RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

THIS ANNOUNCEMENT HAS BEEN DETERMINED TO CONTAIN INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.

24 March 2025

Social Housing REIT plc

(the "Company" or "SOHO" or, together with its subsidiaries, the "Group")

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

The Board of Directors of Social Housing REIT plc (LON: SOHO), the real estate investment trust investing in specialised supported housing across the UK, is pleased to announce the Group's audited results for the year ended 31 December 2024.

Chris Phillips, Chair of Social Housing REIT plc, commented:

"We are pleased to present another resilient set of results for the year. The portfolio continues to perform operationally, with high levels of resident occupancy and tenant satisfaction.

Our newly appointed Investment Manager, Atrato, is in post and is already progressing key strategic improvements for SOHO. Its initial focus has been on successfully completing the Westmoreland transfer and resolving the My Space issue, where we have entered into an option agreement which provides us with control over the solution.

This proactive step, led by Atrato, will help improve rent collection and resident occupancy. With the dividend for last year being effectively covered (0.99x), top line growth has the potential to drive earnings and valuation upside going forwards, particularly when coupled with our long term, low cost debt and the cost savings resulting from the switch to market capitalisation management fee under Atrato's appointment.

Looking ahead, we are excited to take SOHO forwards with Atrato, building on our track record of providing much needed homes for vulnerable residents, allowing them to live independent and happy lives whilst delivering long-term, growing income for shareholders."

Financial summary

· Annualised contracted rental income increased to £42.6 million (2023: £41.0 million).

· Dividends paid with final quarter declared totalling 5.46 pence per Ordinary Share, in line with the Company's target for the year.

· Dividend 0.99x covered by EPRA adjusted earnings2 despite the issues with Parasol and My Space.

· Portfolio valuation of £626.4 million (2023: £678.4 million) reflecting recently achieved pricing for comparable transactions in the wider market, together with a softening of valuation assumptions relating to properties within the portfolio leased to My Space.

· EPRA Net Tangible Assets per share of 99.05 pence (2023: 113.76 pence).

· No refinancing risk with £263.5 million of fixed-rate debt with a weighted average coupon of 2.74% and a weighted average maturity of 8.6 years.

· EPRA cost ratio of 29.89% includes the impact of termination fee and before the benefit of the reduced management fee.

· Reduction in costs, attractive debt profile and increasing rental income provide platform for earnings and dividend growth.

Operational highlights

· Total investment portfolio of 494 properties (2023: 493) with 3,424 units (2023: 3,417 units).

· 100% of contracted rental income is either CPI or RPI-linked with annual uplifts.3

· In 2024, the Company's weighted average annual rental uplift was 4.3%.

· 92.6% rent collection with My Space accounting for 100% of arrears. Pass-through rent collection has increased to 72% of contracted rent in repect of the properties previously leased to Parasol and now transferred to Westmoreland.

· 86% resident occupancy, with My Space and former Parasol properties accounting for over 50% of the voids.

Post Balance Sheet Activity

· On 1 January 2025, the appointment of Atrato Partners Limited as the Company's new Investment Manager with a reduction in management fees expected to deliver a £1.9m per annum saving.

· On 10 February 2025, Shareholders approved a change in the Company's Investment Policy to increase the maximum exposure to any one Approved Provider to 35% (from 30%) of the Group's gross asset value, with the maximum aggregate exposure to the top two Approved Providers not to exceed 55% (previously not restricted).

· My Space entered into a company voluntary arrangement on 7 March 2025. The Investment Manager negotiated an option agreement for the Company permitting the assignment of SOHO's 34 properties leased to My Space. The Investment Manager has agreed heads of terms with a nationwide Approved Provider to assign all My Space leases and expects rent collection to re-commence and resident occupancy to increase during 2025.

Notes:

1 Gross LTV is calculated as balance sheet borrowings divided by gross asset value. Net LTV is calculated as balance sheet borrowings less cash and cash equivalents divided by investment property.

2 The Company reports dividend cover on an EPRA adjusted earnings basis which removes the impact of non-cash items and the termination payments to the previous investment manager from IFRS profit. Dividend cover on a contracted run-rate basis for the year ended 31 December 2024 was 0.83x (2023: 0.85x) which, when all rent is being paid, is equivalent to EPRA adjusted earnings dividend cover.

3 13.5% of leases are capped at 4%, with one additional lease capped at 5%.

Live Webcast

A live webcast of the presentation including Q&A will be held today at 8.30 am for investors and analysts and will be available via our website at www.socialhousingreit.com or on  https://brrmedia.news/SOHO_FY_2024. The webcast will be available for playback after the event.

FOR FURTHER INFORMATION ON THE COMPANY, PLEASE CONTACT:

The Company's LEI is 213800BERVBS2HFTBC58.

Further information on the Company can be found on its website at www.socialhousingreit.com. 

NOTES:

The Company primarily invests in social housing assets in the UK, with a particular focus on specialised supported housing (SSH). SSH is accommodation for vulnerable adults requiring support to live independently, including those with learning difficulties, mental health problems and physical disabilities. These properties are specially designed or adapted to meet residents' needs and are managed by Approved Providers who are predominantly regulated by the Regulator of Social Housing. Approved Providers consist of Housing Associations and Local Authorities, or other regulated organisations in receipt of direct payment from local government.

These operational residential properties deliver sustainable, long-term, growing income for shareholders, improved outcomes for residents and savings to the taxpayer.

The Company is listed on the Closed-ended investment funds category of the FCA's Official List and its Ordinary Shares are traded on the LSE's Main Market.

Atrato Partners Limited is the Company's Investment Manager.

CHAIR'S STATEMENT

I am pleased to present my Chair's statement for the newly renamed Social Housing REIT plc, the first with Atrato Partners Limited ("Atrato") as the newly appointed Investment Manager after an extensive selection process.

Throughout 2024, the Company's Portfolio continued to perform operationally, with high levels of resident occupancy and tenant satisfaction. Our homes are key facilitators of independence for those vulnerable adults who live in our Specialised Supported Housing ("SSH") properties. For the management of our homes, we rely exclusively on registered providers of social housing ("Approved Providers") who maintain our properties and collect the rent paid for our residents through housing benefit. Unfortunately, challenges with two of the Approved Providers, Parasol and My Space, have impacted the level of rent received by the Company during the year.

Following its appointment, Atrato is working to resolve these current challenges, completing the stabilisation of properties transferred from Parasol to Westmoreland during the year and delivering a solution to the properties currently leased to My Space in the year ahead.

Atrato are committed to taking a more proactive approach to resolving any future issues with Approved Providers, before they escalate to the extent we have experienced with Parasol and My Space. Alongside this, Atrato is already exploring options to develop long-term solutions to mitigate counterparty risk through structuring solutions which would enhance the security of the Company's claim to rents owed in respect of its properties.

Outside of our portfolio, broader investment market conditions remained challenging, particularly in the investment trust sector. The Company's share price continued to trade at a material discount to Net Asset Value ("NAV"), despite the reduction in NAV resulting from the valuation falls recognised during the year.

Review of Investment Management Arrangements

In May 2024, after careful consideration, the Board decided to conduct an independent review of the investment management arrangements for the Company, inviting proposals from both Triple Point Investment Management LLP ("Triple Point") and alternative investment managers. The Board was impressed by both the number and the quality of the proposals submitted, which ultimately resulted in the Board appointing Atrato in September 2024, succeeding Triple Point from 1 January 2025.

Atrato was selected due to its deep sector knowledge, investment trust experience and strategic vision for SOHO and the broader supported housing sector. I believe the new investment management team at Atrato will bring a fresh perspective and a renewed focus to the Company, leveraging their experience and ambition for the sector to proactively manage the portfolio, restore investor confidence and ultimately help to narrow the discount to NAV.

The Board set a target of 1 January 2025 for the completion of the transfer of investment manager, which included the transfer of the outgoing manager's operational team, data and systems. We would like to thank Atrato, Triple Point and all advisers involved for their input in ensuring a swift and very smooth transition.

Atrato has been a market leader in moving its investment management fees to a market capitalisation basis, ensuring alignment with the interests of shareholders. The new fee basis delivers a significant annual saving to the Company. The Board has also asked the new Investment Manager to conduct a thorough line-by-line review of the Group's cost base to ensure the Group is getting best value for money from all of its service providers and that its costs are appropriate for the size of the Group and in line with the wider sector.

