The real estate investment trust operating in the social care sector, Civitas Social Housing (CSH), reported a strong half year for the period ended 30 September with earnings up 42% to £14.3m. The shares traded flat 88.5p.

Civitas is the largest provider of accommodation to tenants with learning disabilities, autism, and mental health disorders in the UK. Its portfolio of 599 properties is valued at £841m, equivalent to 107.2p per share, meaning that the shares trade at a 17.5% discount to their asset value.

Properties are signed on leases of over 20 years which are wholly funded by the local housing authority and supported by government policy.

In the past the discount was impacted by concerns that some housing associations had run into financial difficulties, but these issues have since been addressed.


Civitas spent £10.2 on new properties in the first half, pushing up the annualised rent roll to £46.5m, and added another four properties after the period end for £3.2m.

The company secured a new £60m five-year term loan facility with NatWest bank, of which it has already drawn down £20m, and intends to sign a further £80m loan in the first quarter of 2020 giving it a total capacity of £120m.

Total debts of £228.5m represent loan-to-value (LTV) of 24% giving the firm plenty of headroom to reach its medium-term target of an average LTV of 35% and a maximum value of 40%.

The firm has identified a pipeline of more than £200mworth of properties to purchase from local authorities and care providers. Civitas is looking to enter both Northern Ireland and Scotland to diversify its income stream.

The firm has declared a dividend of 1.3p for the quarter and is targeting a full-year pay-out of 5.3p, which is expected to be 100% covered by profits compared with a current run-rate of 96%. This provides a 6% dividend yield.


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Issue Date: 02 Dec 2019