Civitas Social Housing PLC Net Asset Value, Investment and Market Update (2229B)

TIDMCSH

RNS Number : 2229B

Civitas Social Housing PLC

29 January 2020

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

Net Asset Values, Dividend Declaration, Company and Market Update

29(th) January 2020

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 31 December 2019.

Highlights:

   --      Annualised rent roll GBP47.2 million (30 September 2019: GBP46.5m) 
   --      IFRS NAV per share 107.55p (30 September 2019: 107.23p) 
   --      1.325p quarterly dividend declared 
   --      EPRA dividend cover 87% (EPRA run rate 97%) 
   --      Lease indexation targets achieved 
   --      GBP60m NatWest debt facility now part drawn 
   --      Progress on delivering new facilities and investment pipeline 

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").

 
                                    31       30 
                                    Dec      Sept 
 IFRS NAV                           2019     2019 
 Ordinary NAV (GBP'000)           668,592  667,441 
                                  -------  ------- 
 Ordinary NAV per share (pence)   107.55   107.23 
                                  -------  ------- 
 

The portfolio, based on individual asset valuations, has been valued overall at 31 December 2019 at an average of 5.29% Net Initial Yield compared to 5.28% at 30 September 2019. This small movement is the result of a slight reduction, at the present time, in the expectation of growth of the Consumer Price Index based on current predictions for short-term UK inflation rates.

In the period to 31 December 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.

 
                                    31       30 
                                    Dec      Sept 
 PORTFOLIO NAV                      2019     2019 
 Ordinary NAV (GBP'000)           737,561  736,401 
                                  -------  ------- 
 Ordinary NAV per share (pence)   118.65   118.30 
                                  -------  ------- 
 

The portfolio as a whole has been valued at 31 December 2019 at 5.06% Net Initial Yield compared to 5.05% Net Initial Yield at 30 September 2019. The slight adjustment reflects the inflation point noted above.

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 (5.06% Net Initial Yield as opposed to 5.29% under IFRS). This assumption is supported by transactional evidence that JLL has observed in the market.

Company Update

Civitas has now partially drawn the proceeds of the GBP60 million 5-Year Term Facility with National Westminster Bank Plc, and this is being applied to investments expected to be completed shortly and in the recent purchase of own shares at a discount to NAV. The remaining balance of the facility is expected to be drawn shortly.

During the quarter to 31 December 2019 the Company acquired a total of 815,000 Ordinary Shares at an average price of 85.20p per share which are held in treasury for subsequent cancellation or reissue. This compares to 97.30p per share at which the Company's shares traded at the close of business on 28 January 2020.

At the time of publication of the interim results on 2 December 2019, Civitas highlighted the delivery of new state-of-the-art properties in Wales that will support higher acuity care for a range of conditions. These properties are being acquired on completion and following the entering into of all arrangements including leases. Commissioning works have continued to progress, and an update will be provided in due course, once these completions have taken place.

The Company's pipeline of investment opportunities remains robust and comprises new and existing schemes and properties that have typically been brought together by Civitas directly. This reflects the Company's active engagement with a range of property-owning specialist care providers and other sector counterparties. Civitas expects this focus on the generation of bespoke opportunities to remain a core element of the Company's investment process. At the same time the Company is pleased to note that Civitas continues to be an early point of contact for many vendors and their advisers often in advance of general marketing for the properties.

As part of the Company's asset management activities we have successfully assigned certain leases (on their existing terms) to optimise the portfolio and maximise the efficiency of the respective housing associations. In this regard the proportion of the Company's portfolio with Westmoreland Supported Housing, as measured by rental income, is now reduced to 6.4% from the 11.2% previously reported, with leases having been assigned to several housing associations (already within Civitas' portfolio). A full update of the distribution of housing associations will be provided at the time of publication of the Company's results for the year to 31 March 2020.

Since IPO, the Company has successfully attained the following investment milestones and created a high quality, nationally based, diversified portfolio of regulated social housing partnering with a range of counterparties:

 
                         31-Mar   31-Mar  31-Mar  30-Jun  30-Sept  31-Dec 
 Period                   2017     2018    2019    2019     2019    2019 
 Investment* 
  (GBPm)                  106      472     758     761      764     771 
                        -------  -------  ------  ------  -------  ------ 
 Properties                82      414     591     594      599     608 
                        -------  -------  ------  ------  -------  ------ 
 Tenancies                487     2,621   4,075   4,094    4,114   4,153 
                        -------  -------  ------  ------  -------  ------ 
 Local Authorities         32      109     157     158      160     161 
                        -------  -------  ------  ------  -------  ------ 
 Housing Associations      5        11      15      15      15       15 
                        -------  -------  ------  ------  -------  ------ 
 Care Providers            25       64     113     113      114     115 
                        -------  -------  ------  ------  -------  ------ 
 

In the three-month period to 31 December 2019, the Company acquired nine properties for a consideration of GBP7.1 million.

Market Update

The sector continues to experience significant underlying demand from local authority commissioners, individuals and families seeking a community-based solution for their care and associated long-term housing needs. This is particularly so for young adults who are seeking to secure a long-term placement for the first time, often on moving from children's services or a family home.

Recently the Company was pleased to host the Channel 4 documentary "Home Free" at St Thomas House, a Civitas property in Chester. This featured a group of young adults moving into their first independent long-term home that is managed by our housing association partner Hilldale.

The recent definitive General Election result has brought greater clarity to the political landscape. Whilst specialist supported housing has always received cross-party support it is helpful that the macro environment has gained greater clarity and the new Government has made various commitments supporting the delivery of state funded healthcare and social care.

Demand continues to be very strong 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.

More generally we have noted that the importance of providing safe, community based accommodation for vulnerable adults, and the insufficiency and dangers of institutional care, are rising up the public debate agenda, with these issues having been highlighted recently by Parliamentary groups, investigative journalists and activists. We consider that this public focus is likely to generate additional demand for the properties that Civitas and others seek to deliver and to highlight the tangible benefits that result from a well-constructed community placement.

Dividend

The Board has declared a quarterly dividend for the period from 1 October 2019 to 31 December 2019 of 1.325p per Ordinary Share. The dividend will be paid on or around 28 February 2020 to holders on the register as at 7 February 2020 (the record date) and the corresponding ex-dividend date being 6 February 2020. The dividend will be paid as a REIT property income distribution ("PID").

In respect of EPRA dividend cover this has increased to 97% on a run rate basis as at 31 December 2019 and 87% over the period to 31 December 2019. The Company remains committed to achieving 100% run rate EPRA dividend cover as soon as practicable.

Quarterly Fact Sheet

The Company has today published its Fact Sheet for the quarter to 31 December 2019 and this is available to view on the Company's website.

For further information, please contact:

Civitas Housing Advisors Limited

   Paul Bridge                            Tel: [phone] 
   Andrew Dawber                   Tel: [phone] 

Liberum Capital Limited

   Gillian Martin                        Tel: [phone] 

Panmure Gordon

   Sapna Shah                            Tel: [phone] 
   Tom Scrivens                         Tel: [phone] 

Buchanan

   Helen Tarbet / Henry Wilson             Tel: [phone] 
   Hannah Ratcliff / George Beale         [e-mail] 

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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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January 29, 2020 02:00 ET (07:00 GMT)