European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Civitas Social Housing PLC / Event-Driven

<ul>
<li>Property developer/investor CK Asset Holdings made a 80p/share (+1.425p dividend) cash takeover offer for value-destroyer Civitas Social Housing REIT, implied equity value £485million, 44% premium and 26.7% discount to NAV.</li>
<li>Before offer announcement, Civitas traded at 50% discount to NAV, 8.1% dividend yield (covered &lt;1x). Although my fair value estimate (dividend discount model) is 83p, shareholders will likely cash in.</li>
<li>Spread is 1.26%/3.91% (gross/annualised, assuming all payments by 11 September for simplicity). Readacross: Triple Point (SOHO LN), at 49% discount/NAV, 10.1% dividend yield (covered 0.92x), could also be a target.</li>
</ul>


Property developer/investor CK Asset Holdings made a 80p/share (+1.425p dividend) cash takeover offer for value-destroyer Civitas Social Housing REIT, implied equity value £485million, 44% premium and 26.7% discount to NAV.
Before offer announcement, Civitas traded at 50% discount to NAV, 8.1% dividend yield (covered &lt;1x). Although my fair value estimate (dividend discount model) is 83p, shareholders will likely cash in.
Spread is 1.26%/3.91% (gross/annualised, assuming all payments by 11 September for simplicity). Readacross: Triple Point (SOHO LN), at 49% discount/NAV, 10.1% dividend yield (covered 0.92x), could also be a target.


CK Asset Holdings/Civitas Social Housing: Recommended Offer

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Equity Bottom-Up

Triple Point Social Housing REIT / Equity Bottom-Up

Triple Point Social Housing REIT’s (SOHO’s) FY22 results were robust. Indexed rent growth compensated for higher debt costs and expected credit losses, and the DPS target was met. Income and dividends have grown each year since listing, while the company has generated strong social returns. We expect progress in FY23 despite a continuation of credit losses, for which SOHO has set out a path to recovery. Sector issues raised by the regulator continue to generate uncertainty despite a positive response and good performance from many lessees, and tangible progress at others. This seems unrecognised in the share price.

Triple Point Social Housing REIT’s (SOHO’s) FY22 results were robust. Indexed rent growth compensated for higher debt costs and expected credit losses, and the DPS target was met. Income and dividends have grown each year since listing, while the company has generated strong social returns. We expect progress in FY23 despite a continuation of credit losses, for which SOHO has set out a path to recovery. Sector issues raised by the regulator continue to generate uncertainty despite a positive response and good performance from many lessees, and tangible progress at others. This seems unrecognised in the share price.

Triple Point Social Housing REIT - Strong rental growth mitigating challenges

In its trading update, Triple Point Social Housing REIT (SOHO) sets out the path to restoring rent collection from two lessees in arrears. It also underlines the quality of its portfolio, the continuing performance of most lessees and their progress with addressing regulatory concerns. Until resolved, the arrears will have an impact on earnings and valuation, but SOHO remains committed to its FY22 DPS target of 5.46p. We will revise our forecasts when the FY22 results are published in March.

In its trading update, Triple Point Social Housing REIT (SOHO) sets out the path to restoring rent collection from two lessees in arrears. It also underlines the quality of its portfolio, the continuing performance of most lessees and their progress with addressing regulatory concerns. Until resolved, the arrears will have an impact on earnings and valuation, but SOHO remains committed to its FY22 DPS target of 5.46p. We will revise our forecasts when the FY22 results are published in March.

Triple Point Social Housing REIT - DPS commitment maintained despite challenges

In H122, index linked rent increases and acquisitions supported a continuation of consistent positive returns for Triple Point Social Housing REIT (SOHO). Its borrowings are long term and at fixed rates, and provide scope for further external growth. If adopted, a cap on social housing rent increases would compound the inflationary pressures on operator lessee margins but SOHO’s revised investment policy provides it with additional flexibility to manage the effects.

In H122, index linked rent increases and acquisitions supported a continuation of consistent positive returns for Triple Point Social Housing REIT (SOHO). Its borrowings are long term and at fixed rates, and provide scope for further external growth. If adopted, a cap on social housing rent increases would compound the inflationary pressures on operator lessee margins but SOHO’s revised investment policy provides it with additional flexibility to manage the effects.

Triple Point Social Housing REIT - Resilience based on strong fundamentals

Triple Point Social Housing REIT (SOHO) delivered a strong performance in FY21 with its portfolio of long lease specialised social housing assets continuing to perform as expected. With predominantly uncapped index-linked rent uplifts and fully fixed borrowing rates it is extremely well positioned in the current inflationary environment, while capital remains available for further accretive acquisitions.

Triple Point Social Housing REIT (SOHO) delivered a strong performance in FY21 with its portfolio of long lease specialised social housing assets continuing to perform as expected. With predominantly uncapped index-linked rent uplifts and fully fixed borrowing rates it is extremely well positioned in the current inflationary environment, while capital remains available for further accretive acquisitions.

Triple Point Social Housing REIT - Well positioned for growth

United Kingdom

Triple Point Social Housing REIT plc operates as a real estate investment trust. The Company provides closed-ended investment services. Triple Point Social Housing REIT invests in property, technology, renewable energy, asset finance in leasing, lending, and other related sectors. Triple Point Social Housing REIT serves customers worldwide.

Triple Point Social Housing REIT (SOHO LN)

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CK Asset Holdings/Civitas Social Housing: Recommended Offer

CK Asset Holdings made a 80p/share cash takeover offer for value-destroyer Civitas Social Housing. Before announcement, Civitas traded at 50%...

Jesus Rodriguez Aguilar

Triple Point Social Housing REIT - Strong rental growth mitigating challenges

Triple Point Social Housing REIT’s (SOHO’s) FY22 results were robust. Indexed rent growth compensated for higher debt costs and expected credit...

Edison Investment Research

Triple Point Social Housing REIT - DPS commitment maintained despite challenges

In its trading update, Triple Point Social Housing REIT (SOHO) sets out the path to restoring rent collection from two lessees in arrears. It also...

Edison Investment Research

Triple Point Social Housing REIT - Resilience based on strong fundamentals

In H122, index linked rent increases and acquisitions supported a continuation of consistent positive returns for Triple Point Social Housing REIT...

Edison Investment Research

Triple Point Social Housing REIT - Well positioned for growth

Triple Point Social Housing REIT (SOHO) delivered a strong performance in FY21 with its portfolio of long lease specialised social housing assets...

Edison Investment Research