Source - LSE Regulatory
RNS Number : 6262O
Civitas Social Housing PLC
11 October 2021

11 October 2021


Publication of "Market Update - Responses to Shareholder Questions"

Civitas Social Housing PLC (the "Company" or "CSH"), the UK's leading care-based and healthcare REIT, has today published a paper (the "Paper") on the Company's website to provide detailed responses to questions recently discussed with shareholders.

The Board has confidence in the strength of CSH and in its investment adviser, Civitas Investment Management Limited ("CIM") - the Company's assets and revenues continue to perform in line with expectations and the Board reaffirms its raised dividend target for FY22*. Given the recent fall in its share price, the Company has been buying back its shares as an enhancement to shareholder value, at a time when the share price is low compared to the Company's Net Asset Value albeit that this requires a diversion of funds that would otherwise have been used by the Company to purchase further properties.

The Paper has been thoroughly considered by the Company's independent Board, the Company's external alternative investment fund manager, G10 Capital Limited, CIM, and the Company's other professional advisers. The Paper has also been verified by the Company's legal adviser Cadwalader, Wickersham & Taft LLP.

The Paper seeks to address the following principal areas of discussion whilst also providing greater details on a range of topics that have been brought out in conversation with shareholders.

The subjects covered by the Paper are as follows:

•             Due Process, Oversight and Governance - Section 2(ii) sets out the management of  transactions undertaken by CSH and in particular makes clear the formal procedures that were adopted to evidence the application of due process, oversight and governance.


•             Operational Cash Flow - Section 3(i) demonstrates the growth in operating cash flow in excess of the value of the dividends paid to shareholders in FY21. 


•             Dividend Target FY22* - Sections 3(i)-(ii) explain that the strong and growing operational cashflow noted above underpins the Company's dividend target for FY22. This is further supported by Section 9, which demonstrates the strong and growing demand for the properties within the CSH portfolio. The CSH Board reaffirms its confidence in the dividend target for FY22*.


•             Value Accretion (No Loss of Value) - Sections 2(iii)-(iv) demonstrate that property purchases undertaken where SHO Group acts as the care provider have generated capital profits of £8.0m for CSH (5.6% on cost) with no loss of value.  In addition, CSH (via the housing associations/charities) has the benefit of SHO Group rent guarantees over a period of up to 25 years to a value of £164m.


•             Lease Terms - Section 5 explains that, in common with many real estate leases, CSH grants leases for total terms of c. 20-25 years comprising an initial term and (under the control of the Company) an "option for further lease" or a "reversionary lease" in each case when combined with the initial term making up the full lease term.


•             Property Holding Company Directors - Section 5 explains that the majority of the properties acquired by CSH are held within SPV structures which are in turn then owned 100% by CSH with CIM directors representing the interests of CSH on the boards of the SPVs. Prior to acquisition by CSH the original SPV directors would typically be the vendors of the properties. However, in all cases those directorships have terminated following transfer to CSH.


•             Demand and Robust Rental Income - Section 9 sets out the extensive demand that exists for the accommodation provided by CSH and identifies the various ways in which rental income is underpinned and supported.


•             Government Funding - Section 13 comments on the government funding for the sector and makes clear that, upon occupation, the rent roll associated with each CSH property is met ultimately from central government by way of housing benefit. This is in accordance with long established practice and policy.


•             Rent Levels, Value for Money - Section 6 provides evidence that supports the value for money offered by the properties within the CSH portfolio compared to alternative forms of care-based provision and remarks on the better personal outcomes for residents.


•             Purchases and Capital Works - Section 15 provides a worked example of a CSH property purchase with associated capital works to illustrate how prices paid often incorporate the cost of subsequent works and property costs that are placed into escrow and why a comparison of previous sale prices need to take this into account.


This paper also considers certain other matters raised to the Company, including additional financial commentary, Approved Provider counterparties, The Social Housing Family CIC and transaction structuring including same day purchases and sales.

The Paper can be found on the Company's website here:

* The target dividends are targets only and do not represent a profit forecast. There can be no assurance that the targets can or will be met and should not be taken as an indication of the Company's expected or actual future results. 

For further information, please contact:


Civitas Investment Management Limited

Paul Bridge                                                     Tel: +44 (0)20 3058 4844

Andrew Dawber                                            Tel: +44 (0)20 3058 4846


Panmure Gordon

Sapna Shah                                                     Tel: +44 (0)20 7886 2783

Tom Scrivens                                                  Tel: +44 (0) 20 7886 2648


Liberum Capital                                            Tel: +44 (0) 20 3100 2000

Chris Clarke

Darren Vickers

Owen Matthews                                



Helen Tarbet / Henry Wilson                      Tel: +44 (0) 20 7466 5111

Hannah Ratcliff / George Beale        




Civitas Social Housing PLC ("CSH") was created in 2016 by Civitas Investment Management Limited as the first dedicated London listed REIT, to raise long-term, sustainable, institutional capital to invest in care-based social homes across the UK. So far, Civitas has completed more than 120 individual transactions to build the largest portfolio of its kind that has been independently valued at £915.6 million (31 March 2021). CSH now provides homes for 4,391 working age adults with long-term care needs, in 648 bespoke properties that are supported by 119 specialist care providers, 17 approved providers and working with over 178 individual local authorities.


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