April 10, 2019 Property

Update on Civitas Portfolio

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Following the close of the financial year to 31 March 2019, we set out below an Advisor’s commentary on the Civitas portfolio, the sector and the regulatory environment for care-based housing in England and Wales.

We also take this opportunity to set out the steps and procedures that we have undertaken over the year and indeed since launch to help make the eco-system that supports the specialist supported housing (“SSH”) sector (the “Sector”) as robust and sustainable as possible to mitigate risk to Civitas, enhance governance within housing associations and protect the interests of the underlying tenants and to provide value money for local authorities.

Executive Summary

The Civitas Portfolio. This is a highly diversified portfolio located across England and Wales and as at 31st March comprised the following (including committed funds):

Total Invested* £767 million
Care Providers 113
Properties 587
Registered Providers 15
Tenancies 4,119
Local Authorities 157
*excluding purchase costs

Demand for SSH remains very strong. The National Housing Federation has estimated there will be an annual shortage of over 29,000 places by 2019/20 and over 46,000 by 2024/25[1]. Mencap, in a 2018[2] report state that SSH “should be seen and treated by government as an important accommodation investment model, contributing to solving the housing crisis for vulnerable people.” SSH by definition must be delivered without any public subsidy or government grant. Rent payments are usually met from Housing Benefit and are subject to various forms of means testing for each tenant.

Civitas Rents fall within the average range for the SSH sector. Within the Civitas portfolio there is an individual rent agreement in respect of each of the tenants. Our objective is to acquire properties where rents have been determined at an average or median level for equivalent SSH properties in each region. We test each transaction against an independent review from external consultants, by reference to our own database and in dialogue with local authorities, care providers and RPs. This average measure is intended to reflect all SSH properties and not just those that are subject to lease arrangements with private sector REITs.

[1] National Housing Federation; Supported Housing – Understanding need and supply
[2] Mencap and Housing LIN; Funding Supported Housing for All

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