Civitas Social Housing (CSH) has become the first dedicated UK social housing REIT on London Stock Exchange, following its IPO last Friday which generated £350 mln (€411 mln), writes Sara Seddon Kilbinger.
CSH, which was set up last year, will acquire social housing portfolios in England and Wales, including general needs properties and extra care social housing. It has attracted investor interest from both institutional investors and wealth management groups.
'The IPO was timely because there is a huge amount of interest in the social housing sector in the UK, given the social housing crisis,' a spokesman for the REIT’s investment adviser, Civitas Housing Advisors, told PropertyEU. 'It also offers a secure investment because UK local authorities cover social housing rents via housing benefits.'
CSH is hoping to close a deal that would enable it to acquire a portfolio of social housing assets in London for £60 mln by the year end, according to its spokesman. It is also believed to have a pipeline of nine deals which have a combined value of around £500 mln, although further details have not been disclosed.
The REIT's goal is to provide shareholders with an attractive level of income underpinned by long term leases and occupancy agreements of between 10 and 40 years, together with the potential for capital growth. It is targeting a dividend yield of 5%, which is expected to increase in line with inflation. Cenkos Securities acted as sole sponsor and financial advisor.
Law-firm Norton Rose Fulbright advised on tax structuring. Lead partner on the deal at Norton Rose Fulbright, Mike Newell, said that other firms could now follow Civitas Social Housing and list in London. 'There are sectors like social housing that definitely need funding and there is unlikely to be enough funding coming from the public sector. This marks a big step forward.'
