Impact Healthcare REIT — Attractive financial and social returns

Impact’s resilient business model is focused on forming long-term relationships with selected tenants, investing in suitable properties that those tenants can efficiently and profitably operate, while providing a good quality of care. This, in turn, should generate a predictable and growing stream of good-quality cash flows to support dividend growth. Its portfolio comprises a majority core of good-quality, upper middle-market homes, but its willingness to acquire assets that may benefit from asset management initiatives, often as part of a less competitive portfolio transaction, differentiates it from peers. This approach provides acquisition opportunities that may otherwise not be available, benefits operators and their residents alike, enhances the sustainability of the portfolio, and offers enhanced risk-adjusted returns relative to a pure ‘buy-and-hold’ strategy.

Impact aims to provide shareholders with attractive and sustainable returns, primarily in the form of quarterly dividends. DPS has increased each year since IPO, with a clear and progressive dividend policy, targeting growth in line with the inflation-linked rental uplifts received in the preceding financial year. Dividends paid have driven the consistently positive quarterly total returns since IPO in 2017, with aggregate net asset value (NAV) total return (adjusted for dividends paid, but not reinvested) from IPO to end-Q121 of 36.3%, a compound annual return of 7.9% (8.5% excluding acquisition costs incurred in building the portfolio); this is attractive in a low inflation/low return environment although slightly below the medium-term return target of 9% pa. Dividends have been well covered by EPRA earnings and substantially covered (FY20: 94%) on Impact’s more conservative adjusted (cash) earnings basis that excludes non-cash IFRS smoothing adjustments to rental income.

Impact has committed c £26m to accretive acquisitions in the year to date and has a strong pipeline of further opportunities. In April 2021 it raised £35m (gross) in an equity issue and has recently increased its debt facilities by a net £16m to £141m, at the same time extending the duration and lowering the average cost. With little more than £60m of the debt facilities drawn, the gross loan to value ratio (LTV) is a low c 14% and we forecast an additional c £60m of capital deployment by the end of Q122, taking LTV to c 25%, in line with the medium-term target. We assume a 7.25% yield on acquisitions (management targets a yield in line with the historical trend of c 7.5%), a significant premium over marginal borrowing costs of c 2%. Given the strong pipeline of opportunities identified by the investment manager, a significant larger growth opportunity will remain, subject to additional capital resources. Impact’s target FY21 DPS of 6.41p represents an attractive yield of 5.4%, which we expect to be well covered by EPRA earnings and fully covered on an adjusted (‘cash’) basis, supporting the c 7% premium to Q121 NAV, a discount to the peer group average.

We see the key sensitivities (detailed on page 15) as relating to the following:

Impact Healthcare REIT (Impact) invests in a portfolio of primarily residential and nursing care home assets in the UK, diversified by geography, tenant operator, home size and resident funding mix. The demand for care home places is ultimately driven by a growing population of elderly, with increasingly complex care needs, and is relatively insensitive to wider economic conditions; meanwhile there is an undersupply of quality care home beds.

Impact’s business model is focused on forming long-term relationships with selected tenants, investing in suitable properties that those tenants can efficiently and profitably operate while providing a good quality of care. This in turn should generate a predictable and growing stream of good-quality cash flows to support dividend growth. Additionally, the homes that Impact invests in are on long, fully insuring and repairing leases (weighted average unexpired lease term, or WAULT, of c 20 years, with no break clauses), subject to upwards only inflation-linked rent reviews (capped and collared). This provides a high level of visibility to future contractual income, while risk-adjusted returns for the sector (income and capital) have historically compared favourably with most other commercial property sectors.

Impact is externally managed by a sector specialist investment manager, Impact Health Partners (IHP). The principals of IHP bring considerable experience of investment and operation in the UK care home market and wider alternative asset markets, of particular benefit in the sourcing of acquisitions and selection of tenants. Also, they collectively own more than 3% of Impact shares, closely aligning their interests with those of the company and its shareholders.

In common with many companies across the sector, Impact is giving an increasing focus to its environmental, social and governance (ESG) strategy. As a starting point, the social impact that its homes can generate is significant. An open and constructive engagement with tenants, supporting their operations and ability to provide good quality care for residents in an attractive environment, is core to the strategy and closely aligned with ESG principles. The independent board continually reviews and enhances its approach to corporate governance, keeping pace with the company’s growth and development, and increasingly integrating ESG and other long-term sustainability considerations into investment and asset management decisions. During 2020 the investment manager undertook a detailed review of each home to establish an action plan for the measures required to achieve a minimum EPC rating1 of B for each by 2030 (currently 36%).

