TIDMCSH
RNS Number : 4470E
Civitas Social Housing PLC
06 November 2020
6 November 2020
CIVITAS SOCIAL HOUSING PLC
("CSH" or the "Company")
Net Asset Values and Dividend Declaration
Trading and Market Update
Civitas Social Housing PLC ("CSH" or the "Company") is pleased
to announce its net asset value as at 30 September 2020, a dividend
declaration and to provide a trading and market update.
Highlights:
-- Strong financial and operational performance in line with expectations
-- IFRS NAV per share 108.01p (30 June 2020: 107.92p)
-- Rents received as normal with no COVID 19 impact
-- Excellent health and safety compliance reported by housing associations
-- 1.35p quarterly dividend declared in line with full year target of 5.4p
-- Two additional properties (51 beds) acquired for GBP10.4m in the quarter
-- Further progress on new debt facilities and investment pipeline
Trading and Market Update
The Company has continued to perform in-line with expectations
with rents in the quarter being collected as normal unaffected by
COVID-19. As at 5 November over 98 per cent. of rents had been
received across CSH's 618 properties with the balance expected
shortly.
Rental income and net cash generation have advanced positively
to provide further support for the Company's aim of paying a total
dividend of 5.4p for the year to 31 March 2021 and for maintaining
a progressive dividend policy in-line with inflation. Revenue from
the portfolio, including income contracted from new investments,
delivers 100% EPRA dividend cover on a run rate basis.
Further details of the Company's financial performance will be
provided at the time of publication of the half year report to 30
September 2020 in early December.
The Company's investment portfolio has benefited from the
addition of two further properties in the period, leased to
Inclusion Housing Community Interest Company and Bespoke Supported
Tenancies Limited. The properties together comprise 51 bed spaces
of which 49 are supported by a new back to back care provider lease
which covers the entirety of the rental income over the 22-year
period including void protection.
More broadly the sector in which the Company operates has
continued to demonstrate strong fundamentals. The COVID-19 pandemic
has generated further additional demand for specially adapted, high
quality accommodation for vulnerable and disabled adults, to which
CSH has been able to respond by making available vacant properties
in the portfolio.
The Company's investment adviser, Civitas Investment Management
Limited ("CIM") has extended its regular dialogue with housing
associations to include detailed reports on pandemic
responsiveness.
The Board is pleased to note continuing levels of the highest
dedication to health and safety, resulting in excellent compliance
reports together with a strong performance in the unbroken delivery
of essential care for residents.
In addition to undertaking these monitoring activities CIM has
continued to work closely with housing associations to assist in
helping them drive forward operational and financial reporting
improvements including assisting with management and board level
recruitment, asset management and the interaction with local
authorities and care providers. CIM is encouraged to observe that
the housing association partners are continuing to evolve and to
improve their systems and processes.
From an investment perspective, the Company's activities take
place within a sector that has very low correlation to the broader
economy or equity market movements and benefits from 100%
government funding whilst offering independently evidenced value
for money for the public purse and positive transformational
personal outcomes for residents.
The Company continues to focus on Environmental, Social and
Governance ("ESG") principles, and during the quarter has:
-- Increased the Environmental Performance Certificate rating
within the CSH portfolio to 99.5% (98% as at 31 March 2020) with
full compliance expected by the end of the year;
-- Maintained its status as an "Impact Investor" under the
International Finance Corporation ("IPC") principles;
-- Become an early adopter of the new Sustainability Reporting
Standard developed for the social housing sector by a leading
social impact consultancy; and
-- Been at the forefront of improving governance in the sector.
Net Asset Value
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 30
Sept Jun
IFRS NAV 2020 2020
Ordinary NAV (GBP'000) 671,412 670,898
Ordinary NAV per share (pence) 108.01 107.92
The portfolio, based on individual asset valuations, has been
valued at 30 September 2020 at an average Net Initial Yield of
5.26% (30 June 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 the asset purchases in
the period, which were limited in number as the Company is almost
fully invested (above a cash buffer and capital reserved for
transactions expected to complete shortly), notwithstanding a
growing pipeline of strong acquisition opportunities.
In the period to 30 September 2020, an Ordinary Share dividend
of 1.35p per share was declared in respect of the period ended 30
June 2020 and paid in September 2020, amounting to GBP8.4
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 Jun
PORTFOLIO NAV 2020 2020
Ordinary NAV (GBP'000) 735,913 736,057
Ordinary NAV per share (pence) 118.4 118.4
The portfolio, as a single entity, has been valued at 30
September 2020 at 5.08% Net Initial Yield (30 June: 5.07%)
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 CSH 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.
Dividend Declaration
The Board has today declared a second quarterly dividend for the
period from 1 July 2020 to 30 September 2020 of 1.35p per Ordinary
Share as part of the target of 5.4p per Ordinary Share for the year
to 31 March 2021.
The dividend will be paid on or around 4 December 2020 to
holders on the register as at 20 November 2020 (the record date)
with the corresponding ex-dividend date being 19 November 2020. The
dividend will be paid as a REIT property income distribution
("PID").
The target dividend of 5.4p per Ordinary Share 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.
Additional Debt Facilities
The pandemic slowed, temporarily, the ability of lenders to
consider new facilities with their focus being applied to existing
borrowers who required support and with most or all staff working
remotely. More recently lenders have been more open to consider new
funding opportunities on competitive rates and the Company is now
working with parties to finalise a new debt facility. A further
announcement will be made in due course.
Quarterly Fact Sheet
The Company has today published its Factsheet for the quarter to
30 September 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) 20 7466 5000
Hannah Ratcliff / George Beale 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 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 on
an IFRS basis at GBP898.5 million. CSH provides homes for 4,292
working age adults with long-term care needs, in 618 bespoke
properties that are supported by 118 specialist care providers, 15
housing associations over 164 individual local authority areas.
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