TIDMCSH
RNS Number : 1467Y
Civitas Social Housing PLC
11 May 2021
11 May 2021
CIVITAS SOCIAL HOUSING PLC
Year End Net Asset Value, Dividend Declaration,
Trading and Market Update
c.99% Rental Income Received, 100% EPRA Run-Rate Dividend Cover,
Raised Dividend Target 5.55 pence per Ordinary Share
Civitas Social Housing PLC ("CSH" or the "Company") announces
its net asset values ("NAV") as at 31 March 2021, a trading and
market update, a dividend declaration and an increased dividend
target.
Highlights:
-- Strong financial and operational performance in line with expectations
Annualised rent roll GBP50.4 million (31 March 2020: GBP48.4
million)
-- IFRS NAV per share 31 March 2021: 108.30p (31 March 2020: 107.87p)
-- EPRA run-rate dividend cover 100% as at 31 March 2021
-- 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
o Intention to target a dividend of 5.55 pence per Ordinary
Share for the financial year ending 31 March 2022 (1) which
represents an increase of 2.8% to the 2021 full year dividend
-- Strong Investment Grade Credit Rating obtained from Fitch ("A"/ "A-" Secured/Unsecured)
-- New M&G debt facility terms agreed and drawn
-- Substantial opportunities for further high-quality transactions
Notice of Results
Results for the year ended 31 March 2021 are scheduled to be
released on Wednesday 30 June 2021.
Portfolio Update
During the final quarter of the Company's financial year to 31
March 2021 and to date, the Company has experienced normal trading
conditions with rental income received as expected and with a
continued focus on further enhancing our portfolio whilst
maintaining strong controls over costs.
As at 10 May 2021, c.99% of rents due and payable in respect of
the period to 31 March 2021 had been received across CSH's 619
properties with the balance expected shortly.
On 3 March 2021, the Company announced that it had secured an
Investment Grade High Quality Credit Quality rating of "A" (senior
secured) and a Long-Term IDR of "A-" from Fitch Ratings Limited
("Fitch").
The Company has launched a number of important initiatives that
are being led by the Company's investment adviser, Civitas
Investment Management Limited ("CIM"). These will be set out in
detail at the time of publication of the final results for the year
ended 31 March 2021. These initiatives include:
-- Working with the Company's lenders to utilise the strong
investment grade credit rating to develop a debt financing strategy
that encompasses the Sterling bond markets as a means of securing a
reduction in the overall cost of finance whilst increasing
flexibility and securing an extension of tenure;
-- Building on successful pilot projects to enhance the
environmental performance of the Company's portfolio with specific
initiatives to permanently reduce the carbon footprint of the
estate; and
-- Utilising CIM's extensive knowledge and significant expertise
to work in an embedded way with local authorities for the delivery
of augmented service-led homeless strategies aimed at breaking the
cycle of street homelessness.
Dividend Declaration and New Dividend Target
The Board has today declared a fourth quarterly dividend for the
period from 1 January 2021 to 31 March 2021 of 1.35p per Ordinary
Share resulting in a total payment for the year to 31 March 2021 of
5.4p per Ordinary Share. This is consistent and in line with
previous guidance provided by the Company.
The dividend will be paid on or around 11 June 2021 to holders
on the register as at 21 May 2021 (the record date) with the
corresponding ex-dividend date being 20 May 2021. The dividend will
be paid as a REIT property income distribution ("PID").
The Board intends to target a dividend of 5.55 pence per
Ordinary Share for the financial year ending 31 March 2022(1) .
This reflects year-on-year target dividend growth of 2.8% and
compares with the Office for National Statistics' 12-month
inflation measure for the Consumer Price Index ("CPI") of 1.0% at
March 2021. Medium and longer-term predictions for CPI remain
around 2% and this is consistent with the Bank of England's target
for CPI.
The above inflation target dividend for the year to 31 March
2022 has been set in reflection of the Board's confidence in the
future performance of the Company due to:
-- Strong operational and financial performance
-- Stability of rental collection
-- Target gearing (c.35% gross assets) now in place
Going forward the Company retains the ambition to grow the
dividend in line with inflation as measured by CPI.
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 ("JLL").