In 2017 Impact listed with an agreement in place to acquire an immediately income-generating seed portfolio of 56 homes for £149m, let to two tenants (Minster and Croftwood). It has since significantly grown and diversified its portfolio to reach a value of £427m at 31 March 2021 (Q121). Including investment commitments made since the end of Q121,2 the pro forma value is almost £450m, comprising 1113 assets let to 13 different tenants. Impact has not sought simply to add more tenants, but to add selected quality tenants with which to partner and grow over the long term; tenants that are most likely to provide good care, while running a sustainable and profitable business. This selective approach has nevertheless seen a steady decline in the share of income accounted for by Minster and Croftwood, now less half of the total (we estimate c 46%), a trend that we expect to continue. Over time we would expect Impact to target any single tenant exposure to be no more than 30%.

Growth has been achieved while maintaining a moderate level of gearing and has delivered a steady decline in the EPRA cost ratio. End-FY20 gross LTV of 17.8% remained well below the medium-term target of 25% (maximum 35%) and was recently below 14% ahead of deployment of the April 2021 equity raise proceeds. The EPRA cost ratio reduced to 17.1% in FY20, and we expect this trend to continue. The FY20 total expense ratio (TER) was 1.53%.

The company seeks opportunities to further grow the portfolio alongside both existing and new tenants, adding further asset and tenant diversification, and generating economies of scale. As it grows, Impact is also adding much needed new capacity to the market through forward funding the development of new pre-let homes,4 is expanding capacity and the range of services within the footprint of existing homes, and supporting the development of successful operators within the growing mid-market segment of the care home market.

Less competitive portfolio acquisitions, often off-market, have been an important contributor to this growth with acquisition yields consistently in the range of 7.5% (before costs) compared with the EPRA net initial yield of 6.7%. The resultant portfolio mainly comprises a majority core of good-quality, upper middle-market homes serving both the local authority and private markets, but also includes value-add assets where there is potential, working in partnership with and led by tenants, to upgrade/extend facilities and reposition homes in their local markets.

When launching its most recent equity raising in April, the company reported on a substantial identified pipeline of potential future investments,5 well maintained and managed by high-quality operators, capable of providing attractive levels of rent cover and a blended net initial yield in line with previous acquisitions. For operational homes, the vendors are typically owner occupiers either looking to exit (eg through retirement) or looking to grow as a new tenant for Impact through a sale and leaseback. We also expect Impact to look for additional forward-funding opportunities, which bring to the market modern, purpose-built and sustainable facilities, that can be efficiently operated by tenants, and supporting them to increase their offering in the private pay market. If undertaken in partnership with well performing, known, existing tenants these can be particularly attractive on a risk-return basis. Including the £35m (gross) of new equity that was raised and associated debt funding, our forecasts include an additional c £60m6 of capital deployment, with a significant additional opportunity remaining, subject to financing.

Impact considers asset management to be one of the most attractive strategies available to it for the deployment of capital and for enhancing returns beyond a pure ‘buy and hold’ strategy. Impact’s willingness to acquire assets that may benefit from such asset management initiatives, often as part of a portfolio transaction, differentiates it from peers and provides acquisition opportunities that may otherwise not be available. Asset management benefits operators and their residents alike, enhances the sustainability of the portfolio, and offers enhanced risk-adjusted returns, typically generating a yield on capital of at least 8% pa and, in many cases, increased capital values to reflect the asset enhancement. Projects are led by the tenants but are identified and agreed with Impact, in advance for newly acquired properties. Investment is directed at those that can create value for both parties, with tenants benefitting from the potential to enhance or extend facilities, broaden their appeal to residents, and increase earnings, and Impact benefitting from higher rents, improved rental cover, and in many cases capital value uplifts. As the group already owns the land and the tenants have existing central services on site, the marginal cost of adding beds is lower than the cost of greenfield development and the risks are easier to assess. Two of the most notable completed projects are at Diamond House, Leicester, and Freeland House, Oxfordshire. At both, new specialist dementia care facilities were developed within the footprint of the existing homes, offering specialist care and support to existing residents of the homes that may develop dementia symptoms and providing places for new residents with dementia needs. These additional specialist facilities added 30 new high-quality beds at Diamond House (which received Care Quality Commission (CQC)7 registration in February 2020) and 46 at Freeland House (which received CQC registration in April 2021). Two adjacent homes at Fairview Court and House will be linked and older accommodation reconfigured to upgrade facilities, add a net 10 beds and improve the EPC rating from C to A.

