Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Imagine selling £100 notes for £50.
Good to see L&G buying over 18 million Civitas shares- big vote of confidence. Take the hint!
My thoughts exactly MrW
The last 12 months or so has been brutal - let's hope we're nearing some stability
Unless it tanks any more and the divi gets cut, both highly possible
For a relative new investor, such as myself, I have a 65p average, which means the upside value of the Sp combined with the regular dvidend, offers a double whammy.
my apologies. I must get my eyes checked. I misread your prior post.
Lucy, what I actually wrote was “The IFRS valuation is lower than the portfolio (portfolio) valuation”. In the commentary accompanying the latest Quarterly Valuation dated 11th May 2022 (to be found on the company website under “Regulatory News”, Civitas draws a distinction between the IFRS valuation produced by JLL (NAV 110.3p) and the portfolio valuation (122.84p). According to Civitas’s commentary, “the portfolio, as a single entity (reflects) the enhanced value from the aggregation of individual properties into a single portfolio company and the positive effects of the stamp duty adjustment…” Civitas believe that, in addition to stamp duty savings, the value of the entire portfolio to a potential buyer would be greater than the sum of the individual properties.
Exciting, indeed.
"The IFRS valuation is lower than the property valuation". What do you mean by that? Can you explain what you mean by "property valuation", in that sentence? Not being snarky - I just genuinely don't know what you mean. Are you referring to the valuation of the property on its own, assuming it had no lease?
Lucy: the valuations of the individual properties in the portfolio (which are determined by Jones Lang LaSalle and is known as the IFRS NAV) are based on several factors, including, but not limited to, the one you mention. The IFRS NAV also reflects assumptions about long term inflation and the contribution from the indexation of the leases. The IFRS valuation is lower than the portfolio valuation, although the IFRS valuation does assume that the properties, if sold, would be sold as an entire portfolio, not as individual properties (thereby reducing sales costs and enhancing net valuation).
Anyway, all UK REITS have been affected by the recent spike in gilt yields and expectations of higher rates, so this is not a factor specific to CSH. I see that the sector has a whole has rallied today, with CSH currently up over 5%. An exciting time to be holding these shares!
You are just a scaremongering bad person
If you are wary of their practices don’t buy in and jog on
Even if their NAV falls by twenty percent,at this price the stock is a buy too seventy five
"The Clause remains subject to approval by the Company's lenders and now that a settled form of the Clause has been agreed, this process will be commenced."
This was in a recent update. CSH have agreed with the Regulator to introduce a new clause to their leases. I don't think they have shared the clause with the market yet, but I understand it results in CSH sharing more risk with the RPs (its immediate customers). This new clause has to be approved by their lenders and they have said they have now engaged those lenders to seek this approval. I think in a normal market this would probably be ok, but given what's going on with rates, it might be rational for those lenders to extract some commercial value from all this. We'll see. In any event, the valuations of CSH's property portfolio will surely have to come down given the massive increase in rates.
Market Cap£383mLast Close63pCivitas Social Housing invests across the UK in care-based community housing and healthcare facilities, particularly specialised supported housing, for the benefit of working age adults with long-term care needs. Its investment objective is to provide an attractive level of income, with the potential for capital growth.More Civitas Social Housing content >Investment summaryCivitas Social Housing’s (CSH) Q123 NAV increased 1.4% to 11.89p and including DPS paid the three-month NAV total return was 2.7%, continuing the consistently positive returns of the five years since IPO. A Q123 DPS declared of 1.425p was in line with the full year target of at least 5.70p (+2.7%). CSH says the increased target DPS reflects strong underlying cash generation and the board’s positive view of the prospects for the current financial year. FY22 DPS cover was 87% but was 97% on a look-through basis and should increase further with index-linked rent increases. The latter supported Q123 capital growth, which also benefitted from a slightly tighter net initial yield (5.25% vs 5.28% at end-FY22). Work is progressing on the recently launched initiatives to promote greater regulatory alignment and address perceived lease risks should be positive for the sector without negatively impacting existing financial returns. We are reviewing our forecasts.Y/E MarRevenue (£m)EBITDA (£m)PBT (£m)EPS (fd) (p)P/E (x)P/CF (x)2021A 47.8 N/A 36.1 4.9 12.9 15.02022A 50.7 N/A 44.8 4.8 13.1 10.42023E 55.6 N/A 49.8 5.8 10.9 8.62024E 57.0 N/A 51.5 6.0 10.5 8.4Industry outlookWe expect private capital to remain crucial in meeting the current and future needs for care-based social housing. It is widely recognised to improve lives in a cost-effective manner compared with the alternatives of residential care or hospitals.LAST UPDATED ON 28/09/2022Content on Civitas Social HousingCivitas Social Housing – Initiatives to underpin consistent performanceReal Estate | research Update | 27 May 2022Civitas social housing - profile image - 25062019 - JPGCivitas Social Housing – Focusing on the positive driversReal Estate | research Update | 17 February 2022Civitas social housing - profile image - 25062019 - JPGCivitas Social Housing – Focus returning to positive driversReal Estate | research Update | 1 February 2022Civitas social housing - profile image - 25062019 - JPGView moreFollow this companyRegister to receive research on Civitas Social Housing as it is publishedMartyn KingAnalystSectorReal EstateAccess more Real Estate contentShare price graphBalance sheetForecast net cash (£m) 321.3Forecast gearing ratio (%) N/APrice performance%1m3m12mActual (15.9) (23.4) (28
Re debt
When did they tell us they are in talks ???
