI, well, 96% of them are -- there are 4 that we bought that have already been established that are fixed increases but 96% of our leases are inflation-linked. And this bar chart here shows you the history of inflation, the red line shows you, the typical collar and caps. And most importantly in all of this, in inflationary times, are your tenants able to meet the higher costs of the inflated rents. Fundamental to that, we believe, is that the tenant receives a majority of his income from private fee payers. We do not wish to be dependent on government flakiness, shall I say, in relation to the level of the fees. And we're delighted that our tenants are in that situation where private pays 62% of the total that they've received. If any of you are worried about energy costs, typically, they may have been GBP 30,000, GBP 40,000, GBP 50,000. They may rise to GBP 100,000 per annum. But remember, our homes typically have GBP 4 million-plus of income in each of the homes. The labor costs are the all-important part and the rents are the all-important part. Rents typically are around 20% of the total income and labor are around 50%, 55%, perhaps up to 60% sometimes of the total income. So these are the 2 things that you really have to monitor closely as well as agency cost in relation to achieving stability through inflationary times in addition to fixing the costs of our debt, which as Gordon has explained very well.

Okay. Just one final slide on the portfolio and that's just focusing on the E of ESG. We often talk about social and we don't often tell you too much about the E side. Just to flag, it's a modern portfolio. It's in good shape. We're comfortable with regards to the upcoming MEES legislations and the sort of B by 2030 expectation and the compliance with that coming up in that year. We're already at -- 88% is B and above and we've got nothing less than a C. We've taken some [indiscernible] assessments recently. We've had good ratings from that and some good feedback about what we have to do or what we could choose to do to improve the portfolio's environmental credentials. And that feedback has all been positive and has given us some good ideas on what we can do. So in good shape there, good modern portfolio, the [indiscernible] assessment has been helpful. So we've got, essentially what it boils down to is a minimal CapEx requirement, a good ESG portfolio there.

And finally, in summary, what we are creating here is an increasingly diverse and well-located modern portfolio of scale with an attractive dividend. We are well capitalized with long-term debt costs increasingly fixed. The tenant trading outlook is positive for 2022, though we don't expect every tenant to have a smooth ride through it. One advantage or disadvantage of having a CEO who's been around for 40-plus years, is that we remember that as things ease, often there is a little more difficulty in 1 or 2 cases. And we anticipate that we will have some of that, we have coming towards 100 homes, as you've noted. And I've said many times, we don't expect all 100 of the homes to be perfect at all times. So we do anticipate that there will be 1 or 2 more challenges through the year. But the fabulous thing about real estate, I was thinking about this earlier, if we see a nice home in our area that we would like to move to, because it has a non-suite wet room where we can have a shower rather than sharing our shower with all our children. We probably would quite like to move to it if it's in our area and is attractive. That is the fundamental of what we have in our care homes. These are best-in-class homes in 10-minute drive times. If you're an operator in that home and you see that home become available because we want to re-tenant it perhaps, what typically happens is, we'll have 2 or 3 people saying, "Oh, we'd really love to move to that home. Would you let us become the tenant of it?" So we're in a good place in relation to that. I've spoken about inflation also. There are good inflation-linked lease characteristics and the overall sector dynamics are absolutely in our favor. This is needs-based care. We have a couple of examples within the team that runs Target, of family members and they just run out of options. They had to find a care home for their loved one. That's what we mean by needs-based care.

So now is your opportunity. Thank you for listening. But now is your opportunity to ask some questions. And I'm seeing a number of questions here. So let me read them out. The first one is thanks for the presentation. We appreciate rents are set at sustainable levels. But can you talk about affordability for operators in the context of inflation and rising staff and energy costs. I did that a little bit before, Gordon. Do you want to give a finance director's opinion on all of that?

