Civitas Investment Management registers new for-profit provider

Formerly a London-listed REIT, Civitas Social Housing was last year taken over in an all-cash acquisition of shares by Hong Kong-based property conglomerate CK Asset Holdings, through the latter’s subsidiary, Wellness Unity. In August, the REIT’s shares were delisted from the London Stock Exchange’s main market and the Financial Conduct Authority’s official list, and listed with Jersey-based The International Stock Exchange.

The takeover came despite Civitas Social Housing saying in its accounts for the year to the end of March that the offer “undervalue[d] the long-term prospects of Civitas as expressed by net asset value”.

However it added: “[We] also recognise that Civitas, and its sector as a whole, faces a number of challenges in sentiment which the public markets are unlikely to overcome in the short to medium term. The offer provides liquidity to shareholders with the opportunity to exit in full and in cash at a significant premium to the current share price, in a time of macroeconomic uncertainty.”

According to Civitas Social Housing’s 2023 annual report and accounts, the company’s leases range from 20 to 40 years, with index-linked annual rent reviews, but are typically for 25 years. All are fully repairing and insuring.

A significant number of the registered providers leasing these properties have previously been found non-compliant by the RSH.

This includes Auckland Home Solutions, which represented 16.5 per cent of the company’s rental income at the time of Civitas’ 2023 accounts, and which was issued with an enforcement notice by the RSH in April.

In the notice, the regulator said that Auckland was unable to “manage its resources effectively to ensure its viability is maintained while ensuring that social housing assets are not put at undue risk”. It also said the provider was unable to “ensure that the arrangements it has entered into do not inappropriately advance the interests of third parties or are arrangements which the regulator could reasonably assume were for such purposes.”

As a result of the failings, the RSH appointed three statutory board members to the provider. 

CIM remains the investment advisor to CSH. In its offer announcement to the London Stock Exchange in May, CK Holdings said that it intended for the advisor (in which it had previously become a shareholder in November 2021) to remain in this role so that “the day-to-day management of the Civitas portfolio will continue uninterrupted”. It said that it expected Civitas to “maintain its position as one of the leading social housing providers benefiting vulnerable tenants in the UK”.

Quartz

According to Companies House, Quartz’s five current directors include CIM group directors Andrew Dawber and Tom Pridmore, as well as Bob Heapy, chair of Quartz and chief executive of Town & Country Housing Group (now part of Peabody). 

In a press release announcing the registration of its for-profit, CIM said: “RP status will enable Quartz Housing to play a part in supporting the delivery of new general needs and shared ownership social housing, areas of high demand with strong environmental and social impact built into their operating models. 

“2024 will see Quartz Housing bring together the first phase of its significant pipeline of new build homes.”

Mr Heapy said: “Accelerating the supply of high-quality social housing across the UK is an urgent priority, and achieving registered provider status moves us one step closer to becoming an active market participant. We are thankful to the Regulator of Social Housing for recognising what we are looking to achieve with Quartz Housing and look forward to updating the market as we bring forward our pipeline.”

Mr Dawber said: “Quartz Housing represents our further commitment to delivering additional new high-quality social and affordable housing of various tenures to support people to live within their own communities and to contribute to sustainable placemaking.”

Further information requested from CIM regarding how Quartz will interact with the different funds it manages, including Civitas Social Housing, was not available at this time.