TIDMCSH
RNS Number : 9744H
Civitas Social Housing PLC
06 August 2019
6 August 2019
CIVITAS SOCIAL HOUSING PLC
("Civitas" or the "Company")
Net Asset Values, Dividend Declaration, Investment and Market
Update
The Board of Civitas Social Housing PLC ("Board"), the first
London listed Real Estate Investment Trust ("REIT") dedicated to
investing in regulated social housing in England and Wales,
announces its quarterly net asset value ("Net Asset Value" or
"NAV") as at 30 June 2019.
Highlights:
-- Annualised rent roll GBP46.0 million (31 March: GBP45.7m)
-- IFRS NAV per share up 0.12% to 107.21p (31 March: 107.08p)
-- 1.325p quarterly dividend
-- EPRA dividend cover 88%, advancing to target cover
-- Lease indexation targets were achieved during the period
-- Corresponding increase in fair value of investment property
-- First tranche of new debt facilities at advanced stage of negotiation
Net Asset Values:
IFRS NAV
The unaudited IFRS NAV, disclosed below, reflects an independent
RICS "Red Book" valuation prepared on an individual asset basis by
Jones Lang LaSalle Ltd ("JLL").
30 31
June March
IFRS NAV 2019 2019
Ordinary NAV (GBP'000) 667,319 666,508
------- -------
Ordinary NAV per share (pence) 107.21 107.08
------- -------
The portfolio has been valued on an IFRS basis with a 5.28% net
initial yield (31 March 2019 - 5.27%). This slight change is purely
a reflection of rent indexation in this quarter being weighted
towards properties with a slightly higher yield, given the IFRS NAV
is constituted on a property by property basis with individual
yields attaching to each property in the portfolio.
In the period to 30 June 2019 an Ordinary Share dividend of
1.325p per share was declared and paid, amounting to GBP8.2
million.
Portfolio NAV
The unaudited Portfolio NAV, disclosed below, reflects an
independent RICS "Red Book" valuation prepared on a portfolio basis
by JLL.
30 31
June March
PORTFOLIO NAV 2019 2019
Ordinary NAV (GBP'000) 739,244 741,170
------- -------
Ordinary NAV per share (pence) 118.79 119.07
------- -------
The portfolio as a whole has been valued with a 5.03% net
initial yield (31 March 2019 - 5.01%). This slight change is not
the result of any underlying adjustment in the portfolio itself but
reflects the broader market for healthcare transactions in the
period that are monitored by JLL as part of their valuation
process.
The JLL Portfolio NAV valuation incorporates two additional
assumptions when considering the Red Book valuation. First that the
assumed sale costs (from Civitas to a subsequent buyer) are reduced
as the portfolio is assumed to be sold (with all properties within
SPVs) with stamp duty being charged at 0.5% on the sale of shares
in SPVs as opposed to 5.0% for the sale of each underlying
property.
Secondly, that the portfolio is sold in its entirety rather than
as individual properties (making it better suited to a wider group
of institutional buyers) and so attracting more competitive prices
(5.03% cap rate as opposed to 5.28% under IFRS). This assumption is
supported by transactional evidence that JLL has observed in the
market.
Investment Update
As previously noted, Civitas has deployed its presently
available equity, subject to a cash buffer. More than GBP208
million of borrowings have also been successfully deployed, against
available facilities of GBP212.5 million. As a result, our run-rate
annualised rent roll as at 30 June 2019 was GBP46.0 million, an
increase of 62% since 31 March 2018, underpinning the move towards
the target of a fully covered dividend (88% dividend cover at 30
June 2019).
In light of this, and the current pipeline of attractive
investment opportunities which exceeds GBP200 million, the Company
has been working to bring on board the next tranches of debt
facilities, in order to achieve its stated objective of an average
leverage of 35% on a gross asset basis.
The first tranche of these facilities with a new lender is at an
advanced stage of negotiation, following a full programme of due
diligence by the lender and their retained independent valuation
advisers. It is expected to be in the order of GBP60 million with
an extension to around GBP100 million, and with pricing consistent
with the Company's existing debt facilities. In addition, detailed
discussions are underway with other counterparties to secure an
additional debt facility tranche of up to GBP70 million over the
coming months to complement the potential GBP100 million facility
noted above. Further announcements will be made when
appropriate.
Since IPO, the Company has successfully attained the following
investment milestones and created a high quality, nationally-based,
diversified portfolio of regulated social housing in England and
Wales as well as partnering with new Housing Associations and care
providers in new local authorities:
30-Jun 30-Sept 31-Dec 31-Mar 30-Jun 30-Sept 31-Dec 31-Mar 30-Jun
Period 2017 2017 2017 2018 2018 2018 2018 2019 2019
Investment*
(GBPm) 206 284 431 472 508 619 674 758 761
------- -------- ------- ------- ------ ------- ------ ------ ------
Properties 167 282 384 414 440 521 557 591 594
------- -------- ------- ------- ------ ------- ------ ------ ------
Tenancies 1,130 1,820 2,405 2,621 2,845 3,440 3,746 4,075 4,094
------- -------- ------- ------- ------ ------- ------ ------ ------
Local Authorities 68 82 99 109 123 140 144 157 158
------- -------- ------- ------- ------ ------- ------ ------ ------
Housing Associations 7 10 10 11 12 15 15 15 15
------- -------- ------- ------- ------ ------- ------ ------ ------
Care Providers 42 50 59 64 71 93 98 113 113
------- -------- ------- ------- ------ ------- ------ ------ ------
*excluding purchase costs, including completed properties
only.
