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Civitas Investment Management LtdFull Year Results 2020

0

OPENING OF NEW FACILITY IN WALES, JUNE 2020

Civitas Social Housing PLCFull Year Results 12 months ended

31 March 2020

CREATING VALUE BY ENHANCING LIVES

Presentation Team and Contents

1

Contents Page Number

Overview 2

Highlights 7

Financial Results 11

Operational Review 20

Civitas Portfolio 28

Social Impact, ESG and Sector Awards 36

Pipeline 41

Outlook 43

Appendix 47

Civitas Investment Management Ltd Full Year Results 2020

Andrew DawberGROUP DIRECTOR

Paul BridgeCEO, SOCIAL HOUSING

Andrew is a founder of CIM and has been active in the social housing

sector since 2012. He was part of the team that founded the private

investment company, Funding Affordable Homes, and was the adviser and

founder of PFI Infrastructure PLC, the first publicly traded social

infrastructure fund.

Andrew worked at a senior level in the investment banking sector for more

than 20 years, including as head of North Europe ECM at Société Générale.

He is a Chartered Accountant.

Paul is a founder of CIM and has over 20 years’ experience working at a

senior level in the social housing sector. During his career, Paul has held a

variety of non-executive roles in and out of the sector, including Chairman

of Thames Valley Charitable Housing Association, Chief Executive of

Homes for Haringey, a Registered Provider, where he was responsible for

800 staff and 21,000 homes, and Director at Hyde Group, a major G15

Housing Association.

3Civitas Investment Management Ltd Full Year Results 2020 2

OVERVIEW

Full Year Results 2020Civitas Investment Management Ltd 3

OVERVIEW

Rental Recovery, Counterparties and Portfolio Performance

Counterparties Portfolio PerformanceRental Recovery

Quarter to 31 March 2020More than

99%

Two months to May 2020 96%

June 2020Rental income

received as

expected

Rents continue to be received as normal

and are unaffected by COVID-19

Evidence of good operational performance

during COVID-19

Continued receipt of payment from local

authorities / NHS as normal

Authorities supportive of appropriate rental

increases - PPE and extra COVID-19 running

costs

Regular dialogue, rolling monitoring and

operational support from Civitas when

needed

Housing associations and major care

providers holding Civitas leases or under-

leases continue to perform well

Incidences of COVID-19 continue to be few

in number amongst staff and residents

Housing associations and care providers

have adapted and follow guidance from

RSH and CQC

Civitas continues to operate full asset

management activities within the portfolio

Civitas portfolio continues to perform as

expected with no COVID-19 impact


OVERVIEW

Portfolio

Bartley Green, Warwickshire Tamworth, West Midlands

Higher Acuity Facility, Wales St Albans, Hertfordshire Folkestone, Kent

Bournemouth, Dorset


OVERVIEW

Portfolio

Bournemouth, Dorset Borehamwood, Hertfordshire

St Albans, Hertfordshire

Worcester, Worcestershire

New facility, WalesSt Albans, Hertfordshire


OVERVIEW

Portfolio

Horley, SurreyHalstead, Essex

New Facility, WalesNewark, Nottinghamshire Bartley Green, Warwickshire

Halstead, Essex

3Civitas Investment Management Ltd Full Year Results 2020 7

HIGHLIGHTS

8

HIGHLIGHTS

Financial Highlights

Strong income, earnings and asset growth

Income Statement – Year Ended Mar 20 Mar 19 Change

Annualised Rent Roll (£m) 48.4 45.7 Up 5.8%

Rental Income (£m) 45.9 35.7 Up 28.4%

EPRA Earnings1 (£m) 28.8 22.6 Up 27.5%

Operating Cash Flow (£m) 32.9 23.3 Up 41.0%

IFRS EPS (diluted)1 (p) 6.06 4.22 Up 43.7%

EPRA EPS (diluted)1 (p) 4.63 3.63 Up 27.5%

Dividends Declared per share (p) 5.30 5.00 Up 6.0%

Balance Sheet Mar 20 Mar 19 Change

Investment property IFRS (£m) 878.7 826.9 Up 6.3%

IFRS NAV per share (diluted) (p) 107.87 107.08 Up 0.7%

LTV / Gross Assets (%) 27 22 Up 24.1%

1Mar 19: EPRA Earnings, IFRS EPS, EPRA EPS figures are after adding back finance costs associated with the C share


