Civitas announces £85.6m acquisition of regulated social housing properties

The properties are spread across England and Wales over 14 local authority areas, and are supported by six separate care providers.

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Civitas Social Housing PLC has completed the purchase of 19 regulated social housing properties, comprising 266 tenancies for a total consideration of approximately £73.5m.

The company has also exchanged contracts on two further properties, comprising 65 tenancies for a total consideration of £12.1m, with completion expected in due course following certain works being undertaken.

The properties, situated across England and Wales over 14 local authority areas, are supported by six separate care providers. The acquisition enables Civitas to extend the coverage of the company’s national portfolio and further enhance geographic diversity.

The properties are leased to Registered Providers (RP) Encircle Housing Limited, Chrysalis Supported Association Limited, Inclusion Housing and Community Interest Company, Hilldale Housing Association Limited, and Bespoke Supported Tenancies Limited.

All are regulated by the Regulator of Social Housing and are counterparties to existing leases within the company’s portfolio.

Civitas is satisfied that these RPs are operationally robust and are in continuous and positive interaction with the Regulator.

The properties, sourced by Civitas Housing Advisors Limited, the company’s investment adviser, will be immediately income-generating with an initial net yield in line with the company’s expectations.

All the properties that have been acquired are either purpose-built or have been adapted for use as accommodation for tenants with lifelong learning disabilities and other care needs who are expected to remain in occupation for the long-term and who receive 100% state funding.

The properties are subject to long-term leases, with rents adjusted annually in line with CPI over the full period and usually are subject to a lower limit of inflation indexation of 1% per annum and a maximum indexation of 4% per annum.

The properties have been financed from the Company’s existing debt facilities as all equity capital raised to date has, save for a contingency reserve, been invested in income generating properties.

Commenting on the acquisitions, Paul Bridge, CEO of Civitas Housing Advisors, said: “We are delighted to have completed our largest deal so far, and to have acquired properties which are of the highest quality, run by focused and operationally robust Registered Providers.

“For investors, these properties will be immediately income-generating. For tenants, they offer the opportunity to live as independently as possible within their communities.”

 

Further Civitas developments:

  • Intention to complete and announce the arrangement of additional debt facilities within the coming weeks – following this transaction, the company gross LTV ratio is approximately 22%
  • Following this acquisition, the run rate rental income has increased from approximately £41m to approximately £45m (up 10%), and is expected to increase further as additional acquisitions are announced
  • Intention to (on or around Wednesday 8th May 2019) announce the quarterly dividend for the period to 31st March 2019 – the quarterly NAV will be announced in mid-May
  • Intention to host a Capital Markets Day in London in May for investors and analysts to provide greater insight into its business and marketplace

 

Civitas Portfolio (21st March 2019)

Investment £767.5 million Local Authorities 157
Properties 587 Registered Providers 15
Tenancies 4,119 Care Providers 106

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