The Fund recorded a gain of 1.94% in March (C Accumulation GBP) taking the strategy’s performance into marginally positive territory year-to-date. A significant majority of underlying portfolio companies contributed positively during the month, as the broader listed infrastructure sector was buoyed by further news of potential M&A activity. Equity indices also turned downwards in March and there were some signs that investors were moving into more defensive areas of the market.

Care REIT, which owns a portfolio of care home properties in the UK, announced that the Board had reached an agreement with CareTrust REIT (a US entity focused on similar assets) on the terms of a cash acquisition of Care REIT at 108p/share. The offer price represents a strong premium to recent trading levels and prompted a material increase in Care REIT’s share price. However, we note the offer is at a reasonably large discount to the REIT’s latest net tangible asset value of 119.21p/share. Care REIT benefits from the trend of ageing demographics in the UK and has been delivering attractive levels of rental income growth that support a growing and covered dividend. At 108p/share the stock still yields 6.5% on a trailing twelve-month basis. Nevertheless, if public markets do not rate companies appropriately, the prospect for other parties to make successful opportunistic acquisitions of high-quality property platforms at discounted levels is likely to persist.

Shares in Gresham House Energy Storage, a pureplay owner of operational UK BESS assets, reacted positively to news that a direct peer had received interest from potential suitors at proposed price levels that would indicate Gresham House’s portfolio was being undervalued at prevailing share prices.

There were further developments in relation to the potential acquisition of Assura Group. The Board of Assura announced it had received an indicative, non-binding proposal from KKR at 49.4p/share (cum latest dividend), which was a marginal improvement on KKR’s previous indicative proposal of 48p/share. The Assura Board stated that it would be minded to recommend such an offer to shareholders were it to be made firm. Following this, Primary Health Properties (PHP), a peer of Assura, announced it had made a preliminary approach to Assura in relation to a possible combination of the two businesses, which was ultimately rejected by Assura’s Board. Both KKR and PHP have “put up or shut up” deadlines in April and it is encouraging to see the potential for competitive tension in the process.

During the month, the Fund added to existing positions in International Public Partnerships, Tritax BigBox, Primary Health Properties and SDCL Energy Efficiency. In each instance, the yields on offer at the purchase prices were materially in excess of the Fund’s 5% net income yield target. As noted in February’s commentary, the Fund’s exposure to a Heathrow Finance Bond, representing an approximate 1.3% weighting within the portfolio, matured on 3^rd March.

First quarter distribution announced

Income distributions for the first quarter of 2025, payable in April 2025, amounted to 1.2762p per C Income GBP unit and 1.2975p per I Income GBP unit, representing a year-on-year uplift of approximately 6%. As at 31^st March, the Fund’s trailing 12-month yield was 6.71% and 6.82% for the C Income GBP and I Income GBP units, respectively.