Macroeconomic backdrop

The macroeconomic environment remained challenging throughout the year. Concerns that interest rates would remain 'higher for longer' put sustained pressure on property valuations. Nonetheless, the general decline in inflation (despite a modest uptick in the final quarter) is providing some relief and we are optimistic that UK interest rates will continue to decline further during 2025 which should be positive for property sector valuations.

The Company benefits from a very attractive long-term cost of debt. The Company's debt is fixed rate, with a weighted average term of 8.6 years and at a weighted average fixed rate of 2.74%.

Sector tailwinds

The UK residential sector continues to face a major imbalance between supply and demand. The new Labour government has set out its ambitions to facilitate a much-needed increase in the delivery of new homes, albeit with a target supply level remaining unchanged at 300,000 homes per year. However, supply responses in the built environment are complex and will take time to deliver. The demand for SSH continues to rise, resulting in high levels of occupancy across the SSH sector and the Company's portfolio.

Central and local Government continue to provide financial support for individuals who require housing and care. This strong demand dynamic, combined with inflation-linked rental growth, has helped offset some of the broader valuation declines of the Group's property portfolio over the last 12 months.

Operational performance

Across the portfolio, outside of the Parasol and My Space issues noted above, rent collection remained strong with 100% collection. The homes within the portfolio are well maintained and well utilised by residents in need of our properties. We look forward to both extending our upgrade programme to improve building efficiency and completing the development of our new scheme in Chorley later in the year. The void units are largely attributable to the homes originally leased to Parasol and My Space and these are the immediate focus of the new investment manager.

Atrato is assessing the current portfolio and has identified that there are a small number of units which are not suitable for SSH or do not otherwise meet our required standards. It has been determined that these properties will be disposed of over the coming months. The proposed, larger portfolio sale identified in early 2024 did not progress, due to the inability of the counterparty to secure the necessary funding.

Post-year end, the Company received overwhelming shareholder approval to amend its Investment Policy, permitting a maximum exposure of 35% to any one Approved Provider, where it was previously restricted to 30%. This additional flexibility ensures that we have the fullest range of solutions to move the properties away from My Space. We are confident that we will deliver a successful assignment of the My Space leases during the first half of the year, leading to both improved occupancy and the resumption of rent collection.

2025 Outlook

Following the completion of these initiatives, the portfolio will be well positioned and we are confident about the future of the Company. We expect our improving rent collection and resident occupancy will contribute to narrowing the discount to NAV. We also believe a proactive, transparent approach will be key to restoring investor confidence in the Company and the sector.

Financially, the dividend for the year was effectively covered (0.99x) and the transition of the management fee basis will reduce costs going forwards. Atrato are also undertaking a line-by-line review of costs across the Company to identify any further savings which can be made. From this position, the completion of the Westmoreland transfer and recommencement of rent collection for the properties leased to My Space will drive top line growth in 2025, providing earnings and valuation upside.

Atrato will also look to continue to roll out its EPC Upgrade Programme across the portfolio, building on the results of the pilot project to meet legislative targets and deliver operational efficiencies for residents in our homes. It will also oversee the completion of our first new development for some time, with 12 new homes being delivered into our portfolio later in the year.

As we look forward to these positive changes and the year ahead, I would like to thank our advisers and shareholders for their continued support. I would also like to thank the Triple Point team for their dedication to the Company in the seven years since its IPO and their efforts in building a substantial, diversified portfolio.

We are excited to take SOHO forwards with Atrato, building on our track record of providing much needed homes for vulnerable residents, allowing them to live independent and happy lives whilst delivering long-term, growing income for shareholders

Chris Phillips

Chair

21 March 2025

KEY PERFORMANCE INDICATORS

We set out below our key performance indicators for the Company.

Adjusted earnings is a performance measure used by the Board to assess the Group's financial performance and dividend payments. The metric adjusts EPRA earnings for non-cash items such as the amortisation of finance costs and the movement in lease incentive debtor. Adjusted earnings is considered a better reflection of the measure over which the Board assesses the Group's trading performance and dividend cover.

Adjusted EPS reflects the adjusted earnings defined above attributable to each share.

The Group uses alternative performance measures including the European Public Real Estate ("EPRA") Best Practice Recommendations ("BPR") to supplement its IFRS measures as the Board considers that these measures give users of the financial statements the best understanding of the underlying performance of the Group's property portfolio. The EPRA measures are widely recognised and used by public real estate companies and investors and seek to improve transparency, comparability and relevance of published results in the sector.

The EPRA cost ratio does not exclude the impact of non-operational or exceptional items.

Reconciliations between EPRA measures and the IFRS financial statements can be found in the unaudited performance measures section.

EPRA PERFORMANCE MEASURES

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.

For a full reconciliation of all EPRA performance indicators, please see the Notes to EPRA measures within the supplementary section of the financial statements.

INVESTMENT MANAGER'S REPORT

Introduction

This is Atrato's first report as Investment Manager of the renamed Social Housing REIT plc ("SOHO"). We would firstly like to thank the Board for selecting Atrato and believing in our strategic vision for the Company. We believe that Specialised Supported Housing ("SSH") is a key component of the UK residential property market, delivering vital homes to help vulnerable residents live independently.

Tom Still and Michael Carey are sector specialists and former colleagues who have been leading Atrato's social housing strategy. I joined them in October 2024 and Michael is working alongside me on SOHO, heading up the asset management and operations initiatives, whilst Tom leads on growing Atrato's wider social housing platform. We are strong advocates for the sector and the dual benefits that it can deliver - robust, income-driven financial returns for investors and a genuine, positive social impact for residents. Delivering improved outcomes for shareholders and residents is our key focus for SOHO and comes at an important time, as we seek to reinvigorate the sector and evidence its attractiveness as a private sector asset class.

A consistent challenge in the SSH sector has been the financial weakness of many of the Approved Provider lessees. This contrasts with the Government backing of the underlying cashflows, paid by local authorities for housing vulnerable adults in appropriately adapted properties. We believe that we can reduce the historical issues around Approved Provider failures that have arisen in the SSH sector, through a combination of enhanced monitoring, taking early proactive action and better cashflow structuring. We have already commenced work on these initiatives for SOHO.

As part of the Company's management transition, we onboarded key members of the team from Triple Point. Their detailed understanding of the portfolio builds on our knowledge and long-standing, trusted relationships with Approved Providers and developers. At its core, SSH is simply operational residential real estate. It is essential to have a knowledgeable, hands-on operations team who understand the intricacies of the portfolio, can develop and maintain strong relationships with its lessees and ensure the properties are safe and well maintained.

In common with the broader SSH sector, the SOHO portfolio is, of course, not without its challenges. Our primary focus is on delivering a solution to improve resident occupancy and restore our rent collection for the properties currently leased to My Space Housing Solutions ("My Space"). To facilitate that, near-unanimous shareholder approval was received in February 2025 to increase the Company's tenant counterparty exposure limit from 30% to 35%, broadening the range of potential Approved Providers who might take assignments. At the same time, we progressed negotiations and secured an Option Agreement to facilitate the transfer of those properties. More details are provided below.

The immediacy of these actions is representative of our proactive approach to portfolio and asset management, which will characterise the next phase of SOHO under our tenure. We will combine this with an open and transparent approach to disclosure, ensuring shareholders are fully aware of our actions and intentions for the Company as we work to restore investor confidence in the sector and narrow the discount to NAV.

Demonstrating Sector Value and Restoring Investor Confidence

SSH are homes for vulnerable adults with care and/or support needs, who may have learning difficulties, mental health issues, physical disabilities or a combination of diagnoses. Their homes are, in most cases, specially adapted to ensure their comfort and safety, living independently whilst receiving appropriate assistance. SSH is vital in providing beneficial individual outcomes whilst delivering a significant saving to the public purse. This is a particular benefit in an era of strained public budgets, at both local and national levels.

Unfortunately, over the seven years since SOHO's IPO, well-publicised challenges in other listed housing strategies have overshadowed the clear social and financial benefits that SSH can deliver for residents and shareholders.

