Civitas is the leading listed UK social housing REIT. Its investment objective is to provide an attractive level of income, with the potential for capital growth, from investing in a diversified portfolio of fully developed social homes, particularly specialist supported housing for vulnerable adults.
Civitas invests in specialist supported social housing (SSH) assets, fully let on long inflation-adjusted leases that provide strong visibility of contractual income. It also delivers a strong positive social return, providing much needed private investment capital to housing associations to provide and manage additional care-based quality accommodation to some of the most vulnerable in society. FY19 assets and income grew strongly and EPRA earnings more than doubled. Dividend growth is continuing with the company targeting a 6% increase in DPS to 5.3p for the current year. Q1 EPRA NAV increased to 107.2p and annualised rent roll reached £46.0m. The recently agreed £60m debt facility, with accordion option to increase this by £40m, provides funding for further acquisitions as the company seeks to gear the existing equity base towards its 35% target. Our forecasts assume an additional c £170m of debt-funded acquisitions in the current year. Modest recent (c £0.4m) share buy-backs at c 85p per share are accretive to earnings and NAV.
The chronic shortage of SSH is forecast to increase, yet compared with the alternatives of residential care or hospitals it is widely recognised to improve lives in a cost-effective manner.