TIDMCSH
RNS Number : 5579S
Civitas Social Housing PLC
07 November 2019
CIVITAS SOCIAL HOUSING PLC
("Civitas" or the "Company")
Net Asset Values, Dividend Declaration, Investment and Market
Update
7 November 2019
The Board of Civitas Social Housing PLC ("Board"), the first
London listed Real Estate Investment Trust ("REIT") dedicated to
investing into regulated social housing in the UK, is pleased to
announce its quarterly net asset value ("Net Asset Value" or "NAV")
as at 30 September 2019.
Highlights:
-- Annualised rent roll GBP46.5 million (30 June 2019: GBP46.0m)
-- IFRS NAV per share 107.23p (30 June 2019: 107.21p)
-- 1.325p quarterly dividend declared
-- EPRA dividend cover 88% (EPRA run rate 96%)
-- Lease indexation targets achieved
-- New GBP60m NatWest debt facility secured
-- Share buy-backs commenced
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 30
Sept June
IFRS NAV 2019 2019
Ordinary NAV (GBP'000) 667,441 667,319
------- -------
Ordinary NAV per share (pence) 107.23 107.21
------- -------
The portfolio, based on individual asset valuations, has been
valued overall at 30 September 2019 at an average of 5.28% Net
Initial Yield, unchanged from 30 June 2019.
The three-month period to 30 September 2019 has fewer lease
indexation events than other periods during the year, reflecting
the timing of the original asset purchases and therefore the annual
indexation.
In the period to 30 September 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 30
Sept June
PORTFOLIO NAV 2019 2019
Ordinary NAV (GBP'000) 736,401 739,244
------- -------
Ordinary NAV per share (pence) 118.30 118.79
------- -------
The portfolio as a whole has been valued at 30 September 2019 at
5.05% Net Initial Yield compared to 5.03% Net Initial Yield at 30
June 2019. The slight variation reflects JLL's current view of the
market and comparable transactions.
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. Second, 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 (5.05% Net Initial Yield as opposed to 5.28% under IFRS).
This assumption is supported by transactional evidence that JLL has
observed in the market.
Company Update
On 10 September 2019, the Company announced a new GBP60 million
5-Year Term Facility with National Westminster Bank Plc that has
the potential to be extended by a further GBP40 million.
The availability of these funds enabled the Company to take the
opportunity to buy shares at a discount to NAV. This discount
emerged following the publication by the Regulator of Social
Housing ("RSH') of a risk update in April 2019 that raised a number
of concerns over lease-based Housing Associations, many of which
have now been resolved. Prior to this time, and since IPO in
November 2016, the Company's shares had typically traded at a
premium to IFRS NAV.
More recently, the RSH has issued a further risk report in
relation to the entire social housing sector that is regarded as
being more supportive of lease-based Housing Associations. The RSH
has now stated publicly that they have no issue with the
lease-based model.
During this time, the Company has continued to grow its rental
income, deliver enhanced operational cashflow, meet its dividend
obligations and move closer to the target of 100% dividend cover.
It has also worked closely with the RSH and with its Housing
Association and other partners and taken a hands-on role in
bringing about improvements, many of which are now very
apparent.
The Company continues to honour the commitments made to
investment counterparties and to balance the ability to buy-back
shares with these commitments. This is both to vendors of new
properties, particularly in areas where the Company has existing
properties and has built strong relationships with local
authorities and existing properties that are within the portfolio
that are presently being extended significantly. The Board will
continue to monitor this balance and update the market
accordingly.
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-Sept 31-Dec 31-Mar 30-Jun 30-Sept 31-Dec 31-Mar 30-Jun 30-Sept
Period 2017 2017 2018 2018 2018 2018 2019 2019 2019
Investment*
(GBPm) 284 431 472 508 619 674 758 761 764
-------- ------- ------- ------ ------- ------ ------ ------ -------
Properties 282 384 414 440 521 557 591 594 599
-------- ------- ------- ------ ------- ------ ------ ------ -------
Tenancies 1,820 2,405 2,621 2,845 3,440 3,746 4,075 4,094 4,114
-------- ------- ------- ------ ------- ------ ------ ------ -------
Local Authorities 82 99 109 123 140 144 157 158 160
-------- ------- ------- ------ ------- ------ ------ ------ -------
Housing Associations 10 10 11 12 15 15 15 15 15
-------- ------- ------- ------ ------- ------ ------ ------ -------
Care Providers 50 59 64 71 93 98 113 113 114
-------- ------- ------- ------ ------- ------ ------ ------ -------
In the three-month period to 30 September 2019, the Company
acquired five properties for a consideration of GBP3.5 million.
Market Update
Demand for the properties provided by the Company remains very
strong across the UK and supported living is a preferred care
solution for government and for most local authorities.
Our experience increasingly confirms that this demand is
greatest for the provision of properties in which higher acuity
care is delivered, as this generates the highest cost saving for
the state and local authorities and the best personal outcomes for
individuals.
It is also where the rental cost is at its lowest when compared
with the total cost of care and accommodation combined. In some
examples within the Company's portfolio the rental cost is below 5%
of the total cost. This encourages care providers to enter into
back to back 25-year leases with our Housing Association partners
to ensure access to these specialist adapted properties over the
long term.
A third of the Civitas portfolio by rental income is now covered
by such long-term care back-to-back care provider leases that
complement the leases we hold with Housing Associations and this is
expected to continue to increase over time.
The market generally has continued to evolve and now reflects
the role played by significant parties such as Civitas and certain
other landlords, experienced in care who are designing schemes and
working directly with major care providers and local authorities.
This results in the delivery of high-quality bespoke buildings,
both existing newly adapted properties and new build properties
acquired at completion. It avoids the need to take either
development or financing risk, as both of these are usually taken
by large care providers or developers.
Whilst the Company will continue to work with a small select
group of experienced and reliable counterparties who deliver
completed turn-key schemes, much is now generated and assembled
directly by the Company. We consider this increasingly represents a
key point of differentiation that enhances our portfolio.
Dividend
The Board has declared a quarterly dividend for the period from
1 July 2019 to 30 September 2019 of 1.325p per Ordinary Share. The
dividend will be paid on or around 29 November 2019 to holders on
the register as at 15 November 2019 (the record date) and the
corresponding ex-dividend date being 14 November 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 September 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
Robert Naylor Tel: +44 (0)20 7397 1922
Andrew Worne Tel: +44 (0)20 7397 1915
Liberum Capital Limited
Gillian Martin Tel: +44 (0) 20 3100 2222
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 across the UK.
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.
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END
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