31 31
Mar Dec
IFRS NAV 2021 2020
Ordinary NAV (GBP'000) 673,498 672,463
------- -------
Ordinary NAV per share (pence) 108.30 108.17
------- -------
The portfolio, based on individual asset valuations, has been
valued at 31 March 2021 at an average Net Initial Yield of 5.24%
(31 December 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 further enhance the quality
of the Company's properties to reflect the individual needs of
tenants for the long term. It also reflects a deferred
consideration capital payment (with increased rental income) made
in respect of two new facilities in Wales which had previously been
acquired by the Company in August 2020.
In the period to 31 March 2021, an Ordinary Share dividend of
1.35p per share was declared in respect of the period ended 31
December 2020 and paid in February 2021, 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 31
Mar Dec
PORTFOLIO NAV 2021 2020
Ordinary NAV (GBP'000) 736,768 736,363
------- -------
Ordinary NAV per share (pence) 118.47 118.45
------- -------
The portfolio, as a single entity, has been valued at 31 March
2021 at 5.07% Net Initial Yield (30 December 2020: 5.09%)
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.
Market Update
As we move through the Government's staged approach to easing
the lockdown, the sector, in which the Company is the market
leader, continues to display very strong fundamentals in terms of
current and long-term demand and very strong resilience to the
worst effects of the pandemic.
Demand for high quality homes in the community to provide
lifelong housing for people with learning disabilities, mental
health conditions and autism is continuing to grow and will remain
a core focus for the Company. This growth is the result of a number
of key long-term 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.
From an investment perspective, the Company's activities take
place within an asset backed sector that has very low correlation
to the broader economy or general equity market movements,
benefiting from 100% government funding whilst offering
independently evidenced value for money for the public purse and
transformational personal outcomes for residents.
Expansion into Homelessness Services
In addition to the focus on care based housing, substantial
demand exists for housing for those who have suffered homelessness
and also require long term suitable housing in the community, but
with significant additional support to prevent them from returning
to homelessness. In partnership with a number of local authorities
and specialist charities CSH is leading the establishment of
advanced homelessness facilities where the causes of homelessness
are tackled at their roots.
This will assist CSH in diversifying into working with new
counterparties and with a new client group which has the same
dynamics as specialist supported housing in that there is high long
term structural demand, extensive care is required, the social
outcome of addressing the issue will be transformational for
people's lives and considerable savings are achievable for the
taxpayer.
Caring for Residents
CSH has continued an extensive dialogue throughout the period
with all key counterparties, including housing associations, key
care providers, not-for-profit community benefit societies and
community interest companies.
The result of this dialogue is reassurance that the impact of
Covid on CSH's residents has continued to be minimal with the high
levels of care and the design of the homes protecting people. In
addition, high levels of compliance have been maintained as
reported to us by our partner housing providers.
The vaccination programme has been extensively rolled out to
both residents and staff reflecting their status as a vulnerable
group and as frontline key workers. The average age of a CSH
resident remains c.32 years.
With all its housing association counterparties, CSH continues
to be a catalyst for improvements in governance, management and
sharing best practice. Since inception CSH has held quarterly
seminars for all of its partners, ensuring all our staff are
available to work closely with housing associations in respect of
the CSH portfolios. This has included considerable joint working
during the pandemic to maximise the use of best practice and shared
learning.
Quarterly Factsheet
The Company has today published its Factsheet for the quarter to
31 March 2021 and this is available to view on the Company's
website .
Paul Bridge, CEO (Social Housing), Civitas Investment Management
Limited, said:
"This strong performance reflects the high level of structural
demand for good quality homes for vulnerable people, and our
expertise in providing this service. In addition, we are enthused
about the work we are undertaking to enhance the environmental
performance of our properties, and also about our further
diversification into specialist homelessness services. We continue
to see further opportunities to enhance shareholder returns and to
create a beneficial impact for society as a whole through our
activities."
Notes
(1) This is a target and not a formal dividend forecast or a profit forecast
ENDS
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 ("Civitas") 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, Civitas
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 GBP915.6million (31 March 2021). Civitas now
provides homes for 4,346 working age adults with long-term care
needs, in 634 bespoke properties that are supported by 119
specialist care providers, 16 approved providers and working with
over 172 individual local authorities.
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END
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