These other poor performing strategies did not benefit from the same quality of homes and residents with long-term housing needs. SOHO is operating in a different subsector with a very different investment strategy, philosophy and management team. We view a key component of our role, as a new manager, is to communicate effectively to the market why SOHO is different and why our approach differs from the former investment manager. In line with Atrato's investment management philosophy, we intend to operate with far greater transparency with respect to the property portfolio, its financials and the social impact that is being delivered.

Leveraging our real estate, banking, legal and structuring expertise, as Investment Manager we are also seeking to implement structural changes to SOHO's arrangements with its tenants to enhance the security of its cashflows. Together with a more proactive approach to tenant monitoring and resolution, the Investment Manager believes that it will be possible to materially reduce the potential financial impact of situations like Parasol and My Space.

We believe that over time this will help re-establish confidence in the investment case and the operating model and will ultimately narrow SOHO's discount to NAV. Our medium-term ambition is to move to a position of being able to grow the SOHO portfolio, delivering additional, much-needed homes for vulnerable adults.

Financial Review

We are pleased to present the financial results for the year ended 31 December 2024.

In the year the portfolio generated net rental income of £35.8 million (31 December 2023: £35.2 million). The Group's financial performance is underpinned by increases in annualised rental income from its inflation-linked leases, partially offset by the impact of the variations in the lease terms on the transfer from Parasol to Westmoreland.

The annualised contracted rental income of the Group increased to £42.6 million as at 31 December 2024, compared to £41.0 million at 31 December 2023.

The dividend was 0.99x (2023: 0.85x) covered on an adjusted basis for the year. This measure is based upon adjusted earnings, which removes the impact of non-cash items and the termination payments to the previous investment manager from IFRS profit.

The Adjusted Earnings per Share ("Adjusted EPS") is determined on the same basis, measured on the weighted average number of shares in issue during the year. Adjusted EPS was 5.40 pence per share for the year ended 31 December 2024, compared to 4.61 pence for the year ended 31 December 2023.

The EPRA Net Initial Yield ("NIY") has increased from 5.57% at 31 December 2023 to 6.44% at 31 December 2024 following the rental uplifts which occurred during the year.

The EPRA Earnings per Share ("EPRA EPS") excludes the fair value movement on investment properties and non-recurring termination payments to the previous Investment Manager. It is measured on the weighted average number of shares in issue during the year. EPRA EPS was 5.08 pence for the year ended 31 December 2024, compared to 4.92 pence for the year ended 31 December 2023.

The EPRA Net Tangible Assets ("EPRA NTA") per share at 31 December 2024 was 99.05 pence per share, the same as the IFRS NAV per share, compared to 113.76 pence as at 31 December 2023.

At the year end, the portfolio was valued at £626.4 million on an IFRS basis, compared to £678.4 million at 31 December 2023. There was a like-for-like reduction in portfolio value of £53.0 million. The valuation falls reflect recently achieved pricing for comparable transactions in the wider market, together with a softening of valuation assumptions relating to properties within the portfolio leased to My Space.

Debt Financing

With the volatility around interest rates over the last two years, the Group's debt continues to be a valuable asset. All £263.5 million of the Group's debt is fixed-rate (with a weighted average coupon of 2.74%) with a large proportion of it being long-term (with a weighted average maturity of 8.6 years). The earliest debt maturity will occur in mid-2028, providing strong protection from current elevated interest rates.

A summary of the Group's debt structure is outlined below:

• Short-term debt (

• Medium-term debt (2-5 years to maturity): £41.5 million

• Long-term debt (>5 years to maturity): £222.0 million

In July 2018, the Group secured a £68.5 million long-term, fixed-rate, interest-only facility with MetLife Investment Management secured against a defined portfolio of the Group's properties at an initial loan-to-value of 40%. The facility comprises two tranches of £41.5 million and £27.0 million, with maturities in 2028 and 2033, respectively. Across both tranches the weighted average coupon is 3.039%.

In August 2021, the Group secured a £195.0 million long-term, fixed-rate, interest-only, sustainability- linked facility with Barings and MetLife Investment Management clients secured against a defined portfolio of the Group's properties at an initial loan-to-value of 50%. The facility comprises two tranches of £77.5 million and £117.5 million, with maturities in 2031 and 2036, respectively. Across both tranches the weighted average coupon is 2.634%.

In August 2024, Fitch Ratings re-affirmed the Group's existing long-term Issuer Default Rating of 'A-' and senior secured ratings of 'A' in respect of both debt facilities. Fitch published its first rating on the Company in August 2021 with the same Investment Grade distinctions. Further information on the Group's debt facilities is set out in Note 20 of the financial statements.

EPC Upgrade Programme

The Company is actively working to upgrade its portfolio so that all properties have an Energy Performance Certificate ("EPC") rating of C or above, to meet the current legislative deadline of 2030.

71% of the Company's properties already meet this target. Whilst this is materially better than the Social Housing sector average of 43%, the Company is committed to improving the quality of the portfolio and being a sector leader when it comes to reducing emissions. The pilot project has already seen 11 homes upgraded in collaboration with Approved Providers, delivering compliant EPC ratings and already showing reductions in occupational energy consumption.

Atrato are reviewing the outcomes of the improvements delivered within the pilot, applying learnings and best practice to shape and plan the next phase of upgrades. The EPC Upgrade Programme will improve the environmental credentials of SOHO's homes, meet legislative targets and also maintain value for shareholders.

The process will be managed by SOHO's operations team, working closely with Atrato's Head of ESG, Isabelle Smith.

Asset Management

Parasol to Westmoreland Assignment

In August 2024, the Parasol Homes ("Parasol") leases were assigned to Westmoreland.

As part of the transfer process, all 38 properties (7.9% of the gross asset value as at 31 December 2024) previously leased to Parasol moved to an initial stabilisation period where the Company receives rent on an agreed passthrough basis. This allows Westmoreland to assess the condition of each property and evaluate the individual rent levels to ensure they comply with market testing. We expect this period to last for approximately 12 months from the initial date of transfer and, once a property has been deemed sustainable, it will return to the previous long-term fully repairing and insuring ("FRI") basis.

We are pleased with the progress that Westmoreland has made to date and the level of engagement SOHO's operational team have had in this process. This has enabled an increase in rent collection from the 60% of contracted rent previously received by the Group from Parasol to 72% on a pass-through basis from the date of transfer to the end of February 2025 by Westmoreland. This is in line with expectations and the Group forecasts a further increase in rent collection to between 75% to 85% by the end of August 2025.

My Space Housing Solutions

The principal portfolio challenge facing the Company relates to the My Space Housing Solutions ("My Space") portfolio. My Space has not paid the Company any rent since June 2024, as it continues to face significant financial difficulties, despite the efforts of a new My Space management team. During the investment management transition, Atrato has been in regular dialogue with the new senior team at My Space. While their commitment and determination to resolve the challenges they face is commendable, the Company feels that the assignment of SOHO properties leased to My Space to one or more other Approved Providers is in the best interests of shareholders.

On 31 January 2025, My Space and its appointed insolvency specialist, Begbies Traynor, issued a proposal for a company voluntary arrangement ("CVA") to remedy structural challenges in their business and avoid an administration or liquidation process. The proposal was passed by a creditor vote on 7 March 2025. Prior to the vote, the Investment Manager negotiated an option agreement for the Company, which permits the assignment of SOHO's properties within 12-months of the end of the CVA challenge period.

The Company has 34 properties leased to My Space (6.9% of the portfolio), of which 22 are used for Supported Housing, which commands a lower level of care or support. In My Space's case, that care is provided directly by My Space as opposed to a third-party Care Provider (which would be the case for SSH). As a result, when seeking a wholesale solution for the My Space portfolio, Atrato has sought an alternative lessee (or lessees) with (a) the expertise to provide both housing and support, (b) operate across a broad geographical area (including the Midlands, North West and North East of England) and (c) a track record in honouring the financial commitments.

The Investment Manager has agreed heads of terms with a nationwide Approved Provider about transferring the My Space leases, who have both the capacity and proven ability to operate the My Space properties. The Company is now working with  them, My Space and relevant regulatory bodies to facilitate the transfer over the coming months.

