TIDMCSH
RNS Number : 6320N
Civitas Social Housing PLC
02 February 2021
2 February 2021
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 31 December 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 108.17p (30 September 2020: 108.01p)
-- Rents received as expected 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
-- One additional property acquired in the quarter
-- New debt facility terms agreed
-- Substantial opportunities for further high-quality transactions
CSH Trading Update
CSH has continued to perform in-line with expectations with
rents in the quarter having been collected as normal, unaffected by
COVID-19. As at 1 February 2021, over 99 per cent. of rents in
respect of the period to 31 December 2020 had been received across
CSH's 619 properties with the balance expected shortly.
Rental income and net cash generation have advanced positively
to provide further support for the Company's target 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.
The Company's investment portfolio has benefited from the
addition of one further property in the period. This property is
directly adjacent to an existing larger building already owned by
the Company in Chorley, Lancashire and will allow the site to be
consolidated.
The terms of the Company's new debt facility have been agreed
and will be announced shortly. Following completion of certain
formalities and on drawdown the Company expects to be in a position
to undertake a number of additional pipeline acquisitions.
CSH continues to focus on the incorporation of ESG principles
within its investment strategy with a particular attention to
expanding and developing its action plan to enhance the
environmental footprint of the portfolio.
In this regard the Company is pleased to note that it has now
instigated several pilot projects to achieve significant energy
efficiency improvements within its buildings, including installing
solar photovoltaics and air source heat pumps to reduce carbon
emissions. This is part of a broader engagement with potential
'turnkey' partners to deliver portfolio wide energy improvement
solutions including retrofit, energy use reductions and enabling
technology.
These initiatives are by nature long-term and will depend to a
degree upon Government support as part of the broader ambition for
the sector to decarbonise. That should not however restrict the
Company's ambition to play a leading role and to develop positive
environmental initiatives. In this regard the Company is pleased to
have achieved an above average ESG rating as measured by the GRESB
Public Disclosure Assessment 2020 that evaluates the level of ESG
disclosure for property companies and REITs.
Market Update
As the anniversary of the first COVID-19 lock-down approaches,
the sector in which CSH operates continues to demonstrate strong
fundamentals and robust operational characteristics that reflect
the essential care services delivered within the Company's
properties.
Demand for high quality homes in the community to provide
lifelong housing for people with learning disabilities, mental
health and autism is continuing to grow. This is the result of a
number of key drivers: the closure of old remote hospitals, an
increasing number of young people requiring adult care services and
as parents and guardians themselves require elderly care support,
the need for people to move from family homes into permanent
care-based accommodation.
In addition, substantial demand exists for housing for those who
have suffered homelessness and also require long term suitable
housing in the community, with additional support to prevent them
from returning to homelessness.
The Company's Investment Adviser, Civitas Investment Management
Limited ("CIM") has continued its regular and extensive dialogue
with housing associations which since the start of the pandemic
includes detailed reports on pandemic responsiveness. These reports
have shown a high degree of resilience to the pandemic with few
serious cases of COVID-19 reported due to the quality of the
buildings people live in, the attention and dedication of the
one-to-one care they receive and the age profile of the
residents.
With all its housing association counterparties CIM continues to
be a catalyst for improvements in governance, management and
sharing best practice. Since inception CIM has held quarterly
seminars for all its partners and makes its staff available to work
closely with housing associations in respect of the CIM
portfolios.
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 transformational personal
outcomes for residents.
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").
31 30
Dec Sept
IFRS NAV 2020 2020
Ordinary NAV (GBP'000) 672,463 671,412
------- -------
Ordinary NAV per share (pence) 108.17 108.01
------- -------
The portfolio, based on individual asset valuations, has been
valued at 31 December 2020 at an average Net Initial Yield of 5.26%
(30 September 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 single asset
purchased in the period, which reflects the fact that 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 31 December 2020, an Ordinary Share dividend of
1.35p per share was declared in respect of the period ended 30
September 2020 and paid in December 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.
31 30
Dec Sept
PORTFOLIO NAV 2020 2020
Ordinary NAV (GBP'000) 736,363 735,913
------- -------
Ordinary NAV per share (pence) 118.45 118.4
------- -------
The portfolio, as a single entity, has been valued at 31
December 2020 at 5.09% Net Initial Yield (30 September: 5.08%)
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 third quarterly dividend for the
period from 1 October 2020 to 31 December 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 1 March 2021 to holders
on the register as at 12 February 2021 (the record date) with the
corresponding ex-dividend date being 11 February 2021. 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.
Quarterly Fact Sheet
The Company has today published its Factsheet for the quarter to
31 December 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 GBP901.1million. CSH provides homes for 4,295
working age adults with long-term care needs, in 619 bespoke
properties that are supported by 118 specialist care providers, 16
registered and approved providers over 164 individual local
authority areas.
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