TIDMCSH
RNS Number : 6262O
Civitas Social Housing PLC
11 October 2021
11 October 2021
CIVITAS SOCIAL HOUSING PLC
Publication of "Market Update - Responses to Shareholder
Questions"
Civitas Social Housing PLC (the "Company" or "CSH"), the UK's
leading care-based and healthcare REIT, has today published a paper
(the "Paper") on the Company's website to provide detailed
responses to questions recently discussed with shareholders.
The Board has confidence in the strength of CSH and in its
investment adviser, Civitas Investment Management Limited ("CIM") -
the Company's assets and revenues continue to perform in line with
expectations and the Board reaffirms its raised dividend target for
FY22*. Given the recent fall in its share price, the Company has
been buying back its shares as an enhancement to shareholder value,
at a time when the share price is low compared to the Company's Net
Asset Value albeit that this requires a diversion of funds that
would otherwise have been used by the Company to purchase further
properties.
The Paper has been thoroughly considered by the Company's
independent Board, the Company's external alternative investment
fund manager, G10 Capital Limited, CIM, and the Company's other
professional advisers. The Paper has also been verified by the
Company's legal adviser Cadwalader, Wickersham & Taft LLP.
The Paper seeks to address the following principal areas of
discussion whilst also providing greater details on a range of
topics that have been brought out in conversation with
shareholders.
The subjects covered by the Paper are as follows:
-- Due Process, Oversight and Governance - Section 2(ii) sets
out the management of transactions undertaken by CSH and in
particular makes clear the formal procedures that were adopted to
evidence the application of due process, oversight and
governance.
-- Operational Cash Flow - Section 3(i) demonstrates the growth
in operating cash flow in excess of the value of the dividends paid
to shareholders in FY21.
-- Dividend Target FY22* - Sections 3(i)-(ii) explain that the
strong and growing operational cashflow noted above underpins the
Company's dividend target for FY22. This is further supported by
Section 9, which demonstrates the strong and growing demand for the
properties within the CSH portfolio. The CSH Board reaffirms its
confidence in the dividend target for FY22*.
-- Value Accretion (No Loss of Value) - Sections 2(iii)-(iv)
demonstrate that property purchases undertaken where SHO Group acts
as the care provider have generated capital profits of GBP8.0m for
CSH (5.6% on cost) with no loss of value. In addition, CSH (via the
housing associations/charities) has the benefit of SHO Group rent
guarantees over a period of up to 25 years to a value of
GBP164m.
-- Lease Terms - Section 5 explains that, in common with many
real estate leases, CSH grants leases for total terms of c. 20-25
years comprising an initial term and (under the control of the
Company) an "option for further lease" or a "reversionary lease" in
each case when combined with the initial term making up the full
lease term.
-- Property Holding Company Directors - Section 5 explains that
the majority of the properties acquired by CSH are held within SPV
structures which are in turn then owned 100% by CSH with CIM
directors representing the interests of CSH on the boards of the
SPVs. Prior to acquisition by CSH the original SPV directors would
typically be the vendors of the properties. However, in all cases
those directorships have terminated following transfer to CSH.
-- Demand and Robust Rental Income - Section 9 sets out the
extensive demand that exists for the accommodation provided by CSH
and identifies the various ways in which rental income is
underpinned and supported.
-- Government Funding - Section 13 comments on the government
funding for the sector and makes clear that, upon occupation, the
rent roll associated with each CSH property is met ultimately from
central government by way of housing benefit. This is in accordance
with long established practice and policy.
-- Rent Levels, Value for Money - Section 6 provides evidence
that supports the value for money offered by the properties within
the CSH portfolio compared to alternative forms of care-based
provision and remarks on the better personal outcomes for
residents.
-- Purchases and Capital Works - Section 15 provides a worked
example of a CSH property purchase with associated capital works to
illustrate how prices paid often incorporate the cost of subsequent
works and property costs that are placed into escrow and why a
comparison of previous sale prices need to take this into
account.
This paper also considers certain other matters raised to the
Company, including additional financial commentary, Approved
Provider counterparties, The Social Housing Family CIC and
transaction structuring including same day purchases and sales.
The Paper can be found on the Company's website here:
www.civitassocialhousing.com/investors/results-reports-and-presentations/
* The target dividends are targets only and do not represent a
profit forecast. There can be no assurance that the targets can or
will be met and should not be taken as an indication of the
Company's expected or actual future results.
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 Tel: +44 (0) 20 3100 2000
Chris Clarke
Darren Vickers
Owen Matthews
Buchanan
Helen Tarbet / Henry Wilson Tel: +44 (0) 20 7466 5111
Hannah Ratcliff / George Beale civitas@buchanan.uk.com
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 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
GBP915.6 million (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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