Civitas buys 19 regulated social housing properties for £74m
Civitas Social Housing
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16:40 03/08/23
Civitas Social Housing has completed the purchase of 19 regulated social housing properties, comprising 266 tenancies, for a total consideration of around £73.5m, it announced on Thursday.
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In addition, the company 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.
It said the properties were situated across England and Wales over 14 local authority areas, and supported by six separate care providers.
The acquisition would enables Civitas to extend the coverage of its national portfolio, and further enhance its geographic diversity, the board explained.
It said the properties were leased to the registered providers Encircle Housing, Chrysalis Supported Association, Inclusion Housing and Community Interest Company, Hilldale Housing Association, and Bespoke Supported Tenancies.
All of those providers were regulated by the Regulator of Social Housing, and were counterparties to existing leases within the Civitas portfolio.
Civitas said it was satisfied that all of the registered operators were operationally robust, and were in “continuous and positive” interaction with the regulator.
The properties would be immediately income-generating, with an initial net yield in line with the firm’s expectations.
They were sourced by the company’s investment adviser, Civitas Housing Advisors.
All the properties acquired were either purpose-built or had been adapted for use as accommodation for tenants with lifelong learning disabilities and other care needs, who were expected to remain in occupation for the long-term and who received 100% state funding.
The properties were subject to long-term leases, with rents adjusted annually in line with CPI over the full period, and in the majority of instances were subject to a lower limit of inflation indexation of 1% per annum and a maximum indexation of 4% per annum.
Civitas said the properties were financed from its existing debt facilities, as all equity capital raised to date had - save for a contingency reserve - been invested in income-generating properties.
It also announce that in the coming weeks, ot intended to complete and announce the arrangement of additional debt facilities on terms that the board believed would be “favourable”, and which would enhance cash generation and the overall return to shareholders.
“This reflects the quality of the properties being acquired and their long-term income characteristics together with the subdued future expectations for inflation,” the board said in its statement.
Following the transaction, the company’s gross loan-to-value ratio was approximately 22%, with Civitas maintaining a conservative target for average gross indebtedness of 35% of portfolio value, with a hard cap on average of 40%.
“This will enable the company to secure approximately £170m of additional debt facilities in due course.”
Following the acquisition, the firm said its run rate rental income had now increased to approximately £45m from £41m, with that expected to increase further as additional acquisitions were announced in due course.
“The Civitas pipeline of quality investment opportunities remains strong reflecting the brand recognition and the strong track record of completed transactions that the company now enjoys within its sector.”
Civitas said it intended to announce the quarterly dividend for the period ending 31 March on or around 8 May.
It expected that the dividend would benefit from an upward adjustment to reflect inflation and the strength of its underlying cash flows.
The quarterly net asset value would be announced in mid-May.
“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,” said Civitas Housing Advisors chief executive officer Paul Bridge.
“For investors, these properties will be immediately income-generating; for tenants, they offer the opportunity to live as independently as possible within their communities.”