Net Asset Values, Dividend & Trading Update

RNS Number : 5576R

Civitas Social Housing PLC

08 November 2021

 

  8 November 2021

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

Net Asset Values, Dividend Declaration,

Trading and Market Update and continued Shareholder Engagement

Civitas Social Housing PLC ("Civitas" or the "Company"), the UK's leading care-based and healthcare REIT,   is pleased to announce its quarterly net asset value ("NAV") as at 30 September 2021, a dividend declaration, trading and market update and continued plans for Shareholder engagement.

Highlights:

· Robust financial performance in line with expectations

· Rents received as normal with no COVID-19 impact during the quarter

· IFRS NAV per share of 108.49p resilient as expected (30 June 2021: 108.42p)

· Second 1.3875p quarterly dividend declared in line with full year target of 5.55p

· M&G facility part-invested with balance available for pipeline opportunities

· Ongoing engagement with existing and new shareholders

· Share buy-backs undertaken with shares held in treasury for reissue

Trading and Market Update

The Company continues to perform well and in line with expectations, rent collection continues as normal and remains unaffected by COVID-19.

The Company is pleased to announce a slightly increased NAV and a second quarterly dividend of 1.3875p as targeted, consistent with the Board's stated objective of paying a total dividend of 5.55p for the year ending 31 March 2022.

In common with other parts of the healthcare and social care sectors, the Company is pleased to note that access to the Company's properties has eased so that residents are better able to engage with family and friends. At the same time, care providers are still maintaining enhanced levels of health and safety delivery reflecting the ongoing nature of the pandemic.

The pandemic has itself resulted in increased reported levels of demand for many of the services that are delivered within the Company's properties, that is in addition to the long-term secular scarcity of adapted community-based accommodation. Recent government commitments to additional funding of the NHS and social care are consistent with the continued growth in community provision, ensuring that primary care resources within the NHS can be focused on patient waiting lists.

Civitas works within sectors that demonstrate supportive long-term trends and it is of note that leading healthcare consultant LaingBuisson has confirmed that over 90% of the delivery of long-term learning disability and mental health care services are now provided by independent sector care providers with funding from the state. These services are extensively delivered in the community in properties such as those owned by the Company.

The Company once again offers its sincere thanks and support to all its partners and their staff and acknowledges their dedication and excellent performance throughout the period.

Civitas Investment Management Limited ("CIM") - New Shareholder

The Board notes the recent release made on CIM's website confirming that CK Asset Holdings Limited ("CK Asset") has become a shareholder in the CIM group.

CK Asset is a leading multinational corporation that has diverse activities including property development and investment, hotels, aircraft leasing, pub operations and investments in infrastructure and utility assets.

The Board is pleased to note that CIM will continue to be managed by the existing key individuals and the team and confirms that there is no change to either the investment management agreement or to the services provided under it as a result of the investment by CK Asset.

Net Asset Values ("NAV"):

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").

IFRS NAV	30 Sept 2021	30 Jun 2021
Ordinary NAV (£'000)	672,884	674,883
Ordinary NAV per share (pence)	108.49	108.42

The portfolio, based on individual asset valuations, has been valued overall at 30 September 2021, at an average Net Initial Yield of 5.27% (30 June 2021: 5.25%), 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 and are 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 historic low level of CPI inflation), less 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.

During the period the Company purchased 2,250,000 shares into treasury at an average price of 92.13p, being at a discount to the Company's prevailing NAV. The impact of the share repurchases at 30 September 2021 has been to enhance IFRS NAV per share by 0.06p.

A dividend of 1.3875p per Ordinary Share was declared, as targeted, on 6 August 2021 in respect of the quarter ended 30 June 2021 and paid on 10 September 2021 amounting to £8.6 million.

Portfolio NAV

The unaudited Portfolio NAV, disclosed below, reflects an independent RICS "Red Book" valuation prepared on a portfolio basis by JLL.

PORTFOLIO NAV	30 Sept 2021	30 Jun 2021
Ordinary NAV (£'000)	742,636	743,876
Ordinary NAV per share (pence)	119.74	119.51

The portfolio, as a single entity, has been valued at 30 September 2021 at 5.1% Net Initial Yield (30 June 2021: 5.06%) 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 valuation incorporates two additional assumptions when considering Red Book valuation. Firstly, that the assumed theoretical 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.

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 second quarterly dividend for the period from 1 July 2021 to 30 September 2021 of 1.3875p per Ordinary Share as part of the previously stated dividend target of 5.55p per Ordinary Share for the year ending 31 March 2022.

The dividend will be paid on or around 13 December 2021 to holders on the register as at 19 November 2021 (the "record date") with the corresponding ex-dividend date being 18 November 2021. The dividend will be paid as a REIT property income distribution. The Company operates a Dividend Reinvestment Plan ("DRIP"), which is managed by its registrar, Link Group. For shareholders who wish to receive their dividend in the form of shares, the deadline to elect for the DRIP is 22 November 2021.

Shareholder Engagement

The Company and its investment adviser, Civitas Investment Management Limited ("CIM") have continued to make themselves available to speak and meet with both new and existing shareholders following the release of the detailed Market Update on 11 October 2021.

In meetings the management team has discussed the additional background to the Company's investment activities and talked through the worked example of a property purchase that was set out in Section 15 of the Market Update. Shareholders have found this particularly helpful in understanding how the often significant cost of post completion works and other related costs specified by the Company (paid for from purchase consideration) significantly reduces vendors' net margins from selling properties to the Company. To provide further insight into the Company's strategy and the Social Housing sector, the Company intends to hold a Capital Markets Day in Q1 2022.

As a result of this engagement, the Board is pleased to welcome a number of new and significant institutional shareholders to the Company including several leading European institutions.

Investment and Pipeline Update

During the quarter to 30 September 2021, the Company completed one transaction with respect to a property for the delivery of learning disabilities and mental health care services.

The Company also has developed a range of pipeline opportunities that are under consideration and will be balanced with the existing share buy-back programme and the prudent objective of retaining sufficient liquidity at all times.

Quarterly Factsheet

The Company has today published its Factsheet for the quarter to 30 September 2021 and this is available to view on the   Company's website .

ENDS

For further information, please contact:

Civitas Investment Management Limited
Andrew Dawber	Tel: [phone]
Paul Bridge	Tel: [phone]
Panmure Gordon
Sapna Shah	Tel: [phone]
Tom Scrivens	Tel: [phone]
Liberum Capital Limited
Chris Clarke / Darren Vickers / Owen Matthews	Tel: [phone]
Buchanan
Helen Tarbet / Henry Wilson	Tel: [phone]
Hannah Ratcliff / George Beale	[e-mail]

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 and healthcare facilities 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 at £915.6million (31 March 2021). CSH now provides homes for 4,391 working age adults with long-term care needs, in 648 bespoke properties that are supported by 119 specialist care providers, 17 approved providers and working with over 178 individual local authorities.

 

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