We expect rent collection to re-commence and resident occupancy to increase during 2025, which will have a positive valuation impact on this part of the portfolio. Given that My Space has not paid rent since June 2024, there is material upside for the Company in terms of rent collection and, subsequently, dividend cover.

The Investment Manager is working with its advisers to monitor counterparty exposures within the wider SOHO portfolio , whilst also assessing potential structural enhancements to cashflows to help mitigate counterparty exposures. We are also assessing options to reduce exposures over time (potentially through asset sales or lessee buybacks), though only if the outcome is beneficial for both residents and shareholders.

Proactive Asset Management

Our approach to asset management is to be rigorous, responsive and proactive, leveraging operational data and a deep understanding of our properties and lessees. By adopting this approach, we will seek to address tenant issues such as those experienced with Parasol and My Space in a more expeditious manner than has been achieved historically.

As part of our appointment, we are undertaking a full review of the portfolio to identify operational issues that may reasonably be expected before they result in any loss of rent or reduction in quality of service. Using a detailed, diligent approach with frequent lessee engagement and property inspections, Atrato will proactively work with lessees to minimise the occurrence of operational risks and, should they arise, remedy any issues swiftly. If required, as Investment Manager we will not hesitate to assign leases to more appropriate Approved Providers or find alternative solutions for properties.

Lessee Update

It is important to note that whilst the SSH sector has often historically been described as one which offers government-backed income, the reality of the sector and its lease counterparts is more nuanced. Robust contractual arrangements in the form of long-term fully repairing and insuring ("FRI") leases are in place. However, although the Company's lessees are highly specialist organisations which deliver social good to society's most vulnerable people, they are not institutional grade covenants.

As noted earlier, it is key to understand that SSH comprises operational residential properties and relies on two key elements:

• The property fundamentals of location, structural quality and appropriate functionality with an appropriate rent basis; and

• The operational efficacy of the lessees.

The Group's lessees are instrumental in delivering day-to-day operational performance. The properties are typically specialised or adapted to house people often with a variety of complex needs. The lessees' staff are trained individuals who are passionate about improving people's lives. The properties require both intensive housing management and to be kept to a high standard, requiring specific levels of adaption that is suitable for residents. These requirements are far beyond what one would expect to see in the Private Rental Sector which makes the lessees' expertise vital.

* Following the assignment of leases away from Parasol, Westmoreland have moved to a pass-through lease basis during the stabilisation phase. Up to the year end, this has reflected improved rent collection of 72% against the pre-assignment contracted rent level.

Property Portfolio

As at 31 December 2024, the portfolio comprised 494 properties offering homes for 3,424 individuals which are geographically diversified across the UK. The table below shows the portfolio split by region.

Valuation

Market pricing certainty has, for some time, been hampered by a limited volume of transactional activity. Atrato has been liaising with the Company's third-party valuer, Jones Lang LaSalle, to identify a greater number of completed and potential transactions over this period, with which to support the portfolio's latest valuation. There has been a softening of the portfolio NIY to 6.22% at year-end (reflecting an EPRA NIY of 6.44%), which we believe is more reflective of current market sentiment.

The portfolio value as at 31 December 2024 was £626.4 million compared to £678.4 million at 31 December 2023, representing a decline of 7.7% during the year.

Rental Income

In total, the Company has 391 leases with a total annualised contracted rental income of £42.6 million as at 31 December 2024. Over the past 12 months, the Company has collected 92.6% of the contracted rental income with no arrears (noting that prior to the assignment of the Parasol properties to Westmoreland, a creditors agreement saw rents on those leases reduced to 60% of initial contracted rent).

Of the £2.9 million contracted rent due, but uncollected, My Space accounts for 100% of this. As noted above, recommencing the collection of rent across these homes is a key focus for Atrato and we are progressing a solution to restore rent collection and improve occupancy in the homes concerned.

WAULT

As at 31 December 2024, the portfolio had a Weighted Average Unexpired Lease Term ("WAULT") of 23.4 years (2023: 24.3 years). This WAULT includes the initial lease term, as well as any reversionary leases and put/call options available to the Group at expiry of the initial term.

Successful SSH schemes require two key components - strong property fundamentals and a counterparty with operational efficacy. When these are in place, residents are referred into properties, generating inflation-linked rents paid by local authorities. As the sector has evolved, this has brought into question the value of longer-term lease arrangements, given that Approved Providers are typically nascent, thinly capitalised counterparties.

The SSH sector operating model is evolving in this regard. Whilst the SOHO portfolio benefits from many long-term FRI lease arrangements of 20 years and above, increasingly new schemes have shorter-term arrangements of 5 to 10 years which is usually coterminous with the Service Level Agreement ("SLA").

Given the strong operational performance of the Group's portfolio and the specialist nature of its Approved Providers, the Investment Manager does not believe additional lease length beyond the SLA term is accretive to value and as part of its appointment, will work with the Group's valuers to determine this position.

Indexation

100% of the Group's contracted income is generated under leases which are indexed against either CPI (91.9%) or RPI (8.1%). In 2024, the Company's weighted average annual rental uplift was 4.3%.

The majority of annual inflation uplifts are uncapped contractually. However, we have sought to mitigate the risk to our tenants' financial viability should Government policy change through the adoption of a risk-sharing clause. The clause enables the Boards of the Approved Providers we work with to demonstrate an improved risk management strategy to help address a historical concern of the Regulator of Social Housing.

67% of the Group's leases now include the Company's risk-sharing clause, which was rolled out to re-balance the apportionment of risk between landlords and tenants in the context of a long lease model. Negotiations are ongoing with respect to the remainder of the Group's leases.

As part of this clause, annual rent increases are set at the lower of the relevant inflation index and prevailing Government policy in relation to social housing rent increases, as it applies to SSH. Given that the Government has recently stated that it expects social housing rents to be able to increase annually by CPI +1% for the next ten years, these inflation linkages provide the Group and its investors with the comfort that the rental income will be aligned with inflation.

The clause also aligns annual rental uplifts to April (which is consistent with rent setting across the broader Social Housing sector) and enables our Approved Provider lessees to accurately calculate housing benefit submissions ahead of the annual uplift.

For April 2025 rent reviews, the September 2024 reference CPI figure used as the basis to determine the uplift is 1.7%, whilst the RPI basis is 2.7%.

Outlook

Throughout the onboarding process as SOHO's new investment manager, Atrato has been evaluating the portfolio, strategy and team. We remain convinced that the outlook for SOHO is positive. We have three key, but manageable, challenges in the short to medium-term:

• Drive the Parasol to Westmoreland transfer to a successful conclusion and commence a similar process for the My Space portfolio, improving occupancy and restoring rent collection;

• Proactively manage the whole portfolio, working with current and future Approved Providers to maintain operational performance and deliver positive resident outcomes; and

• Improve transparency for shareholders and enhance both shareholder and market engagement, helping to restore investor confidence in the SSH model by evidencing its attractive financial returns and genuine social impact.

We have already commenced these activities, working with our new team and specialist third-party advisers to deliver on each. By doing so, we will improve the operational performance of the business, begin restoring investor confidence and contribute to narrowing the discount to NAV - all whilst delivering much needed homes for vulnerable people.

We look forward to the challenge and the year ahead.

Adrian D'Enrico

Fund Manager

21 March 2025

PORTFOLIO BY LOCATION

* calculated excluding acquisition costs

SUSTAINABILITY REPORT

Message from the Sustainability & Impact Committee Chair

Dear Shareholder,

I am pleased to present Social Housing REIT plc's Sustainability Report and Task Force on Climate-related Financial Disclosures ("TCFD") aligned climate-related disclosures for FY24.

In this report we provide an overview of our sustainability and climate-related performance and progress over the last year, as well as setting out our priorities moving forward. 

Providing better social outcomes for vulnerable people remains at the heart of everything SOHO does. Our focus on sustainability continues to be grounded in our commitment to responsible investment and good stewardship, with the aim of delivering long-term value for our stakeholders. This year, we have continued to deliver on our impact measurement and management ("IMM") framework and the results of this have again been independently assessed by social impact advisory firm, The Good Economy. Full details of our impact goals and real-world outcomes can be found in our annual Impact Report on our website.