I think we've touched well and obviously, those follow-up questions and please do submit them. And I think the talk of energy costs are always there in the press and very prominent but are relatively small proportion of 1% to 2%. Yes. The staff costs are the key one there and that's one of the general challenges our operators are managing anyway and have reported some progress on that with availability and the vaccine side of things hasn't really harmed them over the last few months and that is starting to ease. I think the follow-up question there about the ability of operators to pass on higher cost to residents who with respect to private fees and not private fees is probably one that we should touch on a bit. So Ken, if you've spoken about the history of -- private fee increases have generally been tracking after ahead of inflation for around about 20 years now. And we should see that continuing?

Yes. So the interesting -- when we tried to do the IPO of Target Healthcare, way back in 2012, '13. We were in the coattails of what happened to a public company called Southern Cross. And much of the press commented that the cause of that was that rent [indiscernible] to the income. And we actually did an exercise back then, which has actually went back a further 10 years from 2012. So kind of -- so 20 -- that's what I mean by the 20 years of experience. And in fact, the income was higher, higher growth of income than the rental increase. That's why setting the rental at the right level is all important. So there is clear history, especially where there are private fees, of these fees being increased above the rate of inflation.

Yes. And we are seeing -- hearing evidence currently from our tenants they are passing on effectively at the moment. And there's a question there on the...

Yes. Before I go there, let me answer this one as well, Gordon, because this will be interesting for the listeners. As soon as we were allowed back into the homes in January, towards the end of January, our -- you know that we have a number of people who visit the homes and physically go around. And currently, Gordon and I and the exec team are reading probably 8 or 10 of these each week and it's been really encouraging to see a couple of things, more staff availability, not completely resolved but definitely more availability, more people replying to adverts, more people available to interview and to select from and inquiry level has been very robust. So we're in a good place in relation to that. Shall we go on to the question from Green Street? If current levels of inflation over the last 2 or 3 years -- over the next 2 or 3 years, what would be the rent coverage you expect going forward, considering? So we expect rent covers to recover from the 1.4x level. We fully expect rent covers to return to what we have historically been at, which is around 1.6x. And that is the absolute fundamental of the core underwriting task that the investment team do is, what is the long-term sustainable rent based on our long-term view of profitability. Across your portfolio, what is the staff per resident roughly? How long do you expect for occupancy to reach 90% again? We think occupancy will get back to 90%, perhaps by around the end of the year. Let's just be really cautious. We've got another 40 weeks to go -- if it goes up 1/3 of 1% week by week, will probably get back to around about the 90% level.

Yes. And that's what we were seeing pre-Omicron emerging and the occupancy was increasing at that. And we're seeing some signs that it is starting to increase at that rate over the last 2 to 3 weeks, as Omicron wanes a little bit, we hope.

Clearance Capital are asking, please can you go through the current asset management initiatives and retenanting of homes. We have a continual asset management initiatives going on in terms of improving the physical quality of some of the homes. Some of you will remember that 3% or 4% of the beds do not yet have wet rooms. And actually, some of these homes are actively being worked on. And we're in these homes regularly, ensuring these are improved. We don't have much asset management activity in terms of adding bedrooms. The homes are largely the size we think are suitable over the medium term. And as you know, they otherwise always have wet rooms. And then in relation to retenanting of homes, as I've said already, there's always 2 or 3 homes that we expect to require to re-tenant. And if that's 2% or 4% of the 100, that's kind of what it is and we expect that to continue in the medium term.

Yes. We completed 1 retenanting of an underperforming tenant and home during the period and we have 1 which we're just waiting for regulatory approval, which is a group of 4 homes where the assets were performing okay and rent was being paid in full but we just thought that the homes could operate better for the local market with a more focused, smaller operator group. So we're waiting on -- that is -- that has been done. We're just waiting on the regulatory approval for that. And that's the kind of thing we'll keep an eye on as well and may do some more of in the future.

Any impact from the U.K. government social care reform announced last year? A lot of hot air. The money will primarily go to the NHS. No real impact on the ground at this stage. Some discussion we are seeing but no impact on the ground and demand will be recovering anyway. Next question is, do you want to ask...

