Valeria Martinez, Investment Week, 9 May 2023:
The Civitas Social Housing REIT board has agreed to a recommended all-cash offer by Wellness Unity at 80p per share, but analysts are calling for a counter bid.
The bid made by CK Asset Holdings’ wholly-owned indirect subsidiary, CK Bidco, values the investment trust at approximately £485m, which represents a premium of around 44% to the closing price of 55.4p on Friday (5 May).
In a statement today (9 May), chair Michael Wrobel said that although the bid undervalues the company’s long-term prospects as expressed by its net asset value, the board intends to unanimously recommend that shareholders accept the “fair and reasonable” offer.
“The board recognises that Civitas, and its sector as a whole, faces a number of challenges in sentiment which the public markets are unlikely to overcome in the short to medium term,” he said.
Wrobel said that the offer provides liquidity to shareholders with the opportunity to exit in full and in cash at a significant premium to the current share price in a time of macroeconomic uncertainty.
Civitas shareholders who are on the register at close of business on 19 May will also be entitled to receive and retain the quarterly dividend of 1.425p per share for the first quarter of 2023 as announced in a trading update today.
Once the listing and trading of its shares is cancelled, Civitas will be re-registered as a private company “as soon as practicable”, the board said.
Richard Williams, property analyst at QuotedData, said the bid price is too low and “materially undervalues” the company, given its £662m NAV as of the end of March.
“We agree that sentiment towards the company and the social housing sector are not likely to improve any time soon, but we believe shareholders can do better than 80 pence per share. We would like to see a counter bid a lot closer to NAV,” he said.
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