Impact aims to commit at least £15m to asset management on an annual basis, although new asset management activity (excluding forward-funding activity) in the past year has slowed. FY20 capex was c £1.7m. The slowdown is mainly due to the pandemic, but in some cases is due to the tenants of otherwise strongly performing homes preferring to defer significant projects. More recently, Impact has taken measures to formalise and incentivise the activation of the projects identified and agreed with tenants at acquisition. During FY20, £2.8m was committed to three acquisitions on this basis.

Performance during the pandemic has thus far provided good evidence of the resilience of the group’s strategy. Impact received 100% of its contracted rent for 2020 and continuing into 2021, achieved without changes to lease terms or payment schedules. This strong performance can primarily be attributed to:

As discussed in the next section, with no material change in the underlying demographic drivers of care home need/demand, the vaccination roll-out and the gradual easing of visiting restrictions, care home managers have recently been reporting a high level of tenant enquiries. Impact is cautiously optimistic about the speed with which the operators will be able to rebuild their occupancy but notes that the pandemic is not yet over and remains unpredictable as was demonstrated by a severe COVID-19 outbreak at one home in late February/early March despite what appear to be effective infection-control measures being in place and following initial vaccinations. There are no direct consequences for Impact with the home operated by a strong tenant with a good level of overall rent cover.

The demand for residential care is driven by demographic and health trends rather than being directly linked to economic conditions, with c £17.3bn spent annually on providing residential care for elderly people in the UK. Although the pandemic has negatively affected industry-wide care home occupancy (we estimate by c 10% on average) by reducing the short-term demand for care home places and slowing the pace at which available rooms can be safely occupied, these longer-term structural trends suggest that the need for elderly residential care will continue to increase for a great many years.

Taking account of the net new rooms that will be required in coming years and the need to replace or upgrade a significant share of the existing stock, the sector investment requirement is very significant. We expect private capital providers such as Impact to continue to play a vital role in meeting this need and shaping the development of future provision, offering the potential for stable, long-term returns to investors while providing a positive social and community impact.

Across the industry, this combination of growing demand, shrinking supply and the shift from local authority to private sector provision continues to generate sustained, above-inflation growth in revenues and average weekly fees for the operators. LaingBuisson estimates that between 1998 and 2020, weekly fees charged by private sector operators have increased at an average c 3.8% pa for nursing care and 3.7% pa for residential care. Over the same period, the Retail Price Index (RPI) has averaged 2.8%. Factors contributing to this rise in fees include rising staff and property costs, increasingly complex medical and care needs (including rising levels of dementia), higher standards of care required by the regulator, and growth in the private pay market (within the private sector) driven by customer choice and the shrinking pool of those eligible for public funding. In fact, despite being above inflation in recent years, fee growth has been struggling to keep pace with industry-wide cost pressures and industry profitability margins have trended lower. During the pandemic in 2020, fee growth accelerated, in part due to government support, while costs were relatively well contained, mitigating the impact of lower occupancy.

The profitability squeeze of recent years has been most acute for operators that rely heavily on state funded residents, particularly those funded by local authorities.9 Although local authorities have effectively withdrawn from the operation of residential care homes, they remain a significant provider of funding for care home residents, accounting for c 50% of the total, either in full or with some top-up from residents and their families. Given the financial pressures that they face and the significant pricing power that they exercise, in general there is a clear differential between local authority-funded fees compared with the fees paid by self-funded residents. In many cases, the local authority fees paid are insufficient and are effectively cross-subsidised by higher-paying self-funding residents. While a balance of resident funding is desirable, operators that rely too heavily on local authority-funded residents have been more likely to struggle with cost pressures and this is more so if the homes that they operate are older, often converted and poorly configured. Although diversified, compared with the overall market the resident mix within the homes owned by Impact has a slightly above-average share of self-funded residents (c 43% wholly self-funded and a further c 11% partly self-funded with top-ups). Importantly, rents are set at sustainable levels; we estimate average weekly rents per bed of c £100 at end-FY20 compared with the average resident fees charged by its tenant operators of c £827 per week.