Yes. So a question on the restructure across the portfolio, could you please outline the proportion of leases that are capped in the portfolio? Also, are all leases reviewed annually? Yes, so I think there's -- we have 1 lease, which is 5-year upwards-only reviews rather than annually, so that, obviously the -- pretty much all the portfolio is annual reviews. The small proportion is fixed. And other than the fixed ones, I think all of our -- the 90% inflation [indiscernible], we see it's half caps and collars in them. Clearly, we're looking at sustainability of income over 30 or 35 years. So we think that capping is important to -- for the sector and for our portfolio. So yes, that's where we are there. And you've seen that it's the typical cap collar and cap are at about 2% to 4% levels, which we outlined in the presentation.

And the last question at the moment is, do you see any challenges to the profitability of tenants that are weighted towards private pay residents if the government introduces legislation that caps the amount private resident has to pay for care over the lifetime? The important thing to understand in all of this is, all of the government social care reform is in relation to the care aspect of the fee. If you think about moving into care home, there is a hotel and accommodation aspect and there is a care aspect. The care aspect may ultimately be more funded by the government if they really do what they're saying, they will. They're thinking about doing the hotel aspect. We see no evidence at all of that being capped. So we think that the advantage of having the best-in-class home where you can choose to enjoy having your bottom wiped in the privacy of your own bedroom rather than having to go to a common bathroom, will always win out. And if we're at all a caring holistic society, all of us would want to be in rooms like that. So we think that will win through very well.

And remembering the type of home, the real estate that we invest in is only 29% of the total beds in the U.K. So if there's a choice there, which we would expect there will be going forward for private fee payers, all things being equal, they are more likely to choose that type of property run by our tenants and held in our portfolio, relative to other types as well. So there should be some pricing favorability for our tenants there.

A question from [ George Gravis ], why haven't cap rates within care homes compressed that materially compared to other property sectors across the past few years, our value is overly conservative? George, where I come from, when we started buying this portfolio, we were buying in the mid- to low [ 7s ]. The thought of buying in the [ 5s ] is pretty horrendous to me. This is a long-term risky sector. You better be well diversified in this sector. And that is the yield opportunity for an excellent niche manager as we suggest we are. So our value is overly conservative. I think the values we're seeing, I would say that they move valuation in accordance to what the market does in terms of deals that have been done. We have -- and here, we are concentrating on yield, George, not on sustainable rent. If a buyer is offering to receive an extra 20% of rent, to us, that's just not wisdom and it is the corollary of yield. So we typically receive lower rents than we would otherwise do but we fundamentally believe that we'll be able to receive them for 35 years inflation adjusted within our collars and caps to provide boring long-term income.

And I would also add, Ken, if the -- the typical operator and particularly the typical operator, who we like in the sector is the generally smaller regional, still sizable businesses but it's not the large corporate balance sheets, which get investment-grade covenants. And so I think that the valuers do reflect that often within the sector in the yields that they apply and obviously, to the cap rates there. So yes, I think this is just something worth noting.

And your next question, George, is regarding activity in the sector, new entrants, sizable transactions, cap rates and so on. So the most sizable transaction and I think in the last 6 months is us acquiring the portfolio. In that case, there wasn't -- we weren't at a disadvantage by offering to receive less rent than others. So I think that's when we achieved a 5.7% cap rate on that. And in relation to who else is active in the market, there are many. There always have been. When we started this way back in 2010, there were 2 or 3 other buyers. One of them dropped out a little, something called the Quercus fund. Then the U.S. REITs were active, Welltower, HCP and Ventas and Omega, as they were called and some of them have changed their names in the intervening time. And then there were some European buyers and then there were some new U.K. buyers and now there's some more U.K. buyers and there are some European buyers. We can't spend too long looking at everybody else. We're just trying to be a really niche, boring, repetitive income fund, buying fabulous real estate, improving the quality of people's lives, helping our seniors to live well in their latter days.

And using all of the knowledge we've gathered to make sure that we're setting the right rent levels at each home that we invest in.

Thank you, everybody. I think we've come to the end of our questions. Thank you. If you've lasted out right to the end, we appreciate your support. We always know that we are custodians of your hard earned money. And we will seek to care for you well as we seek our residents to be cared and loved to the end of their days. Good night. Goodbye.

Thank you.