Net Asset Value, Trading and Dividend Update

RNS Number : 0803B

Civitas Social Housing PLC

09 February 2022

 

9 February 2022

CIVITAS SOCIAL HOUSING PLC

("Civitas" or the "Company")

Net Asset Value, Trading Update and Dividend Declaration

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 31 December 2021, with performance continuing in line with expectations.

Highlights:

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

· IFRS NAV per share of 108.78p - resilient as expected (30 Sept 2021: 108.49p)

· Rents received as normal with no impact from COVID-19

· Third 1.3875p quarterly dividend declared in line with full year target of 5.55p (2021: 5.40p)

· The Company offers a high degree of inflation protection to investors through stable, inflation adjusted leases

Trading and Market Update

The Company is pleased to announce an increased NAV of 108.78 pence per share and a third quarterly dividend of 1.3875 pence per share as targeted, consistent with the Board's stated objective of paying a total dividend of 5.55 pence per share for the year ending 31 March 2022.

The Civitas portfolio continues to benefit from inflation adjusted long-term leases or occupancy agreements with Approved Providers and the Company aims to deliver returns broadly in line with inflation over the long term.

The Omicron variant of COVID-19 has had no significant operational or financial impact upon the Company and we are pleased to note that the level of restrictions is now being reduced considerably. High levels of care continue to be provided within the properties and enhanced health and safety procedures have been maintained to ensure residents can engage safely with families and friends.

The UK's long-established Government policy of seeking to house vulnerable people as near as possible to their own community, remains in place. This reflects both a multi-decade cross-party consensus and the experience of the pandemic, which has further demonstrated how important care-based housing is for health and life quality of the vulnerable, whilst providing value for money for the taxpayer.

In addition, the Company, working in partnership with London local authorities, has pioneered the provision of advanced homelessness facilities in several locations to ensure those experiencing homelessness have an opportunity to receive a full suite of care and to recover their lives.

The Company offers its heartfelt thanks and support to all its partners and their staff for their efforts during the pandemic.

Investment and Pipeline Update

During the quarter to 31 December 2021, Civitas completed the acquisition of one property in Lancashire for a total consideration of £1.4 million. The property provides a home for 13 individuals with learning disabilities and mental health care needs.

Civitas is currently assessing a number of high-quality opportunities with local authorities and care providers, to acquire long term community housing for those with lifelong care needs. Further announcements in this respect will be made in due course. Deployment into these opportunities will be balanced with the prudent objective of retaining sufficient liquidity at all times.

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	31 Dec 2021	30 Sept 2021
Ordinary NAV (£'000)	669,650	672,884
Ordinary NAV per share (pence)	108.78	108.49

The portfolio, based on individual asset valuations, has been valued overall at 31 December 2021, at an average Net Initial Yield of 5.29% (30 September 2021: 5.27%), 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.  The slight reduction in IFRS NAV is attributable to the recent buy back of ordinary shares which are held in treasury for subsequent reissue.

For the financial year to date, the Company purchased 6,875,000 shares into treasury at an average price of 91.33p, being at a discount to the Company's prevailing NAV per share. The impact of the share repurchases at 31 December 2021 has been to enhance IFRS NAV per share by 0.19p.

A dividend of 1.3875p per Ordinary Share was declared, as targeted, on 8 November 2021 in respect of the quarter ended 30 September 2021 and paid on 13 December 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	31 Dec 2021	30 Sept 2021
Ordinary NAV (£'000)	741,346	742,636
Ordinary NAV per share (pence)	120.43	119.74

The portfolio, as a single entity, has been valued at 31 December 2021 at 5.06% Net Initial Yield (30 September 2021: 5.1%), 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 third quarterly dividend for the period from 1 October 2021 to 31 December 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 11 March 2022, to holders on the register as at 18 February 2022 (the "record date"), with the corresponding ex-dividend date being 17 February 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 18 February 2022.

Ongoing Engagement with Housing Associations

Civitas continues to take a proactive and collaborative approach towards the housing associations and charitable entities holding Civitas leases in support of their objective to enhance their financial and operational performance and, where relevant for certain housing associations, to respond to comments made by the Regulator of Social Housing ("RSH").

Housing associations and charities have continued in the quarter to report high levels of health and safety compliance in addition to meeting their lease obligations to the Company.

Quarterly Factsheet

The Company has today published its Factsheet for the quarter to 31 December 2021 and this is available to view on the   Company's website .

LEI:  213800PGBG84J8GM6F95

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 £946.3million (30 September 2021). CSH now provides homes for 4,404 working age adults with long-term care needs, in 649 bespoke properties that are supported by 119 specialist care providers, 18 approved providers and working with over 178 individual local authorities.

 

END

 

 

MSCFLFITFTITIIF