Given the pressures on local authority funding and the demographically driven increasing need for care, there is a widespread recognition of the importance of finding a long-term solution to the funding of social care in the UK. This continues to be debated within government and publicly, along with closer co-operation between health and social care, but no proposals have yet been forthcoming. Reform is likely to stimulate the much-needed investment in the residential care estate and although less clear, it may also create more balance between the profitability of state-funded and self-pay residents. With this in mind, we believe a balance of resident funding sources to be desirable.

The UK care home operator market is varied and fragmented and getting more so. The top 10 providers (c 21% of the total market) have seen an erosion in share as some of the largest groups, often private equity owned, struggle with heavy debt burdens. At the opposite end of the market, single home operators, accounting for around one-third of the stock, have also been in decline, in many cases operating from older, adapted properties that can present additional challenges to the provision of good-quality care. It is mid-sized groups with between three and 80 homes that are driving overall market growth, and this is the segment where most of Impact’s tenants are active. While the challenges facing the wider industry, and particularly the problems experienced by some of the largest and some of the smallest operators, inevitably receive a great deal of media attention, the ability of well-managed operators, with efficiently run homes in locations with a good demand-supply balance, to operate profitably and sustainably provide good-quality care is often overlooked.

Impact Healthcare REIT is closely overseen by a non-executive board of directors and is externally managed, under a management contract, by Impact Health Partners LLP (‘IHP’ or ‘the investment manager’).

The investment manager was established in 2016 by its principals, Mahesh Patel and Andrew Cowley, who collectively bring considerable experience of investment and operation in the UK care home market and wider alternative asset markets. The IHP investment team has been expanding in step with the growth of Impact and includes eight professionals supporting its investment. Plans are in place for further growth, supported by investment in IT infrastructure that will enhance both the quality and efficiency in the day-to-day management of the assets. Biographies for the key members of the IHP investment team can be found at the back of this report. Mahesh Patel owns 10m shares in the company (c 3.4%), primarily through Maal Limited, and other members of the IHP team own c 0.3%, which closely aligns the interests of the investment manager with those of the company and its shareholders.

Investment management fees are set at 1.0% pa on average net assets up to £500m, reducing to 0.7% pa on average net assets of more than £500m, increasing the benefit to shareholders from continuing growth in the portfolio. Although net assets are yet to cross the £500m level (c £387m at 31 March 2021 adjusted for the net proceeds of the subsequent c £35m capital raise), economies of scale are already being achieved (Exhibit 4). The FY20 EPRA cost ratio continued to reduce (to 17.1%), a trend that we forecast to continue in FY21. The FY20 TER was 1.53% (FY19: 1.60%).

The independent non-executive chairman of the board is Rupert Barclay, managing partner of Cairneagle Associates LLP. He is a chartered accountant with almost 30 years’ experience as a strategy consultant specialising in strategic decision support for companies and private equity firms, and has extensive non-executive board experience. The other non-executive directors of the company bring broad experience in the real estate sector, and specifically healthcare real estate, finance and capital markets, social housing, and corporate stewardship and governance. They are: Rosemary Boot (senior independent non-executive director), with extensive corporate, board and finance experience including as executive director and strategy adviser at large housing association Circle Housing Group; Amanda Aldridge, a former audit and advisory partner at KPMG (with a focus on quoted companies including clients with significant property portfolios) and an experienced board member, including the property management, development, and regeneration company Places for People Group; Paul Craig, portfolio manager at Quilter Investors (a 17.0% shareholder in Impact) with more than 20 years’ of investment experience; Philip Hall, director of Debden Healthcare Consultancy (and previously chairman for healthcare at JLL), a chartered surveyor with more than 25 years’ experience in the healthcare sector in the UK and internationally, and author of ‘The Valuation of Care Homes: Principles into Practice’ (2008); and since May 2021, Chris Santer, chief investment officer for Primary Health Properties, with 25 years of real estate investment and development experience. Other than Paul Craig, who represents the company’s largest shareholder, all of the non-executive directors are considered independent.

