Civitas Social Housing Share Discussion Threads

[rambutan2] 14/11/2022 22:18

They didn't buy 18m on the 7th. They just tipped over the 3% mark ie now notifiable. And the transaction date was the 3rd. Just about all of it is held somewhere within the pensions division, with a tiny bit held in an open ended fund.

[williamcooper104] 14/11/2022 21:27

One thing I've learned is never trust someone else's DD - my favourite being - oh look Goldmans have bought - which usually means they're covering a total return swap Was this LGEN own balance sheet or one of LGENs many third party managed pots of money

[jg231] 14/11/2022 15:01

Well, we can agree to differ @theprovosts.

The majority of the specialist adaptations are wet rooms. The Civitas “adaptions” page is very telling - a lift, security system, alarm system, wet room. Most modern flats have the same. The only actual bespoke bit is anything for wheelchair users but these people make up a tiny % of SSH (page 7 of the attached -

The “below market rent” compares with alternative accommodation, i.e. hospital or care homes, not private market flats.

£194 for a (very lightly adapted) self-contained flat in the SE is good value. The Civitas portfolio is focused in the NW, W and NE. According to the Civitas website 69% of the properties are in the 40% most deprived local authorities ( Anyone who thinks developers weren’t targeting the cheaper areas to maximise profits is deluded (hence the map below…)

[wskill] 09/11/2022 08:19

Hopefully we will have a good few years of divis before any take out spoole5,more than happy with the update management are getting on with the job that will do me.

[cwa1] 09/11/2022 08:14

Yes, sounded a sensible enough update to me

[spoole5] 09/11/2022 08:13

Decent update, not that the market will care. These will end up being taken out at below NAV.

[catch007] 04/11/2022 15:34

Added a few more today circa 60p hoping the divi level is maintained.

[theprovosts] 01/11/2022 09:33

care to reference your claims about overrented vs open market JG231? It is my understanding that substantial sums are invested into the properties to make them suitable for specialist assisted social housing.

Also consider:

"it is important to note that SSH rents must be below market rent in order to meet the definition of supported housing, which is defined in the Government’s Policy statement on rents and in turn references low cost rental as defined in s.69 of the Housing and Regeneration Act 2008."

"CSH has previously indicated that the average weekly rent for a mid-acuity property in its portfolio is £194 (which is in line with rents quoted by Mencap) and £311 a week for very high-acuity residential care accommodation."

Circa £800 per month for a self contained specially purposed dwelling is not excessive. Your talk of a 30% rent cut is not only pure speculation, but pure stupidity considering the huge housing shortage and massive demand for rental properties of all types nationwide.

[williamcooper104] 01/11/2022 08:14

Check out HOME REITs trading update They're in process of transferring Circle properties to another tenant at what seems to be the same rent - £60 per bed per week which doesn't seem excessive The issue with cutting rent by say 30 percent is that you are basically admitting that much of your income is operating income disguised as rent so you could get hit on valuations on both the rent and the yield

[jg231] 01/11/2022 07:32

The problem for me is that the look through valuation net initial yield is about 7% (£54m rent / £360m market cap + £360m debt + assumed purchaser's costs).
However, if you read the regulator's commentary, these properties are very overrented vs open market. If they had to cut the rent by 30%, the implied valuation yield is more like 5%. Offsetting that, they may get 10% CPI rental uplifts next April. If they can do that, it looks like they are closer to rational numbers.

[catch007] 31/10/2022 17:03

I added a tranche today at 59p mainly for dividend income given the NAV discount. Long term there is a deep social need for these businesses that is difficult to replace so worth a punt at 9%+ yield.

[williamcooper104] 31/10/2022 12:36

The charities often have very little operating surplus post lease payments; and they will be struggling with wage inflation and general public sector austerity

[2sporrans] 31/10/2022 12:10

The Wroebel 'put' hasn't done much to support the price.

[He bought almost £60k worth at 75p on 13Sep22].

Disappointing the revival in gilts hasn't been reflected in a significant recovery here; not least seeing Civitas isn't badly exposed to the business cycle.
Not like e.g. offices, retail, warehouses or most industrials are.
Accepted, rising rates are bad news for coming debt rollovers and property valuations.

