Investor interest in income funds tapping into long-term government-backed revenues remains intense after Civitas Social Housing raises £302 million in a C-share issue.
Investor interest in income funds tapping into long-term government-backed revenues remains intense after Civitas Social Housing (CSH) raised £302 million in a C-share issue.
Although the real estate investment trust fell short of its £350 million target – a sum that would have doubled its assets and equalled the amount raised at its flotation a year ago – it is still a substantial achievement, making it the fifth biggest capital raising by an investment company in 2017.
Civitas, which provides sheltered accommodation to vulnerable people living in housing association or council-owned property, said the issue had broadened its shareholder base from the institutional investors and wealth managers who backed its over-subscribed IPO (initial public offer) in November 2016.
Private investors, pension schemes, ethical and property funds had all ploughed money in to the open offer and share placing, said chairman Michael Wrobel.
Among them, Clearance Capital, a specialist real estate investment management firm, served as the ‘cornerstone investor’, committing around £20 million, according to the company’s prospectus.
As a result Civitas has issued 302 million non-voting ‘C’ – or conversion – shares at 100p with an initial net asset value of 98p after launch costs. Trading starts today.
New investors will receive a 3p dividend in the first year, rising to 5p in the second year with future pay-outs designed to grow in line with inflation. The C shares will convert into CSH’s existing ordinary shares within 12 months or when most of the money has been invested.
The raising leaves Civitas with a war chest of over £400 million to spend on new properties, once a £90 million debt facility has been finalised. It has identified £100 million of investments it could make soon with a further pipeline of £400 million over 12 months.