Filter
Filter

Filter

Filter content by topic
Brexit
Finance
Mergers and Acquisitions
Pay and pensions
Regulation and Governance
Asset management
Development
Markets
Accounts
People
Deals
Grant
Insight
Projects
Market sale
HAs below 5000
View All

Civitas shareholders see 10.7% return on investment

The UK’s first social housing real estate investment trust (REIT) has provided its equity investors with a 10.7 per cent total shareholder return in its first full year of trading.

Linked InTwitterFacebookeCard

Civitas Social Housing reported a £36.9m pre-tax profit in the year to 31 March 2018.

 

The REIT launched on the stock market in November 2016 with an oversubscribed £350m initial public offering, which it followed with a £302m capital raising of C shares.

 

Civitas reported that it had acquired 414 specialist supported housing properties in its first year across 109 local authorities, deploying £471.6m of capital.


As at 31 March 2018, the International Financial Reporting Standards (IFRS) net asset value of the company was 105.5p, representing an increase of 7.7 per cent since the IPO price of 98p per ordinary share and giving a total return of 10.7 per cent, including dividends paid of 3p per share in the period. The company’s share price this week was 103p, which is seven per cent down year on year.


Along with its directors, Civitas’ shareholders include Investec Wealth & Investment, which has placed more than £55m with the REIT from a large range of its clients; East Riding Council Pension, which has £20m of shares; Close Asset Management (£11.66m); and Kilik & Co (£10.6m).


The company also paid £5.77m to its investment advisor, Civitas Housing Advisors (CHA), in the year. CHA, led by chief executive Paul Bridge, leads on the portfolio and pipeline, along with funding.


Fees are charged at between 0.9 per cent and one per cent of the net asset value on the portfolio to £500m, dropping to 0.8 per cent for more than £500m and 0.7 per cent once over £1bn.


The REIT’s rental income for the year from its supported housing properties was £28.4m, with a portfolio worth £516.6m on an IFRS basis.

 

Civitas said CHA’s relationships have enabled it to make acquisitions in the specialist supported housing sector, with yields typically in the region of 5.5 per cent to 6.5 per cent.


The REIT reported that the company has benefited from acquiring many properties “off-market”, which has meant “prices achieved have been very competitive, resulting in capital appreciation of £30.6m in this first reporting period”.


It said many of the tenants “are of an age that would mean that they could be in residence for the length of the lease and beyond, as such the leases are typically 25 years in length or longer and subject to annual CPI uplifts”.

 

Local authorities are responsible for paying the care provider directly for its provision of services to the tenant. The registered provider typically enters into a service level agreement with the care provider.

The REIT will continue to gear up, having taken a £52.5m 10-year loan with Scottish Widows and a £40m, three-year revolving floating credit facility with Lloyds Bank. The revolving credit facility with the bank has been extended by £20m.

The portfolio is spread across the country, with concentrations in the West Midlands, Durham, Dorset and Greater London.


All the properties have long-term leases signed with 11 housing associations (see below), “providing dependable accommodation for 2,621 tenants supported by 64 care providers”.

Westmoreland Supported Housing Association provided 35 per cent of the rent roll, followed by 14.4 per cent from Falcon Housing Association. In the year to March 2018, one of its partner RPs, First Priority Housing Association, provided 10.66 per cent of rental income.


Following financial and governance difficulties at First Priority, those leases were transferred to Falcon. Civitas also made a number of changes to its approach to RP partners, including establishing a new investment protocol.

Michael Wrobel, chair of Civitas, said: “Civitas has made a strong start. It has succeeded in assembling a market leading portfolio of high-quality social housing, providing long-term stable, affordable accommodation for some of the most vulnerable in society.


“[CHA] has identified a further pipeline of opportunities and is engaged presently in conducting detailed due diligence on those that are near term and evaluating further those for purchase later in 2018 and beyond.


“As part of this work, [CHA] continues to build relationships with potential vendors, particularly care providers who today form a growing element of the pipeline overall in addition to housing associations and other private vendors.”


The social housing REIT also published an independent social impact report with “encouraging evidence that Civitas can deliver on its social objective: increasing the provision of high-quality social homes, improving the quality of life for low income and vulnerable people in social need while achieving financial returns for investors”.

% of annual rental income per Civitas registered provider:

 

 

% of total annual rent

 

Westmoreland Supported Housing Limited

35.02

Falcon Housing Association CIC

14.44

First Priority Housing Association

10.66

Trinity Housing Association Limited

9.04

Inclusion Housing CIC

8.70

PAS Housing Association

6.04

New Walk Property Management CIC

4.59

Chrysalis Supported Association Limited

4.43

Harbour Light Assisted Living CIC

3.76

IKE Supported Housing Limited

1.89

Hilldale Housing Association Limited

1.43

 

Total

100.00

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.

Related Stories

For general enquiries you can contact Social Housing at:

3rd Floor, 4 Harbour Exchange Square, Isle of Dogs, London, E14 9GE

Tel: 0207 772 8300
Fax: 020 7772 8590/91

© 2019 Social Housing
All rights reserved
Twitter
Facebook
LinkedIn