Isn't the rental income tolerably well insulated though; hence the cashflow and dividend also?
Or are the Charities struggling to cope with inflation?
Even if their [tenant] income is fully indexed, the time lag for 'catch-up' with soaring costs might stump some.

[tux223] 25/10/2022 11:22

I just plotted the prices of CSH and SOHO against Grainger GRI for the last six months. The market seems to have the same down on Grainger, a general ordinary housing landlord, as on the specialists. There doesn't appear to be any special dislike for social housing, just an appreciation that asset values may fall (house price crash) and that yields have to be adjusted against the now much higher bank base rate.

The higher yoeld on CSH and SOHO doubtless reflects the higher costs that would be incurred if the charities renting their social housing were to default. For GRI it would be relatively simple to evict the tenant and install a new one who could pay!

[debeege] 25/10/2022 10:21

goingloco:

1: Show me a REIT that is paying back its loan unless they redeem it all? They are all interest only as you are required to pay 90% of all profits to shareholders.
2: Try reading RNS's. "The Government consultation, launched by the Department for Levelling Up, Housing and Communities, on a new social housing rent cap in 2023 currently excludes Specialist Supported Housing and other specialist sub-sectors"
3. Rent is paid direct to the Registered Providers in the vast majority of cases as the tenants often have special needs.
4. Read more RNS's. In cases where a registered provider has ended a lease early, other providers have stepped up with minimal changes.

[jonwig] 20/10/2022 19:46

I looked recently at both CSH and SOHO and came to the same conclusion. The providers (charities) are the weak link and the reason for share price underperformance.

I agree with all the points you make.

FWIW, the straightforward build-to-rent sector has some attractions: PRSR for example. Directors have been buying heavily, recent statements have been positive, and almost all its homes are currently built by Vistry.

[goingloco] 20/10/2022 18:43

Civitas and TriplePoint both mentioned in a newsletter by the DT's Richard Evans today, based on the prospective dividend yields of over 8%.

I would like yields of 8%+ in my income portfolio (actually my SIPP).

But as I see it these REITS could be skating on thin ice for 3 reasons.

1. The usual REIT risk of debt ie: "good" gearing in the good times, dangerous debt now even though SOHO has fixed interest long-term debt - but it's interest only so will have to be rolled over
2. The business model where the REIT owns the properties and leases them to "Approved Providers" who pay inflation-indexed rent (actually its capped in most cases) to the REIT, run the properties, collect rents from tenants, and help the tenants get the housing benefit which in most cases (I believe) is where the actual income comes from. These Approved providers are struggling at the moment because of increased costs and the government wants to cap the income they receive, caps of3%, 5% and 7% are being considered. Also there's always the risk that an Approved Provider could lose its status. How would the REIT handle a situation where its tenant had failed and it is now the direct landlord of numerous individuals, most of whom require care of some kind? Presumably some sort of work-around would be found but the idea of a nice steady inflation-indexed income would have evaporated.

I'm talking myself out of these investments - would anyone like to enthuse me and tell me why I'm being too pessimistic?

[jonwig] 09/10/2022 07:15

Edison also covers CSH. Home page here:



Last note was in May.
I'll be looking to buy one of CSH and SOHO, but I want to see what plans this "government" has in mind for the sector.

[kaffee] 08/10/2022 13:25

You are correct. Apologies

[alanpro1] 08/10/2022 10:24

hxxps://www.shorttracker.co.uk/company/GB00BD8HBD32/0.5% short. Not 190m. Circa 3m shares.

[kaffee] 08/10/2022 09:31

Well the discount isn't bothering some, 190m to the short side and opened quite recently......

hxxps://shorteurope.com/details_company.php?company=CIVITAS%20SOCIAL%20HOUSING%20PLC&land=united_kingdom

[jonwig] 08/10/2022 08:20

The note does help there. The APs seem to be the problem. But there's also uncertainty about the amount of government support and inflation-linking. The Truss regime appears to be sending mixed signals about lots of things.