Walls & Futures REIT plc Final Results for Year to 31 March 2024

Final Results and Audited Annual Report and Accounts for the Year to 31 March 2024

Notice of Annual General Meeting

Walls & Futures REIT plc (Ticker: WAFR), the Ethical Housing Investor and Developer, is pleased to announce its final results and the publication of its audited annual report and accounts for the year to 31 March 2024 (the “Annual Report”). A copy of the Annual Report has been published on the Company’s website, in accordance with its articles of association, and can also be viewed through a link at the bottom of this announcement.

The principal activity of the group continues to be investing and developing property to meet the unmet demand for specialist social housing (“SSH“) in the UK. We do not have involvement with the care delivered within the properties, which is managed by care providers approved by local authorities.

The Company’s Annual General Meeting for the year ending 31 March 2024 will be held at Octagon Point, 5 Cheapside, London, EC2V 6AA on 3 October 2024 at 1.00pm (the “AGM”).  The notice of the AGM (the “Notice”) will be posted to shareholders today, and a copy of the Notice will be added to the Company’s website.

Highlights

• Net Asset Value (“NAV”) down 4.5% to 85p per share (2023: 89p per share)
• Revenue £128,917, up 11.7% (2023: £115,398)
• Loss -£43,561 (2023: Loss of -£472,765)
• Investment property value increased by 2.4%
• Earnings per share -1.17p (2023: -12.59p)
• 100% of Specialist Supported Housing rents collected
• Welcome Ross Taylor, Vengrove CEO, to the board

Key elements of the final results can be viewed below.

Joe McTaggart, CEO of Walls & Futures REIT plc said:

“We are pleased with the performance of our portfolio, where we collected 100% of our rents, which benefited from an increase from our inflation-adjusted leases. It outperformed the MSCI UK Residential Index in terms of income return, delivering 4.69% compared to the benchmark of 3.18%.

We are, however, frustrated that we have not made the intended progress on the fundraising front during the 2023-24 financial year. Our experience is not unique and is reflected in the wider real estate sector, which has faced the highest interest rates in 16 years and broader economic headwinds.

The Bank of England’s recent decision to reduce interest rates marks a change in direction, and from reviewing the underlying economic indicators and the need to drive economic growth, there is a case for rates to fall much further. This is likely to lead investors to return to property for higher yields, which, until very recently, have performed better.

The fundraising is showing signs of improvement, and we firmly believe that there is a need for a REIT focused on investing in social infrastructure and by leveraging Vengrove’s expertise, we are best placed to deliver.

We are continuing with our engagement of institutional investors focused on the infrastructure and real estate sectors and hope to provide updates soon.”

Business review

2023-24 has continued to be a challenging period for the real estate sector, all facing economic headwinds and the highest interest rates in 16 years. Some sectors, such as offices and retail, have been more affected as they battle technology advancements, remote working and other structural changes, with falling occupancy rates leading to reduced income and asset values.

Our portfolio of residential lead assets offering essential support to the community has bucked this trend and performed robustly. Compared to the MSCI UK Residential Index (which runs to 31 Dec 23), it underperformed in terms of Total Return -2.52% vs the benchmark of 3.4%. However, it outperformed the index in terms of income return by 4.69%, compared to the benchmark of 3.18%.

Overall, we have collected 100% of our rents, which benefited from increases from our inflation-adjusted leases. There has been a modest increase of 2.4% in the value of our portfolio, and our Net Asset Value (“NAV”) fell by 4.5% to 85p per share on 31 March 2024. The group has less than £15,000 outstanding on a Bounce Bank loan, so with no significant borrowing, it has been minimally affected directly by rising interest rates and the cost of serving debt.

Negative sentiment towards the narrow investment vertical of the Specialist Support Housing sector remains, and the share price of REITs in this sector have fallen and trade at discounts to their NAV.

This confirms our view that we need to build a broader portfolio of high-quality, income-producing real estate assets across social infrastructure assets that support the quality of life of regional and local communities.

Pax Homes update

Over the last year, Pax Homes (in which the Company holds an interest in preference shares) has been approved by NHS England for grant funding. They are supporting a number of local authorities in grant applications, which, if successful, will fund the build of new Pax Homes. Working in partnership with local authorities, care providers and a national housing association, pre-application submissions have been made for schemes in Derbyshire, Dorset and Leicestershire.

Further prospective sites have been identified in The Borders, Cambridgeshire, and Lancashire, and opportunities are being pursued in Hampshire, Hertfordshire, Suffolk, Peterborough, Norfolk, Oxfordshire, and Kent.

While Pax Homes has a growing order book, it has not generated any revenues. As such, we will continue to impair the value of the investment on our balance sheet. This will be evaluated annually.