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Civitas NAV edges up despite inflation fall

Civitas NAV edges up despite inflation fall – Civitas Social Housing has announced its NAV at the end of December 2019 and it has edged up from 107.23p at the end of September to 107.55p at 31 December. This is despite an increase in the net initial yield used to value the portfolio from 5.28% to 5.29%. The yield change was in turn driven by a lowering of long-term inflation expectations.

The quarterly dividend is 1.325p, in line with projections. This was covered 87% by EPRA earnings in the final quarter of 2019 and the company says that, based on the run rate of income at the start of 2020, 97% of the full year dividend should be covered by EPRA earnings.

Less exposure to Westmoreland

Some of the leases held by Westmoreland have been reassigned to other Registered Providers, reducing the fund’s exposure to Westmoreland to 6.4% and increasing the diversification of the portfolio by Registered Provider.

Westmoreland was one of the Registered Providers that the Regulator for Social Housing had concerns over – we wrote about it in September last year when the problems were being tackled, at the height of its problems in May 2019, and in 2018: December 5th and 3rd and 15th October, when problems first came to light.

New properties

At the end of December, Civitas had 4,153 tenants in 608 properties, having bought nine additional properties for £7.1m in the quarter. This gave it an annualised rent roll of £47.2m,

Civitas has some new high-acuity properties being developed in Wales – work on these is progressing. It also has a robust pipeline of potential new investments – “The company’s pipeline of investment opportunities remains robust and comprises new and existing schemes and properties that have typically been brought together by Civitas directly. This reflects the Company’s active engagement with a range of property-owning specialist care providers and other sector counterparties. Civitas expects this focus on the generation of bespoke opportunities to remain a core element of the company’s investment process. At the same time the company is pleased to note that Civitas continues to be an early point of contact for many vendors and their advisers often in advance of general marketing for the properties.”

The company has a £60m facility with NatWest and has been using this to fund the Welsh development, acquisitions and the recent share buyback. They expect that the facility will soon be fully utilised.

[The final quarter of 2019 was not a particularly eventful one for Civitas but it is good to see things settling down, especially with the situation with Westmoreland. With the share price recovering and a huge unmet need for specialist needs housing, it might be that 2020 sees renewed efforts to expand the company. Civitas has said that it wants to focus on the high acuity end of the market as this is where government/local authorities can save the most money and get real care improvements by moving patients from institutions to their own homes.]

CSH : Civitas NAV edges up despite inflation fall

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