TIDMCSH
RNS Number : 2905V
Civitas Social Housing PLC
06 August 2020
6 August 2020
CIVITAS SOCIAL HOUSING PLC
("Civitas" or the "Company")
Net Asset Values and Dividend Declaration
Trading and Market Update
Civitas Social Housing PLC ("Civitas" or "the Company") is
pleased to announce its quarterly net asset value as at 30 June
2020, a dividend declaration and to provide a trading and market
update.
Highlights:
-- Robust financial performance in line with expectations
-- Rents received as normal with no COVID 19 impact during the quarter
-- IFRS NAV per share 107.92p (31 March 2020: 107.87p)
-- 1.35p dividend declared for the quarter as planned
-- RICS removes "material valuation uncertainty" condition
-- Three additional properties acquired for GBP3.9 million
-- Strong pipeline of investment opportunities
Trading and Market Update
The Company continues to perform in line with expectations and
rents have been collected as normal and unaffected by COVID-19.
Cash generation remains strong. The Company is pleased to
announce a slightly increased net asset value (reflecting the
current low level of CPI inflation) and an on target uplifted
dividend of 1.35p consistent with the stated objective of paying a
total of 5.4p for the year to 31 March 2021.
The healthcare and housing sectors in which the Company operates
have continued to prove operationally resilient against the
backdrop of the COVID 19 pandemic with care providers and housing
associations continuing to adapt best practice for the safety of
residents and staff. Whilst no part of the economy has been
completely immune from the virus, the instances of COVID 19 within
the Company's portfolio remains at a very low level with many
properties reporting no occurrences at all. The Company continues
to offer its thanks and support to its counterparties and
acknowledges the excellent way in which they continue to
perform.
The Board believes that the Company operates a robust and
defensive business model. This is driven by meeting, in a
cost-effective manner, the legitimate needs of vulnerable
individuals who require the accommodation provided by the Company
to enable them to reside, for the long-term, in community settings
in line with stated Government policy. The COVID 19 pandemic
provides a further demonstration of the merits of enabling
individuals to reside either in their own dwelling or in small
clusters as opposed to old style, large scale, remote residential
or hospital settings. When evaluating the performance of
counterparties, the Company believes it is important for all
interested parties to take these broader and usually very positive
personal outcomes into account.
Net Asset Values ("NAV"):
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 ("JLL").
30 31
Jun Mar
IFRS NAV 2020 2020
Ordinary NAV (GBP'000) 670,898 670,564
------- -------
Ordinary NAV per share (pence) 107.92 107.87
------- -------
The portfolio, based on individual asset valuations, has been
valued overall at 30 June 2020 at an average Net Initial Yield of
5.26% (31 March 2020: 5.26%) after taking into account the initial
costs of property acquisitions incurred by the Company and the
assumed costs of a subsequent theoretical sale. The individual
valuations are determined by JLL based on a range of underlying
metrics including applicable discount rates and expected long-term
inflation.
The growth in IFRS NAV reflects the contribution from the
indexation of leases in the period, (based on the current low level
of CPI inflation) and the cost of modest discretionary capital
expenditure that has been incurred to enhance further the quality
of the Company's properties to reflect the individual needs of
tenants for the long term. It also reflects fewer asset purchases
and any associated yield compression in the period as the Company
does not presently have surplus capital (above a cash buffer and
capital reserved for transactions on which exchange has taken
place), notwithstanding a strong pipeline of acquisition
opportunities.
In the period to 30 June 2020, an Ordinary Share dividend of
1.325p per share was declared in respect of the period ended 31
March 2020 and paid in May 2020, 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
Jun Mar
PORTFOLIO NAV 2020 2020
Ordinary NAV (GBP'000) 736,057 735,704
------- -------
Ordinary NAV per share (pence) 118.40 118.35
------- -------
The portfolio, as a single entity, has been valued at 30 June
2020 at 5.07% Net Initial Yield (31 March: 5.06%) reflecting the
enhanced value from the aggregation of individual properties into a
single portfolio company and the positive effects of the stamp duty
adjustment noted below.
The JLL Portfolio NAV valuation incorporates two additional
assumptions when considering Red Book valuation. Firstly, that the
assumed theoretical 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
pricing. This assumption is supported by transactional evidence
that JLL has observed in the market.