Exhibit 9 shows a summary of the portfolio. The independent portfolio value at 31 March 2021 (end-Q121) was £427.0m compared with £418.8m at 31 December 2020 (end-FY20).10 Impact has since committed to two further properties, both let to a new tenant for the group (the 12th care operator tenant and 13th tenant including the NHS), Carlton Hall. One of these properties is a high-quality care home near Lowestoft, let on a 30-year lease, and the other is a pre-let forward funding arrangement for a new care home in Norwich, pre-let for 35 years. The leases are subject to upward-only RPI-linked rent reviews (with a floor and cap at 2% pa and 4% pa). The initial consideration for the two properties is an aggregate £20.8m. Including these two commitments, the portfolio is now comprised of 111 healthcare properties, of which 109 are care homes (107 operational and two under development), let to 12 different tenants, and two were healthcare facilities leased to the NHS.

All the care homes are let on long and fixed-term (20–35 years at inception with no break clauses) triple net leases (the tenant is responsible for all maintenance expenditure and insurance costs), with annual upwards-only, RPI-linked rent increases with floors and caps.11 Impact’s standard leases include covenants in respect of minimum rent cover, minimum maintenance expenditure and standards of care. The two NHS facilities are let on shorter leases (remaining terms of approximately two years and five years), indexed to the consumer price index. Over the medium term, working in partnership with the NHS, Impact believes there is asset management potential for both. Including the two recent commitments, the portfolio annualised contracted rent is now £33.4m. At end-Q121 the weighted average unexpired lease term was 19.8 years. The end-FY20 valuation reflected an EPRA topped-up net initial yield of 6.71%.

Meeting the dual dividend growth and total return targets requires a balance to be struck between high-quality core assets that generate attractive, secure, long-term income, and value-add assets with the potential to create further value through asset management. The portfolio is underpinned by a strong core portfolio, accounting for 67.9% by value at end-FY20. Core and value-add assets together represented c 98% of the portfolio by value; non-core assets are candidates for disposal and recycling into more attractive investment opportunities representing the balance. During FY20, one non-core asset was sold for £0.9m, a 24% premium to the carried value. Value-add properties represented 39.2% of the total number of properties but only 30.3% of the total value, highlighting the significant opportunity that exists to enhance their value, over time, through tenant-led asset management.

We have updated our forecasts to include the April 2021 equity raise and our expectations for the deployment of the proceeds, increasing our forecasts for net rental income and earnings. Allowing for the c 10% increase in shares outstanding, in per share terms we expect the capital deployment to be accretive and our forecast for EPRA earnings is increased by c 3% in FY21 and c 6% in FY22. EPRA dividend cover also increases (to c 1.4x) despite an increase in DPS (we now assume a slightly larger 2.5% increase in FY22).

Part of the increase in EPRA earnings reflects an increase in the non-cash IFRS rent smoothing adjustment (in respect of the straight-line recognition of fixed rent increases over the long contractual lease period), which we expect to increase along with the additional rent income generated by acquisitions. The company’s adjusted ‘cash’ earnings measure strips this out and the changes to our forecasts for adjusted EPS growth are little changed, although we continue to expect a strong advance in dividend cover on this basis (110% in FY21 and 118% in FY22). Increasing dividend cover demonstrates the strong cash flow emerging from the growing portfolio. Under the company’s dividend formula, the 2.5% DPS growth that we forecast in FY22 is looking back to rent indexation achieved in FY21. The increase in cover that we forecast indicates there may be room to increase DPS ahead of that suggested by this formula.

When we last published, Impact had announced the January 2021 completion of the acquisition of Mavern House for £5.1m (before costs) and, based on the capital resources at the time, we assumed an additional £25m of capital deployment by mid-FY21.

Since then, in addition to the equity raise, Impact has announced the acquisitions of an operational care home, Carlton Hall, in Lowestoft, and the forward funding commitment in Norwich, representing a combined initial commitment of £20.8m (before costs). Reflecting the enlarged capital base, in addition to these announced transactions we assume an additional £60m of capital deployment by the end of Q122 (March 2022). We estimate that this represents an effectively full deployment of the recently increased debt facilities (see below) and is consistent with the medium-term target gross LTV of 25%.

We assume a 7.25% yield on consideration for the assumed capital commitment, which makes some allowance for the continuing strong investor interest in care home properties, although this may prove to be conservative; management hopes to achieve yields consistent with the c 7.5% historical trend (shown in Exhibit 5).