The appointment of Atrato Partners Limited ("Atrato") as the new Investment Manager for SOHO provides us with an opportunity to take stock of sustainability performance to date and assess how our approach to sustainability could be enhanced going forwards. Atrato have already identified a number of sustainability priorities for the next year, including conducting a materiality assessment to underpin a refreshed sustainability strategy, expanding on our collection and monitoring of Environmental, Social and Governance ("ESG") data and reviewing our targets to better enable tracking of, and transparent reporting on, our sustainability performance.

In tandem with these strategic review priorities, working with Atrato we are committed to expanding our focus on the environmental performance of our portfolio in addition to our social impact priorities, with particular attention to energy efficiency measures, emission reduction opportunities and addressing climate-related risks.

Immediate enhancements that have already been made, as part of the onboarding of SOHO by Atrato, include the enhanced Greenhouse Gas ("GHG") disclosures we have made in this Sustainability Report, an expansion of our Scope 3 reporting to cover for the first time all relevant Scope 3 emissions categories and making our first full disclosures against the EPRA Sustainability Best Practices Recommendations ("sBPR") framework.

The progress we have achieved to date, and shared within this report, highlights how investing responsibly for long-term value creation remains core to our business model. Looking forward to the year ahead, we are excited to refresh and expand on our sustainability approach to build on the material positive social and environmental impact we have delivered to date.

Professor Ian Reeves CBE

Chair of the Sustainability & Impact Committee

21 March 2025

SOHO and Sustainability

The Company believes that by embedding ESG factors within investment and asset management processes, it can not only deliver broader positive outcomes for residents, society and the environment but better manage financial risks and returns over the long-term.

The Company's approach to sustainability is underpinned by the Board's commitment to good stewardship and creating long-term shareholder value. To support the integration of ESG priorities into the execution of the investment strategy, the Board established a dedicated 'Sustainability & Impact Committee' in May 2023.

Both the Company's Board and its new Investment Manager recognise the importance of transparent, decision-useful sustainability reporting to improve accountability to stakeholders. As a result, the Company has committed to publishing an annual Sustainability Report and TCFD disclosures.

Our Impact Measurement and Management Framework

The Company's impact goal is to increase the provision of Specialised Supported Housing ("SSH") that delivers positive outcomes for vulnerable adults with care and support needs.

Under this overarching impact goal, the Company has established the following set of impact objectives and target outcomes.

Impact objectives - the primary areas under the Company's direct control or influence.

1) Deliver homes which meet social need

2) Fund high-quality sustainable developments

3) Provide quality services and partnerships

4) Increase supply

Target outcomes - the primary outcomes for people and planet; these depend on many factors, one of which may be the Company's activities.

1) Improve wellbeing

2) Deliver value for money

Further information about the Company's impact objectives and real-world outcomes can be found in our annual Impact Report on the Company's website (www.socialhousingreit.com).

FY25 Priorities

The Company's Investment Manager, Atrato, is responsible for the day-to-day delivery of the sustainability strategy approved by the Board and associated stakeholder engagement on behalf of the Company.

Atrato has initiated a review of the Company's sustainability strategy to assess how the Company's approach to sustainability could be enhanced going forward. As a result, a number of key sustainability priorities for the next reporting period have been identified, including:

1) Conducting a materiality assessment and UN Sustainable Development Goals ("UN SDG") alignment review to underpin a refreshed sustainability strategy;

2) Evaluating options to improve collection and monitoring of ESG data; and

3) Reviewing and refreshing the Company's ESG targets.

In tandem with these strategic review priorities, the Company is committed to expanding its focus on the environmental performance of its portfolio in addition to its social impact priorities. This includes enhancing sustainability activities related to energy efficiency measures, emission reduction opportunities and addressing climate-related risks.

Responsible Investment and ESG Integration

The Company's new Investment Manager, Atrato, has a Responsible Investment Policy developed in line with the Principles of Responsible Investment ("PRI"). This Policy, which has been endorsed by the Board, outlines how ESG factors are incorporated into investment policies, practices and processes.

The responsible investment process aims to avoid, mitigate and manage potential ESG-related asset risks and optimise the ESG potential of investments at all stages of the investment cycle. These aims are achieved through both ESG incorporation and stewardship activities.

FY24 Sustainability Performance

The Company has used the metrics below to monitor and track sustainability performance during the reporting year. The Company is currently reviewing its sustainability metrics and targets - see FY25 Priorities section above for more details

Net Zero Update

The Company is committed to measuring and reducing its carbon emissions across its portfolio. Safe, comfortable and efficient homes provide better outcomes for the environment and for residents.

In January 2024, the Board adopted this near-term science aligned net zero pathway for the Company: reduce social housing portfolio emissions by 75% per m2 by 2035 from a baseline year of 2021.

The 2021 baseline for this target utilised 100% estimated data sources and included only Scope 3: Category 13 emissions (comprising electricity and natural gas only). The Company has engaged the services of a specialist data provider to extract actual metered emissions data from its properties and has, for the first time, calculated a complete GHG inventory covering all relevant Scope 3 emissions categories (see GHG Inventory Table below). In addition, the Company's near-term target was developed before the Science Based Target Initiatives ("SBTi") published its criteria and guidance for the buildings sector in August 2024.

With the new Investment Manager appointment, the Company has initiated a review of its near-term emissions reduction target. Through this review, the Company is evaluating its baseline emissions, given recent enhancements to its emissions data and calculation process, and is assessing options to refresh the target. This will ensure alignment with best practice target setting methodology and facilitate setting ambitious yet achievable decarbonisation targets for the Company.

The Company will provide an update on this target setting review within its interim results reporting.

Energy Efficiency

The UK Government has confirmed its ambition to have all rented properties achieving a minimum EPC rating of 'C' by 2030, as part of broad efforts to reduce carbon emissions and improve the energy efficiency of housing across the country.

The current SOHO portfolio of 494 properties has an average EPC of C with the breakdown shown below in Table 6. To place this in context, the average residential EPC rating for the UK is currently D.

For every property that the Company acquires, the Investment Manager targets a minimum EPC rating of C for renovated properties and B for new-build properties, notwithstanding the legal requirement for any privately rented properties to have a minimum rating of E.

During 2023 and 2024, the Company implemented a pilot programme focused on enhancing the energy efficiency of 11 properties (eight directly and twenty two in conjunction with Approved Providers securing grant) with the intention of scoping the cost, technologies and preferred suppliers to implement a portfolio-wide EPC Upgrade Programme (in the first instance focusing on properties which do not currently align with the 2030 minimum EPC target). The primary objectives include aligning with EPC regulation changes, reducing energy costs for tenants and minimising portfolio-wide emissions. The retrofit pilot was successfully completed in the year, implementing a range of upgrades to the 11 properties, as well as improving the building fabric.

The pilot phase was strategically designed to gain a deeper understanding of the practicalities associated with retrofitting Specialised Supported Housing and the Group's ability to access grant funding. The execution of a wider EPC Upgrade Programme will require careful and considerate planning, especially with regard to the impact on residents whilst works are carried out and the ongoing ease of use of all technology that is implemented. The Company's Investment Manager, Atrato, expects to announce the details and costings of the EPC Upgrade Programme during the first half of 2025, setting out a phased approach to complete upgrade works in line with the required EPC standards and timetable. 

Modern Slavery Statement

The Company is within the scope of the Modern Slavery Act 2015 and is therefore obliged to make a slavery and human trafficking statement. The Company's Modern Slavery Act statement can be found on the Company's website (www.socialhousingreit.com).

EPRA sBPR Report

This year, the Company has made full sustainability disclosures against the European Public Real Estate Association ("EPRA") Sustainability Best Practices Recommendations ("sBPR") framework for the first time. Please see the following appendix to the Sustainability Report for more details: Appendix: EPRA sBPR Index. 

Taskforce On Climate-Related Financial Disclosures ("TCFD") REPORT

The TCFD recommendations provide a framework for organisations to more effectively take account of and disclose climate-related risks and opportunities. The TCFD Report for the Company, included below, contains voluntary climate-related financial disclosures for the reporting period 1 January 2024 - 31 December 2024 in relation to governance, strategy, risk management and metrics and targets[6]. It addresses all four core elements and 11 TCFD Recommended Disclosures as detailed in "Recommendations of the Task Force on Climate-Related Financial Disclosures"[7].

