Regulatory action is positive

Civitas Social Housing (CSH) has met its dividend targets, grown its NAV and invested over £674m into 557 properties (housing almost 3,750 tenants) since launch. It has now merged its C share and ordinary share portfolios and is focused on optimising its capital structure (targeting 35% LTV), which should further strengthen its revenue account.

Over the past few months, a number of the Registered Providers (RPs) that are counterparties to CSH’s leases have been issued with grading under review notices by the Regulator for Social Housing. This note addresses this issue and we seek to explain why the regulator’s actions should have minimal direct impact on CSH but, in the medium-term, should serve to enhance the quality of its earnings.

Income and capital growth from social housing

CSH aims to provide its shareholders with an attractive level of income, together with the potential for capital growth from investing in a portfolio of social homes. The company expects that these will benefit from inflation adjusted long-term leases or occupancy agreements with Registered Providers and that they will deliver, on a fully-invested and geared basis, a targeted dividend yield of 5% per annum on the issue price. CSH intends to increase the dividend broadly in line with inflation.



wdt_ID Year ended Price total return (%) IFRS NAV total return (%) IFRS adj. earnings per share (pence) EPRA earnings per share (pence) Dividend per share (pence)
2 31/03/18 (0.6) 10.7 2.60 1.44 4.25
3 31/03/19 5.0