During the period, Civitas acquired a further 3 properties for a
consideration of approximately GBP3.2 million.
Civitas' investment portfolio is well diversified and through
our active asset management activities we give consideration to
making the portfolio as efficient as possible. We also continue to
appraise individual properties with a view to ensuring that they
deliver the very best long-term accommodation while meeting the
stringent quality standards expected by the Company.
We continue to work closely with our Housing Association
partners as they develop and strengthen their financial, governance
and regulatory status. We are actively involved in helping with
this work, and we expect that our and their efforts will be
reflected in some measure in the future views expressed by the
Regulator of Social Housing (RSH) with whom the Company continues
to be in regular, productive and collaborative dialogue. The RSH
has indicated publicly more than once in the period that it does
not have an issue with the lease-based model for the delivery of
supported housing, although it is keen to see the sector evolve and
mature, as are we. Examples of the significant progress the sector
has made in its evolution, and our involvement in helping secure
this, can be found in our annual report.
Market Update
Supported housing is integral to the healthcare pathway in the
UK and a key component in facilitating the delivery of care for
individuals with significant long-term care needs. Supported
housing enables such people to live fulfilling lives within the
community and close to their families, rather than in a hospital or
institution. It is a substantial and well-established sector,
housing more than 170,000 individuals[1] and growing at an average
of around 5% a year. Laing Buisson estimates that supported living
is seeing the most significant growth in investment (CAGR 7.8%)
which is a reflection of its success in providing high quality
community-based accommodation, as well as the ongoing UK
demographic shifts and other favourable factors which drive
demand[2].
Demand
Our experience of working on the ground across half the local
authorities in England and Wales indicates that demand for
supported housing is growing and expanding to cover a wider range
of underlying needs faced by people who are battling homelessness,
various forms of addiction or who are stepping down from the NHS
into a more appropriate supportive care environment before
returning home. The pressure on local authority budgets at this
current time is well known, and this is changing behaviour as
authorities look for high quality solutions that deliver from a
social perspective and also save money. It is universally accepted
that supported living meets both of these criteria.
Rents
Supported living often costs more than general housing and this
goes beyond just the physical adaptions to the buildings, extensive
and specialised though they are. This is well understood and
accepted by local authorities, government ministers and leading
charities, who all appreciate that for people who need long term
care, the alternative to supported housing is a hospital or
institution, at a much greater personal, social and economic cost.
Whilst supported housing rents cannot be meaningfully compared to
market rents or general needs social rents, because the individuals
in consideration cannot live in general needs accommodation, it is
well understood by those commissioning care that supported housing
provides better outcomes and value for money than
institutionalisation. This has been the case since its inception
more than 20 years ago.
Government
Across the broad political cross party landscape, we know that
there remains very strong support for supported housing to
facilitate the provision of community-based care particularly for
those individuals with significant long-term care needs and who are
regarded as vulnerable as a result. Supported housing enables
people to achieve better and more independent lives and outcomes
which are positive for those individuals and also ultimately
represent a major cost saving for the taxpayer.
Dividend
The Board has declared a quarterly dividend for the period from
1 April 2019 to 30 June 2019 of 1.325p per Ordinary Share. The
dividend will be paid on or around 6 September 2019 to holders on
the register as at 16 August 2019 (the record date) and the
corresponding ex-dividend date being 15 August 2019. The dividend
will be paid as a REIT property income distribution ("PID").
Quarterly Fact Sheet
The Company has today published its Fact Sheet for the quarter
to 30 June 2019 and this is available to view on the Company's
website.
For further information, please contact:
Civitas Housing Advisors Limited
Paul Bridge Tel: +44 (0)20 3058 4844
Andrew Dawber Tel: +44 (0)20 3058 4846
Cenkos Securities PLC
Sapna Shah Tel: +44 (0)20 7397 1922
Tom Scrivens Tel: +44 (0)20 7397 1915
Buchanan
Helen Tarbet / Henry Harrison-Topham Tel: +44 (0) 20 7466 5000
Henry Wilson / Hannah Ratcliff civitas@buchanan.uk.com
Notes:
Civitas Social Housing PLC is the first Real Estate Investment
Trust offering pure play exposure to social housing in England and
Wales. The Company is advised by Civitas Housing Advisors Limited,
who are authorised and regulated by the Financial Conduct Authority
under Firms Reference Number 815699. The Company is listed on the
premium listing segment of the Official List of the Financial
Conduct Authority and was admitted to trading on the main market
for listed securities of the London Stock Exchange in November
2016.
[1] House of Commons, First Joint Report of the Communities and
Local Government and Work and Pensions Committees - "Future of
Supported Housing: May 2019
[2] LaingBuisson, Adult Specialist Care, 3(rd) Edition: April
2019
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END
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