The property valuations are heavily dependent on rates. Every single property valuation in CSH's portfolio is based on DCF calculation of the lease that's attached to that property. As rates go up, the DCF valuation falls. This is a separate issue to the interest rate sensitivity that you are describing, which I think is focused on the cost of the debt, not the value of the book. CSH have told us that they are now in negotiations with their banks because of the increased risk on the leases, owing to the amended terms. It must be an exciting time to be in negotiations with lenders.
There’s a note on pages 115-116 of the 2022 Annual Report on interest rate risk. It states that each 1% increase in interest rates will reduce profits (after tax) by roughly £ 1 million. There is no detail about how this calculation is arrived at, but the note points out that interest rate fluctuation is managed in various ways, including interest rate swaps. So it would appear that the impact on post tax profits of a 3% increase in interest rates would be £ 3 million, not £ 5.4 million.
The loans are secured on various properties, according to a loan to value ratio. I suppose if the value of the properties falls, the loan to value ratio could be a problem when it comes to refinancing the loans.
There must be a risk that the NAV will fall if property prices generally fall. On the other hand, my understanding is that the valuations are based at least in part on rental income and the classification of the properties as special purpose homes. In any case, the substantial discount of the share price to NAV suggests that valuation risks have already been factored in.
The greatest risk, in my view, is that there could be more defaults on rent, whether or not it is inflation proofed, as the recession bites. But the counter argument is that much of the rent is paid by the government in the form of housing benefits.
I’m not trying to play down the risks and uncertainties, which undoubtedly exist. But I believe that these are more than reflected in the current share price. I added to my position at 68p and 62p and will be happy to hold for recovery and for the yield, which currently stands at 7.25% (net of tax) according to my calculation.
All we can do is sit tight now Sitiain - Those idiots in No10 & 11 along with that lunatic Putin have damaged us for years to come. It's not just REIT's as well, I have some fair holdings in infrastructure and they've been equally clobbered.
There goes the early ish retirement
trying to get my head around this position, to which I have been battered. The debt I'm told, I called them up is 50/50 with regard to mortgages fixed or floating. So 361 Mio outstanding debt, half is going to go up considerably. Can they put up rents to cover this ... no. The government will start to cut everything. Get better yields almost from govt debt than being here. How can they ever start to realise their supposed NAV ( house price correction underway). This **** pile looks priced in.Am I missing something . Appreciate any help ? I calculate 180mio not fixed , up by 3 percent =5.4 mio pounds less their profit of 44 =38.6 mio . Im sure I'm wrong but it looks priced in for an absolute wreck of assets .trouble is no one trusts the management much or this government who will have to cut expenses . What a mess . I think all bad news priced ut they have to get rent increases . Are they matched to inflation? thnakyou
It is fare to say everything more or less is going down due to the terrible state of our economy and a change of government leadership giving the market the jitters. The only thing I can see wrong with the company fundamentals is the EPRA earnings reduction in the full year results and the declared intention to increase the dividend. Some may consider that imprudent
Then again, what do I know. Drops from 80p to 71p in a week! I give up trying to predict this one. Something strange going on in the background possibly.
That's a rather naive view me thinks. CHS is definitely not a '1' nor '0' and sits somewhere in between. Baking in risk is what markets do and it seems that they have baked in risks that have knocked of 30-40p per share from its high (which was probably too high anyway). The huge discount to NAV protects further significant falls. Nice to see a 10% jump over the last week or so.
Another positive update from CSH. Things turning around nicely now.
Director buys on todays RNS and "shorts" closing on 6 September are i think going to support a move up, just how far is a guess but I think at least another 7p (if only for shorters to start again) and hopefully past the 90p mark which would still give 6%+ return
Because this company's short history is mired by undisclosed related party transactions, circular transactions, and a spate of insolvent customers. And yet the credit worthiness of its existing customers (as questionable as they might be) is the sole argument underpinning the entirety of the reported NAV. When you are net debt, and growing that net debt to pay a dividend, then the sorts of risks we are talking about here cannot be "baked in". It's a 1 or 0 scenario.
Great to see CSH taking these steps
Lucy, given the SP has fallen from around 115p to 73p over the last year or so, it seems difficult to see much more downside given the NAV and ultimate discount. Its gone from a 10% premium to a 35% discount. All known risks look very baked in. Why do you think that they are not?