Trading and Market Update

RNS Number : 4610V

Civitas Social Housing PLC

10 August 2022

 

10 August 2022

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

Net Asset Values, Dividend Declaration,

Trading and Market Update

Consistent and positive portfolio performance

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") update as at 30 June 2022, with performance continuing to be robust and dividend declared in line with full year target.

Highlights:

· Consistently robust financial and operational performance, in line with the Board's expectations

· Unaudited IFRS NAV per share increased to 111.89p (31 March 2022: 110.30p)

· First quarterly dividend of 1.425p declared in line with full year target of at least 5.70p¹ (2022: 5.55p)

· Portfolio continues to benefit from contractual inflationary increases to rent roll

· Work progressing on strengthening the sector including seeking to achieve regulatory alignment through the previously announced lease clause proposal

· Sustained high demand for the specially adapted community-based homes that Civitas provides

Trading and Market Update

The Company is pleased to announce an increased unaudited NAV per share of 111.89 pence (being a 1.44% increase over the quarter) and a first quarterly dividend of 1.425 pence per share as targeted, consistent with the Board's previously announced target of paying a total dividend of at least 5.70 pence¹ per share for the year ended 31 March 2023.

The Civitas portfolio benefits from inflation adjusted long-term leases or occupancy agreements with Approved Providers (housing associations and other not-for-profit organisations) and the Company aims to deliver returns broadly in line with inflation over the long-term.

As recently outlined, the Company has been working on a regulatory clause in partnership with its Approved Providers with the objective of helping them to achieve regulatory compliance. This work is progressing and the Company will provide market updates as and when appropriate. 

Demand for care-based community housing remains high and is projected to increase further still by independent bodies. The Company is at the forefront of ensuring the sector maintains focus on quality, value for money and robust governance. 

Investment and Pipeline Update

During the quarter to 30 June 2022, the Company completed the previously announced acquisition in Wisbech, Cambridgeshire for a total consideration of £0.6 million (excluding purchase costs).

The property is subject to indexed leases with Chrysalis (an existing counterparty) and is immediately income generating with a net initial yield in line with the Company's present expectations.

¹ This is a target and not a formal dividend forecast or a profit forecast

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 June 2022	31 Mar 2022
Ordinary NAV (£'000)	683,366	675,547
Ordinary NAV per share (pence)	111.89	110.30

The portfolio, based on individual asset valuations, has been valued overall at 30 June 2022, at an average Net Initial Yield of 5.25% (31 March 2022: 5.28%), 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 IFRS NAV reflects the contribution from the indexation of leases in the period, less the cost of 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 quarter to 30 June 2022, the Company also purchased 1,700,000 shares into Treasury at an average price of 87.72p, being at a discount to the Company's prevailing NAV per share. Collectively, the share repurchases during the quarter have enhanced IFRS NAV per share by 0.06p.

A dividend of 1.3875p per Ordinary Share (amounting to £8.5 million) was declared, as targeted, on 11 May 2022 in respect of the fourth quarter ended 31 March 2022 and paid on 28 June 2022.

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 June 2022	31 Mar 2022
Ordinary NAV (£'000)	762,374	752,331
Ordinary NAV per share (pence)	124.83	122.84

The portfolio, as a single entity, has been valued at 30 June 2022 at 5.03% Net Initial Yield (31 March 2022: 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 first quarterly dividend for the period from 1 April 2022 to 30 June 2022 of 1.425p per Ordinary Share as part of the previously stated dividend target of at least 5.70p per Ordinary Share for the year ended 31 March 2023.

The dividend will be paid on or around 9 September 2022, to holders on the register as at 19 August 2022 (the "record date"), with the corresponding ex-dividend date being 18 August 2022. 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 19 August 2022.

The increased target dividend for the year ending 31 March 2023 reflects both the strong underlying cash generation that the Company's portfolio is delivering and the Board's positive view of the Company's prospects for the current financial year.

Quarterly Factsheet

The Company has today published its Factsheet for the quarter to 30 June 2022 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 / Verity Parker	[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. CSH's portfolio has been independently valued at £968.8million (31 March 2022). CSH now provides homes for 4,594 working age adults with long-term care needs, in 697 bespoke properties that are supported by 130 specialist care providers, 18 approved providers and working with over 178 individual local authority partners.

 

END

 

 

TSTEKLFBLVLZBBD