Material Valuation Uncertainty
In accordance with RICS guidelines the Material Valuation
Uncertainty that has been applied to the valuation of the majority
of classes of real estate as a result of the COVID 19 pandemic has,
from the end of May 2020, been lifted from the Company's portfolio.
RICS confirmed that the condition would no longer be applied to
specialist supported housing of both C2 and C3 designations let on
FRI leases. This reflects the perceived stability of income
associated with such arrangements.
Dividend Declaration
The Board has today declared a first quarterly dividend for the
period from 1 April 2020 to 30 June 2020 of 1.35p per Ordinary
Share as part of the stated target of 5.4p per Ordinary Share for
the year to 31 March 2021.
The dividend will be paid on or around 7 September 2020 to
holders on the register as at 14 August 2020 (the record date) with
the corresponding ex-dividend date being 13 August 2020. The
dividend will be paid as a REIT property income distribution
("PID").
The target dividend for the year to 31 March 2021 reflects both
the strong underlying cash generation that the Company continues to
achieve and the Board's view, at the present time, of the Company's
prospects in the current financial year.
Investments/ Pipeline
During the quarter to 30 June 2020, the Company completed the
acquisition of three freehold properties comprising 25 tenancies
for a total consideration of GBP3.9 million prior to purchase
costs. This includes the purchase on completion of the first
smaller phase of the Company's new state of the art healthcare
facilities in Wales.
The purchase consideration has been reserved by the Company for
this phase together with the final phase which will provide
accommodation for 49 individuals and is due for completion and
delivery over the coming weeks.
In respect of additional investment opportunities, the Company
is in active discussions over the potential acquisition of a range
of high-quality existing and new build properties to be acquired at
completion without the need for forward financing.
The availability of these investment opportunities reflects many
of the unique strategic relationships that have been established by
the Company over recent years, in particular with leading
specialist care providers as well as with several new
counterparties based on the recent shareholder approval for a
broadening of the Company's investment policy.
Additional Debt Facilities
As noted previously the Company is in active discussions
regarding the provision of additional debt facilities and expects
to provide an update in this regard in due course and for new
facilities to be made available over the next few months.
Activity within the lending markets for new facilities is
beginning to move forward again after delays noted at the beginning
of the COVID 19 pandemic when lenders' focus was very much directed
towards borrowers impacted by the virus.
As noted above, at the present time the Company's cash resources
are fully allocated to the projects that are expected to complete
this year on which exchange has taken place and to maintaining an
appropriate and prudent cash reserve. The Board is currently
considering options for raising additional capital to enable the
Company to continue to acquire further assets within its pipeline
of attractive investment opportunities.
Quarterly Fact Sheet
The Company has today published its Factsheet for the quarter to
30 June 2020 and this is available to view on
the Company's website .
S
For further information, please contact:
Civitas Investment Management Limited
Paul Bridge Tel: +44 (0)20 3058 4844
Andrew Dawber Tel: +44 (0)20 3058 4846
Panmure Gordon
Sapna Shah Tel: +44 (0)20 7886 2783
Tom Scrivens Tel: +44 (0) 20 7886 2648
Liberum Capital Limited
Gillian Martin / Chris Clarke Tel: +44 (0) 20 3100 2222
Buchanan
Helen Tarbet / Henry Wilson Tel: +44 (0) 7872 604 453
Hannah Ratcliff / George Beale Tel: +44 (0) 20 7466 5111
civitas@buchanan.uk.com
Notes:
Civitas Social Housing PLC (CSH) was created in 2016 by Civitas
Investment Management Limited as the first dedicated London listed
REIT, to raise long-term, sustainable, institutional capital to
invest in care-based social homes and healthcare facilities across
the UK. So far, CSH has completed more than 120 individual
transactions to build the largest portfolio of its kind that has
been independently valued at GBP885 million. CSH provides homes for
4,241 working age adults with long-term care needs, in 616 bespoke
properties that are supported by 118 specialist care providers, 15
housing associations over 164 individual local authority areas.
Most recently, CSH has extended its mandate to be able to work
directly with the NHS and other leading care-based
organisations.
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END
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