Civitas comments on BeST ruling – The Regulator of Social Housing issued a judgement on Bespoke Supportive Tenancies Limited (“BeST”), which provides accommodation for vulnerable adults from various client groups including adults with learning disabilities, physical disabilities, sensory impairment, mental health needs, mothers fleeing domestic abuse and adults who are homeless. BeST is one of the 15 housing associations working with Civitas and other landlords in the sector. In line with the Regulator’s policy, BeST has not received a grading as it leases/owns less than 1,000 homes.
The Regulator’s statement is attached. It says that BeST “…has no long term financial plan that demonstrates it can continue to meet its lease obligations under a range of scenarios and its underlying financial profile is weak meaning it lacks capacity to manage downside risk should it crystalise” and that BeST’s “reported aggregated rent income is lower than its lease expenditure… BEST needs to finance the shortfall through alternative sources. The evidence provided to the regulator demonstrates that BEST can currently only continue to meet its lease obligations with the continuation of growth, third party support, and the use of pooled service charge income”
As at 31 March 2019, BeST represented 11.5% of the Civitas NAV and 9.5% of the Civitas gross asset value (based upon target leverage of 35%). Civitas says that, as at 9 May 2019, BeST remains fully up to date with all lease payments due to Civitas and this is expected to continue to be the case. Civitas is evolving leases to take into account concerns raised by the Regulator. Civitas also says that, having consulted with BeST, the regulatory announcement is expected to have no impact on Civitas’ portfolio or financial position.
Paul Bridge, chief executive officer of Civitas Housing Advisors, said: “The announcement was as anticipated, after the initial grading notice and does not affect our ongoing, successful relationship with BeST, nor the vital services which BeST provides. Civitas is in regular and productive dialogue with BeST and the RSH and firmly supports the general review. We operate in a sector which is evolving and maturing, and we work with our Housing Association partners and care providers to continue to enhance the sustainability of our sector.”
[QD comment: another day, another judgement from the Regulator and another statement from Civitas that it does not expect any impact on its business. Civitas is hosting a Capital Markets Day on Monday (13th May) and investors will no doubt question it closely on these run of statements. We will be there and will report back to QuotedData readers.]
CSH : Civitas comments on Best ruling