Governance

· Describe the board's oversight of climate-related risks and opportunities.

The Board is responsible for setting the Company's sustainability strategy and overseeing the Company's approach to climate-related risks and opportunities affecting its business.

The Board established its 'Sustainability & Impact Committee' in May 2023, ensuring that sustainability issues, including climate change, are discussed in sufficient detail and given appropriate focus. The Sustainability & Impact Committee, Chaired by Professor Ian Reeves CBE, meets not less than once a year (and more frequently as required) and has responsibility for overseeing the delivery of the Company's Sustainability Strategy, including identification and management of climate-related risks. The Board is primarily informed of climate-related risks and opportunities by the Investment Manager through the meetings of the Sustainability & Impact Committee.

Climate-related risks are assessed as part of the standard due diligence process when acquiring or funding the development of new properties. Identified climate risks are presented in the materials provided to the Investment Committee and, where relevant, will be discussed during committee meetings to assess the potential impact of these risks on the property or development and to determine (a) the time frame over which they might materialise and (b) the potential impacts they may have both operationally and in terms of asset value.

The Board is invested in enhancing the Company's understanding of climate risks and opportunities and, as part of this, has approved budget allocation for ongoing climate-related activities for the next reporting year. This facilitates forward planning and preparation of ESG matters targeted for the next reporting year.

· Describe management's role in assessing and managing climate-related risks and opportunities.

The Investment Manager is responsible for the day-to-day delivery of the sustainability strategy as approved on behalf of the Company by the Board, including the assessment, management and reporting of climate-related risks and opportunities.

At the Investment Manager level, assessment and management of climate-related risks and opportunities is shared across the Social Housing Team and the wider business of the Investment Manager.

The Company's new Investment Manager, Atrato, has a dedicated Managing Director, ESG, who is responsible for the operational delivery of climate-related risks and opportunities measures within the Investment Manager's operations and leads the provision of climate risk advice to the Company. 

Strategy

• Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term.

Investing in real assets exposes the Company to both physical and transition risks associated with climate change. The Company's properties may require additional work to bolster their resiliency against increasingly extreme weather events or require efficiency upgrades to meet ever-stricter efficiency standards, as the Government seeks to mitigate emissions from the building sector, one of the largest sources of emissions in the UK.

In FY23, the Company engaged an external provider Climate X, to analyse and quantify the physical risk to its assets resulting from climate change. Climate X maintains a realistic digital twin of the earth, utilising data from remote sensing. This digital twin is combined with the latest, high-resolution climate modelling to determine the future risks from a wide range of hazards, under a range of climate scenarios.

Hazards assessed by the Climate X model:

Climate X simulates the effect of future chronic and acute weather events at the asset level, to model the vulnerability of the asset itself, which is then used to calculate the asset-specific risk from each individual hazard, and estimate future value-at-risk, expressed as expected losses per annum, as a percentage of the total building reinstatement cost for each property.

The main risks to the fund, which were first disclosed in the Company's FY23 TCFD Report, are shown below.

The Company considered undertaking another assessment of the portfolio through Climate X in FY24 but determined this was unnecessary given there have been no material changes to the portfolio during the reporting period.

• Describe the impact of climate-related risks and opportunities on the organisation's businesses, strategy and financial planning.

In the Company's FY23 TCFD Report, the impact of climate-related risks and opportunities on the Company's businesses, strategy and financial planning was disclosed. See below risk and opportunity impact summary tables for details.

Over the next reporting period the Company plans to review its risk mitigation opportunities with the aim to improve the Company's resiliency to these identified risks and opportunities moving forward.

Physical Risks

Transition Risks

Opportunities

• Describe the resilience of the organisation's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.

In FY23, the Company performed partial, qualitative scenario analysis to understand the impact of each of the most significant risks to its portfolio under different climate outcomes.

The most prominent risks to the Company were assessed, and the overall resiliency of the strategy was assessed under the following two scenarios:

· Net Zero: in which warming is limited to 1.5°C by 2050, limiting physical risks but creating high transitional risk due to the introduction of strict climate policies and rapid technology change; and

· Hot House World: in which warming reaches 4°C, as no new climate policies are introduced and technological progress is slow, limiting transitional risks but presenting significant physical risks.

Quantitative scenario analysis was conducted for the portfolio utilising climate modelling from Climate X (described in the Risk Management section).

The findings from the FY23 Climate X assessment showed the Company's assets have a low vulnerability to physical climate risks and the portfolio is more efficient than average.

As noted above, the Company did not repeat the Climate X assessment given there were no material changes to the portfolio during the reporting period. Over the next reporting period the Company plans to conduct further analysis over the outputs from this assessment and will assess the benefit of refreshing this assessment in FY25.

Risk Management

· Describe the organisation's processes for identifying and assessing climate-related risks.

· Describe the organisation's processes for managing climate-related risks.

· Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management

The Company's approach to risk assessment is as set out in the Our Principal Risks and Uncertainties Section.

The new Investment Manager, Atrato, has overall responsibility for the Company's risk management and internal controls, with the Audit and Risk Committee reviewing the effectiveness of the Board's risk management processes on its behalf. The Sustainability & Impact Committee is responsible under the delegated authority of the Board for the identification and monitoring of climate-related risks which are incorporated into the risk management process.

The Sustainability & Impact Committee considers both physical and transition climate-related risks, including existing and emerging regulatory requirements related to climate change.

The method used to evaluate the importance of each climate risk that the Company is exposed to is aligned to the Company's general risk management structure. It involves a matrix with a 5-point rating system for both the likelihood and consequence of each risk.

• Likelihood: low, moderate, high; and

• Impact: low, moderate, high.

The alignment to the Company's general risk management structure allows for the climate-related risks to be incorporated into broader risk management and mitigation procedures. These risks are added to the risk register of the strategy, which is reviewed regularly with the Board of the Company. This meeting brings together the SOHO team, sustainability and risk teams, with the resulting risk register being approved by the Board and evaluated and approved by the Risk Committee. The period over which each risk first becomes material is defined as:

• Short-term: 0-2 years;

• Medium-term: 2-5 years; and

• Long-term: over 5 years

These time scales are aligned to the Company's overall risk management framework, considering the nature of the Company's assets and liabilities.

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 process.

The Company recognises the need for continuous improvement of data collection and monitoring to accurately assess climate risks and opportunities in line with its strategy and risk management process.

The Company measures and monitors the following key climate-related metrics:

1) EPC ratings: see above for breakdown and YoY comparison;

2) Energy consumption: see details of energy consumption data provided below; and

3) GHG Emissions: see GHG Inventory below

EPC Ratings

The EPC ratings of each property are monitored on an ongoing basis. Currently, 71.2% of the portfolio is rated at C or above. The chart below shows the EPC breakdown of properties as at 31 December 2024.

Energy Consumption Data

The Company has engaged the data provider, Perse, to enable access to actual energy consumption through direct APIs to every property's meter. This data is utilised in the preparation of the Company's GHG Inventory.

The energy consumption data from Perse not only improves the completeness and accuracy of the Company's GHG Inventory but will also support improved emissions reductions modelling to improve decision making in relation to available decarbonisation levers.

• Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.

GHG Inventory

The Company engaged external consultants, Anthesis, to prepare its GHG Inventory for FY24 in line with the GHG Protocol methodology. The Company does not have any Scope 1 and 2 emissions but has reported all relevant categories of Scope 3 emissions.[8]

The Company's GHG Inventory is disclosed below in Table A (see the following appendix to the Sustainability Report for further details of the GHG Inventory methodology: Appendix: GHG Inventory Methodology).

Table A - GHG Inventory[9]

• Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.

Climate-related Targets

In January 2024, the Board adopted the following near-term science aligned net zero pathway for the Company: reduce social housing portfolio emissions by 75% per m2 by 2035 from a baseline year of 2021. However, this target is currently under review. See Net Zero Update for more details.

The Company and its Investment Manager intend to asset manage the portfolio to ensure all properties have an EPC rating of C or above by 2030 to ensure compliance with current legislative targets and that the homes it provides for residents are environmentally and economically efficient.