Our other income statement assumptions include:

We expect revaluation movements will continue to be driven by rental growth and asset management initiatives in combination with ‘buying well’. We allow for existing asset valuations to increase in line with our rental growth assumption; for an uplift on asset management investment; and for the yields on acquired assets to migrate towards the portfolio average over time. FY21e is boosted by the level of acquisitions assumed for the year, partly offset by acquisition costs written off.

Impact has grown its portfolio since IPO using a blend of new equity and debt while keeping gearing at a moderate level and well within its medium-term targets. The gearing policy specifies a maximum 35% gross LTV at the time of drawdown, although the company does not expect average gearing to be higher than 25%. Most recently, new equity of c £35m was raised in April 2021, which together with existing debt facilities provides the capital for near-term growth. However, beyond this the scale of the investment opportunity significantly outstrips the current capital base.

Following a recent refinancing,12 debt facilities amount to £141m, comprising a £15m term loan facility and £126m of more flexible, lower cost, revolving credit facilities (RCF). The refinancing introduced a new £26.0m RCF with NatWest Bank, with a three-year term and 1.90% margin over the sterling overnight index average (SONIA), while £10.0m of the Metro Bank term facility due in June 2023, and with a margin of 2.65% over base rate, was repaid without fees. This increased available debt, extended the average maturity and reduced the blended margin. At 25 June 2021, £62.3m of the debt facilities had been drawn, giving a gross LTV of 13.7% based on the 31 March 2021 gross asset value of £454.0m, and on a fully drawn basis would have been 26.5%. Net of outstanding commitments,13,14 the group had £63.2m in cash (£17.8m) and undrawn debt facilities available for further investment.

We estimate the average maturity of the debt facilities at c 2.2 years with an average cost of c 2.3% (based on three-month Libor at 0.1%/SONIA at 0.05%). To mitigate the interest rate risk of the variable rate borrowing, Impact has hedged £25.0m, until June 2023, with an interest rate cap that protects against a rise in Libor above 1%.

Allowing for the increase in gross assets as a result of the acquisitions that we forecast, our estimated gross LTV at the end of FY22 is c 25%, in line with Impact’s medium-term target.

All of the debt is secured against specific non-recourse security pools with no cross defaults and Impact continues to be in compliance with all of the loan covenants.

As noted above, Impact has a progressive dividend policy and has increased annual aggregate DPS each year since IPO. The current year target of 6.41p (+1.9%) represents an attractive yield of 5.4%. The shares trade at a c 7% premium to Q121 NAV per share, above the c 2% average premium since IPO but below the high of c 11%.

Progressive dividends are a key component of Impact’s 9% pa medium-term total return target, also including the potential for capital growth (driven by inflation-linked rental growth and asset management opportunities). Aggregate NAV total return (adjusted for dividends paid, but not reinvested) from IPO to end-Q121 is 36.3% or a compound annual return of 7.9%. Adjusted for the acquisition costs incurred in building the portfolio, we estimate a compound annual return of 8.5%. Both measures are slightly below the company’s target but nevertheless represent an attractive return in a low inflation/low return environment.

In Exhibit 19 we show a summary of the performance and valuation of a group of REITs that we consider to be Impact’s closest peers within the broad and diverse commercial property sector. The group is invested in the primary healthcare, supported housing and care home sectors, all targeting stable, long-term income growth derived from long-lease exposures.

In terms of share price performance, the peer group has trailed the overall UK property sector and FTSE All-Share Index over the past year as less defensive, more cyclical areas of the market have rebounded from last year’s lows. Over the same period, Impact has been the stronger performer in the group, although its yield remains above average and its P/NAV below average. There are several factors that suggest a continuing positive outlook for the shares including a combination of the long WAULT (19.8 years) with no break clauses and upwards-only, triple net rents, mostly linked to RPI, which provides considerable visibility over a growing stream of contracted rental income. It also offers considerable protection against inflation at a time when inflation expectations are increasing. The robust tenant performance reported by Impact during the pandemic thus far, with no interruption in rent collections, is a further positive indicator for covenant strength.

Long leases with RPI-linked rent increases provide considerable visibility of contractual income and underpin long-term dividend growth. We see the key sensitivities as relating to the following: