Socially Responsible: Initiate at Buy

Research evidence excerpt

Socially Responsible: Initiate at Buy

D earnings accretive in the 1st FY. Completion

Exhibit 1 - Portfolio overview (as of 31 Dec

of the deal is expected in mid-July 26, subject to shareholder approval (Our forecasts assume 2025)

the transaction completes). The ReSI senior Pro Forma

Group living (Enlarged

Social supported housing (SSH) market opportunity. SSH combines affordable housing with portfolio Group)

Gross asset value £636.8m £194.6m £831.4m

high-level, tailored care for vulnerable residents. The sector benefits from strong govt support EPRA NTA £370.8m £100.6m £471.4m

given that supported housing is materially cheaper than NHS alternatives by £000's per week, PropertiesGross rental(#)income £43.7m492 £13.5m2,198 £57.2m2,690

with policy backing expected through the mid-2030s. Net rental income £40.0m £11.5m £51.5m

. EPRA Adj. Earnings £25.7m £8.1m £33.8m

Source: Company data, Jefferies

Attractive Valuation. We use a DCF (82p PT Incl ReSI deal) which consists of forecasting Exhibit 2 - Resi Sector Cap Values and Rents

stabilised cash flows for the next 10 yrs and calculating a terminal value by using an exit yield YoY Change

in year 10. We also triangulate our PT back to NAVs as a sense check (the market's preferred 15%

valuation methodology). Looking back 5–6 years we note SOHO has historically traded at a 10%

discount to NAV for much of this period, stabilising at around a 20-25% discount, in line with 5%

the UK REIT market. FY25 under management by Atrato showed an inflection in earnings and 0%

a new phase of growth (earnings +21%), with our 3yr EPS CAGR of c6%. -5%

Jul-15 Jan-17 Jul-18 Jan-20 Jul-21 Jan-23 Jul-24 Jan-26

On a Fwd DY (c7.6%), the stock looks attractive vs peers at c6% with divi growth sustainable . Capital Values Rents