Civitas Social assures Westmoreland won't hit NAV
By Oliver Haill
Date: Wednesday 05 Dec 2018
(Sharecast News) - Civitas Social Housing has assured that the recent declaration that one of its main tenants has been declared non-compliant by the social housing regulator is "unlikely" to be detrimental to the company's net asset value.
In a summary regulatory judgement, the Regulator of Social Housing gave Westmoreland Supported Housing, which leases 109 properties from Civitas and represents 22.6% of the NAV of the portfolio, non-compliant ratings for governance and financial viability. A plan was agreed with the RSH to remedy the problems.
After Jones Lang LaSalle published a 'Red Book' portfolio valuation that speculated on the potential for reductions of up to 4% in the Civitas NAV, the FTSE 250 company stressed that it did not feel that the strength of its debt covenants had not changed "in any substantive manner" as a result of the publication of the RSH judgement, that Westmoreland's leases are underpinned by income due from its 53 local authority clients regardless of the judgement, with tenants likely to reside in the Civitas properties for many years or decades to come.
"Given the scale of the Civitas portfolio the levels of underlying income diversity are amongst the greatest in the specialist sector and support the covenant strength of the Civitas portfolio with Westmoreland and in a similar manner with other housing association partners," the company said.
Gesturing to the remainder of its specialist supported housing portfolio, Civitas noted that it is underpinned by rental income received from 142 local authorities and supported by 94 care providers provides housing for 3,619 tenants, almost all of which are long-term and with an average age of 36. The Run-rate rent roll stands at £38.8m.
Civitas also announced on Wednesday that it had completed the £4m acquisition of five regulated social housing properties and conditional exchange of £20.7m of 15 regulated social housing properties.
The properties are leased to Bespoke Supportive Tenancies, Chrysalis Supported Association and Encircle Housing, all regulated providers and counterparties to existing leases within the company's portfolio.
The deal is being funded through the company's C-share of which a total of £263.7m has so far been invested and committed, representing 92% of the available capital after costs and the £10m cash buffer.
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