APPENDIX: GHG INVENTORY METHODOLOGY

Emissions were calculated using the Anthesis 'Route Zero' software tool, in alignment with the GHG Protocol.

For lessees, 7% of emissions were estimated by Anthesis, 22% were based on estimated consumption of SOHO and 70% of emissions were calculated based on actual data provided. 75% of electricity emissions and 76% of natural gas emissions were calculated based on actual data.

Purchased Goods & Services

The Environmentally Extended Input Output ("EEIO") method, which estimates emissions from expenditure, was used to calculate the emissions from this category. The SOHO team provided spend for the reporting year split by supplier. The suppliers were mapped against the DEFRA Input/Output ("IO") categories, which are based on SIC codes and have an associated emission factor. The DEFRA IO emission factors were multiplied by the spend to calculate the emissions. Exclusions include service charge costs and costs that are recharged to tenant in full.

Business travel

This includes the upstream well-to-tank emissions of business travel activities.

Downstream leased assets

Where actual fuel and electricity consumption data was provided, this was used. For any gap-filling and estimations, methodology notes are included below:

Electricity estimates:

Electricity consumption is estimated using actual data from sites with recorded usage. First, electricity consumption and floor area data are collected from sites with available records. This helps calculate electricity intensity, which serves as a benchmark. The benchmark intensity is calculated by dividing electricity consumption by floor area (kWh/m²). This value represents typical electricity usage per square meter. For sites without actual data, the benchmark intensity is multiplied by their floor area to estimate electricity consumption.

Natural Gas estimates:

Natural gas consumption is estimated using actual data from sites with recorded usage. Natural gas consumption and floor area data are collected from sites with available records. This helps calculate electricity intensity, which serves as a benchmark. The benchmark intensity is calculated by dividing natural gas consumption by floor area (kWh/m²). This value represents typical electricity usage per square meter. For sites without actual data, the benchmark intensity is multiplied by their floor area to estimate natural gas consumption.

Waste estimates:

Waste consumption is estimated using UK Government data on household waste, utilising the number of households and an average floor area of dwellings. This data was used to create a benchmark, estimating average tonnes of waste per m2. This benchmark was multiplied by property floor area, estimating total waste per lessee.

Water estimates:

Water consumption is estimated using GRESB benchmarks. The benchmarks consider cubic meters of water per meter squared of floor area (m3/m²). The benchmarks were multiplied by property floor area, to estimate total water usage per lessee.

APPENDIX: EPRA SBPR INDEX

Introduction

This report contains Social Housing REIT plc's (LSE:SOHO) EPRA Sustainability Performance Measures and Overarching Recommendations ("sBPR") disclosures for the reporting period 1 January 2024 to 31 December 2024.

About us

SOHO seeks to address the ongoing UK social housing sector demand-supply imbalance, providing sustainable high-quality homes which have been adapted for vulnerable adults with long-term care and support needs including mental health issues, learning disabilities, or physical and sensory impairments or a combination of diagnoses.

Our portfolio

SOHO has built a unique portfolio of Supported Housing properties, diversified by geography and leased to a variety of Approved Providers across the UK. The below map shows SOHO's property exposure across the UK (as at 31 December 2024).

Overarching recommendations

The table below highlights how SOHO has made a focused effort to implement the overarching sBPR recommendations into its reporting.

Environmental performance

The environmental data on which SOHO's emissions are calculated comes from electricity and natural gas. There is no consumption of district heating and cooling at SOHO sites. Waste and water data were estimated based on GRESB 2020 Benchmarks[13] and Defra waste statistics[14], and are not included in the assessment of GHG emissions.

Below is a breakdown of environmental data and a more in-depth analysis by topic, including Energy, GHG emissions, Waste and Water and Sustainably certified assets.

Any reference to 'N/A' for Scope 1 and 2 emissions is due to the nature of SOHO's organisation. SOHO does not have any offices and therefore does not have any direct emissions. Like-for-like comparisons have also been excluded within this report. For reporting year 1 January 2024 to 31 December 2024, SOHO has calculated a complete GHG inventory, where this has not been completed previously. Changes in methodology also means that like-for-like comparisons will not be an accurate representation of SOHO's emissions.

*FERA emissions are included in Scope 3 Category 13: Downstream Leased Assets. Emissions are reported on a location-basis.

Energy and GHG emissions

Between 1 January and 31 December 2024, SOHO calculated Scope 3 GHG emissions.

Scope 3 emissions reported include:

1. Category 1: Purchased Goods and Services;

2. Category 6: Business Travel; and

3. Category 13: Downstream Leased Assets.

This is the first complete GHG Inventory SOHO has developed, where previously only emissions relating to category 13: Downstream Leased Assets have been captured.

The tables below provide energy consumption and GHG emissions for SOHO's assets for the reporting year 1 January to 31 December 2024. Emissions and associated consumption data reported below include both a location-based and market-based approach.

In relation to floor area coverage, 100% of floor area of properties is tenant managed and included in Scope 3 downstream leased assets.

Water and waste

The table below provides water and waste consumption values for SOHO's assets for the reporting year 1 January 2024 to 31 December 2024.

Water and waste were estimated this year using GRESB 2020 Benchmarks2 and Defra waste statistics3.

Sustainably certified assets

The table below provides a breakdown of the EPC ratings for SOHO's assets for the reporting year: 1 January 2024 - 31 December 2024.

Social performance

Below is an overview of SOHO's social performance data and a more in-depth analysis by topic, including Diversity, Employees[15], Health & Safety and Community Engagement.

Governance performance

Below is an overview of SOHO's governance performance data.

STAKEHOLDER ENGAGEMENT

This section describes how the Board engages with its key stakeholders, how it considers their interests and the outcome of the engagement when making its decisions, the likely consequences of any decision in the long-term, and further ensures that it maintains a reputation for high standards of business conduct. The Group is committed to continual stakeholder engagement and implements a cycle of constant engagement at all stages of the Group's investment lifecycle.

Section 172(1) Statement

Principal Decisions

Principal decisions have been defined as those that have a material impact on the Group and its key stakeholders. In taking these decisions, the Directors considered their duties under section 172 of the Act.

Appointment of New Investment Manager

During the year, the Board made the decision to undertake an independent review of the investment management arrangements. This was conducted by Akur Limited and included the benchmarking of market precedents and engagement with other market participants. After careful consideration, the Board appointed Atrato Partners Limited as the Company's new Investment Manager with effect from 1 January 2025. Further detail on this can be found in the Chair's Statement. The Board believes that the appointment of Atrato Partners Limited will result in closer alignment with shareholders' interests and material cost savings for the Company in the long term, underpinned by a management fee calculated on the basis of market capitalisation and also a renewed focus, with a strategy to improve the quality and security of rental income via proactive asset management.

Lease Transfer

The Board decided to transfer all 38 properties previously leased to Parasol Homes Limited (representing 8.1% of the Group's Gross Asset Value and 9.70% of the rent roll as at 31 December 2023) to Westmoreland Housing Association. The transfer completed on the 19 August 2024. 

Dividend target to remain flat

In May 2024, the Board decided to keep the target dividend flat for the year ended 31 December 2024.

The Board believed that the decision was in the best interests of the Company's shareholders, in order to preserve dividend cover for the current financial year, whilst the Investment Manager concluded the transfer of the 38 properties from Parasol to Westmoreland and were intending to proceed with the proposed sale of a portfolio of properties, which ultimately did not take place. Further detail can be found in the Investment Manager's Report.

Appointment of New Non-Executive Director

During the year, the Company undertook a formal recruitment process led by the Nomination Committee, with the support of an independent search consultancy, for the appointment of a new Board member. This process actively encouraged a diverse pool of candidates who could contribute specific skills and experience identified by the Board. The Board were pleased to announce the appointment of Bryan Sherriff as an Independent Non-Executive Director with effect from 1 January 2025.

It was also announced that, as part of the Succession Plan for the Board, Ian Reeves will step down from his role as an Independent Non-Executive Director at the 2025 Annual General Meeting following an orderly handover.

RISK MANAGEMENT

The Board recognises that effective risk management is key to the Group's success and that a proactive approach is critical to ensuring the sustainable growth and resilience of the Group.

By way of background, the Group focuses on a single sub-sector of the UK real estate market with the aim of delivering an attractive, growing and secure income for shareholders. The Company has a specific investment policy, as outlined in this announcement, which is adhered to and for which the Board has overall responsibility. In February 2025, the Company received shareholder approval to amend its investment policy, which will now allow for a maximum exposure of 35% to any one Approved Provider, where it was previously restricted to 30%.

Following the appointment of Atrato as the Company's new investment manager effective from 1 January 2025, a comprehensive review of the current risk framework was undertaken resulting in various enhancements to the existing risk management methodology being made. The changes to approach are more reflective of the individual nature of the risks being considered and will enable the Board to view the risks on a more granular level.

In the Group's 2024 Interim Report, it was reported that the principal risks and uncertainties remained unchanged during the period. Following the comprehensive review undertaken by the Investment Manager, two existing principal risks have now been determined to be non-material and two risks that were previously deemed non-material have now been re-classified as principal risks. More information on the changes can be found in the Principal Risks and Uncertainties table.

As an externally managed investment company, the Company outsources key services to the Investment Manager and other service providers and relies on their systems and controls. The Board undertakes a formal review of the risks identified by the Investment Manager, with the assistance of the audit committee, twice a year to assess and challenge the effectiveness of the Company's risk management and internal control systems. The Board regularly reviews the control reports of the key service providers and the external auditors note any deficiencies in internal controls and processes that have been identified during the course of the audit. A description of the key internal controls of the Group can be found in the Audit Committee Report.

The Investment Manager has responsibility for identifying potential risks at an early stage, escalating risks or changes to risk, and relevant considerations and implementing appropriate mitigations which are recorded in the Group's risk register. Where relevant the financial model is stress tested to assess the potential impact of certain risks against the likelihood of occurrence. The Board regularly reviews the risk register to ensure gradings and mitigating actions remain appropriate.

The Group's risk management process is designed to identify, evaluate and mitigate (rather than eliminate) the significant and emerging risks the Group faces and continues to evolve to reflect changes in the Group's business and operating environment. The process can therefore only provide reasonable, and not absolute, assurance. It does however ensure a defined approach to decision making that decreases uncertainty surrounding anticipated outcomes, balanced against the objective of creating value for shareholders.

During the year, the Board has not identified or been advised of any failings or weaknesses in the Group's risk management and internal control systems.

Principal Risks and Uncertainties

The table below sets out what we, the Board, believe to be the principal risks and uncertainties facing the Group. The table does not cover all of the risks that the Group may face. Additional risks and uncertainties not presently known to management or deemed to be less material at the date of this report may also have an adverse effect on the Group.

Having conducted a full review of the Group's existing risk register, the Investment Manager has reclassified the previous Principal Risks of "Inflation" and "Reliance on Investment Manager" as non-material and also assessed that "Volatile trading market" and "Health and safety standards" should be captured within the Group's Principal Risks.

GOING CONCERN AND VIABILITY

Going Concern

The Strategic Report and financial statements have set out the current financial position of the Group and Parent Company. The Board has regularly reviewed the position of the Group and its ability to continue as a going concern in Board meetings throughout the year.

The Directors have reviewed the Group's forecast which shows the expected annualised rental income exceeds the expected operating costs of the Group. 92.6% of rental income due and payable for the year ended 31 December 2024 has been collected, rent arrears are predominantly attributable to one Approved Provider, My Space Housing Solutions.

The Directors believe that the Group is still well placed to manage its financing and other business risks and that the Group will remain viable, continuing to operate and meet its liabilities as they fall due. During the year, Fitch Ratings Limited assigned the Company an investment Long-Term Issuer Default Rating of 'A-' with a stable outlook.

The Directors have performed an assessment of the ability of the Group to continue as a going concern, for a period of at least 12 months from the date of signing these financial statements. The Directors have considered the expected obligations of the Group during this period and are confident that all will be met.

The Directors have also considered the financing provided to the Group. Norland Estates Limited and TP REIT Propco 2 Limited have bank facilities with MetLife and Metlife and Barings respectively.

The loans secured by Norland Estates Limited and TP REIT Propco 2 Limited are subject to asset cover ratio covenants and interest cover ratio covenants which can be found in the table on the right. The Directors have also considered reverse stress testing and the circumstances that would lead to a covenant breach. Given the level of headroom, the Directors are of the view that the risk of scenarios materialising that would lead to a breach of the covenants is remote.

Under the downside model the forecasts have been stressed to show the effect of some Care Providers ceasing to pay their voids liability, and as a result this causes Approved Providers to default under some of the Group leases. Under the downside model the Group will be able to settle its liabilities for a period of at least 12 months from the date of signing these financial statements. As a result of the above, the Directors are of the opinion that the going concern basis adopted in the preparation of the financial statements is appropriate.

The Group has no short term refinancing risk given the 8.6 year weighted average maturity of its debt facilities with MetLife and Barings, the first of which expires in June 2028, and which are fully fixed at an all-in weighted average rate of 2.74%.

Based on the forecasts prepared and the intentions of the Parent Company, the Directors consider that the Group will be able to settle its liabilities for a period of at least 12 months from the date of signing these financial statements and therefore have prepared these financial statements on the going concern basis.

Viability Statement

In accordance with Principle 21 of the AIC Code, the Board has assessed the prospects of the Group over a period longer than 12 months required by the relevant 'Going Concern' provisions. The Board has considered the nature of the Group's assets and liabilities, and associated cash flows, and has determined that five years, up to 31 December 2029, is the maximum timescale over which the performance of the Group can be forecast with a material degree of accuracy and therefore is the appropriate period over which to consider the viability.

In determining this timescale, the Board has considered the following:

· The length of the service level agreements between Approved Providers and care providers.

· The future growth of its investment portfolio of properties is achieved through long-term, inflation linked, fully repairing and insuring leases.

· The Group's property portfolio has a WAULT of 23.4 years to expiry, representing a long-term income stream for the period under consideration.

· The Group's Loan Notes have a weighted average term of 8.6 years.

In assessing the Company's viability, the Board has carried out a robust assessment of the emerging risks and principal risks facing the Group, including those that would threaten its business model, future performance, solvency, liquidity and dividend cover for a five-year period.

The Directors' assessment has been made with reference to the principal risks and uncertainties and emerging risks summarised in this announcement and how they could impact the prospects of the Group and Company both individually and in aggregate. The following risks in particular have been addressed in the assessment:

1. Approved Provider default (taking into account that two of the Group's lessees have built up arrears since 2022)

2. Non-payment of voids cover by Care Providers

The business model was subject to a sensitivity analysis, which involved flexing a number of key assumptions underlying the forecasts. The sensitivities performed were designed to provide the Directors with an understanding of the Group's performance in the event of a severe but plausible downturn scenario, taking full account of mitigating actions that could be taken to avoid or reduce the impact or occurrence of the underlying risks outlined below:

· Rental income: It is assumed that some care providers do not meet their void payment obligations, and this causes Approved Providers to default under some of the Group's leases; and rental receipts from two Approved Providers are lower than the previously contracted rent levels.

· Property valuations: It is assumed that where there are void units Approved Providers will default on their leases, and those units will be valued significantly below their vacant possession value. We believe this represents a severe reduction in value.

· Inflation: No inflation uplift on rental income but costs increase in line with inflation.

The outcome in the downturn scenario on the Group's covenant testing is that there are no breaches, and the Group can maintain a covenant headroom on existing facilities.

In the downturn scenario mitigating actions to reduce variable costs would be required to enable the Group to meet its future liabilities.

The remaining principal risks and uncertainties, whilst having an impact on the Group's business, are not considered by the Directors to have a reasonable likelihood of impacting the Group's viability over the five-year period.

Based on the results of this analysis, the Directors have a reasonable expectation that the Group and Company will be able to continue in operation and meet its liabilities as they fall due during the period up to 31 December 2029.

BOARD APPROVAL OF THE STRATEGIC REPORT

The Strategic Report was approved by the Board and signed on its behalf by:

Chris Phillips

Chair

21 March 2025

GROUP FINANCIAL STATEMENTS

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

The accompanying notes form an integral part of these Group Financial Statements.

GROUP STATEMENT OF FINANCIAL POSITION

As at 31 December 2024