HIGHLIGHTS

Market and Portfolio Highlights

Operational and investment objectives achieved in the period

Market

Created a portfolio of care-based housing for adults of working age

with long-term care needs in England and Wales

Civitas is a leading strategic counterparty for many major sector

participants and is frequently the party of first or sole choice for

vendors

Strong demand continues from local authorities, enhanced by

pandemic

Supports the demographic growth in those needing care

accommodation and closure of older long stay hospitals

Clear commitment from government to provide additional funding

and continued support for social care sector

Portfolio

Focus on alignment of care

provider and housing association

lease terms

WAULT of

23.7 years

at 31 March 2020,

compared to 24.4

years at 31 March

2019

Low void levels

paid directly by housing

associations across the

portfolio as at 31 March

2020 with no exposure to

Civitas

Civitas Investment Management Ltd Full Year Results 2020 9

Housing Associations

Care Providers

Local Authorities

Properties

Tenancies

Investment

31-Mar-19 31-Mar-20

£789

4,216

613

164

117

15

Total Expense

Ratio of

1.36%

as at 31 March

2020 (1.36% 31

March 2019)

IFRS asset by asset independent

valuation of

5.26%

(after initial purchase costs)

Average acquisition net initial

yield at 31 March 2020 of

5.9%

(before initial purchase costs) and

5.6% (after initial purchase costs)

Continued drive towards mid to

higher acuity care properties


HIGHLIGHTS

New Opportunities…Additional Counterparties

General Meeting on 28 May approved resolution to modify the Company’s investment objective and policy

• Care-based housing

• Healthcare facilities with a focus on mid-

to-higher acuity for working age adults

• Step down accommodation

• Key worker housing

• Healthcare facilities working with the

NHS centrally and with specific NHS

Trusts

• Care-based housing

• Homeless accommodation

• Key Worker accommodation

• Asylum Seeker housing

• Ministry of Justice accommodation

FINANCIAL RESULTS

12

FINANCIAL RESULTS

Consolidated Statement of Comprehensive Income

Abstract from Consolidated Statement of Comprehensive

Income For the

year ended

31 March 2020

£’000

For the

year ended

31 March 2019

£’000

Net rental income 45,906 35,738

Total expenses (9,860) (9,642)

Change in fair value of investment properties 8,912 3,652

Operating profit 44,958 29,748

Net finance cost (7,233) (3,484)

Finance expense – C Share amortization - (6,400)

Profit before tax 37,725 19,864

EPRA earnings and diluted earnings

Profit before tax 37,725 19,864

Add back – change in fair value of investment properties (8,912) (3,652)

ERPA earnings 28,813 16,212

Add back – finance expense C Share amortization - 6,400

EPRA diluted earnings 28,813 22,612


13

FINANCIAL RESULTS

Consolidated Statement of Financial Position

Abstract from Consolidated Statement of Financial

Position 31 March 2020

£’000

31 March 2019

£’000

Assets

Non-current assets

Investment property 867,988 820,094

Other receivables 10,755 6,824

Current assets

878,743 826,918

Trade and other receivables 10,838 5,723

Cash and cash equivalents 58,374 54,347

69,212 60,070

Total assets 947,955 886,988

Liabilities

Current liabilities

Trade and other payables (7,743) (15,324)

Bank and loan borrowings (59,730) -

(67,473) (15,324)

Non-current liabilities

Bank and loan borrowings (209,439) (205,156)

Interest rate derivatives (478) -

Total liabilities (277,391) (220,480)

Total net assets 670,564 666,508


14

FINANCIAL RESULTS

Rent Roll and Operating Cash Flow

Acquisitions and rent indexation drive rental growth

45.7

0.91.8

48.4

0

10

20

30

40

50

60

£ m

illi

on


Driven by strong growth in rental income

23.34

10.39

(0.60) (0.23)

32.90

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

£ m

illi

on

6% Growth in Annualised Net Rent Roll 41% Increase in Operating Cash Flow

15

FINANCIAL RESULTS

Growth in EPRA Earnings and EPRA Earnings Per Share

Driven by strong growth in net rental income

Mar-19: £22.6m represents the diluted EPRA earnings after adding back finance costs associated with the C-shares

22.6

(0.2)

(3.8)

10.2 28.8

0

5

10

15

20

25

30

35

£ m

illi

on


3.63

(0.03)

0 0 0

(0.6)

1.63 4.63

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Pe

nce

The diluted EPRA earning per share applied the weighted

average number of shares in issue, 622,461,380 shares for

March 2019 and 622,103,798 shares for March 2020

28% Growth in EPRA Earnings 28% Growth in EPRA Earnings Per Share

16

FINANCIAL RESULTS

Investment Property Portfolio and IFRS NAV per Share

826.9

38.5

13.3

878.7

0

100

200

300

400

500

600

700

800

900

1000

£ m

illi

on

s

Acquisitions and revaluation gains drive IFRS valuation


107.08

(5.30)0.03

107.87

0

20

40

60

80

100

120

£ m

illi

on

IFRS NAV per share after deduction of dividend payments

6.06

6% Growth in IFRS Valuation 1% Growth in IFRS NAV Per Share

17

FINANCIAL RESULTS

Dividends

As at 31 March 2020 - 100%1 run rate dividend cover (87% actual cover) reflecting growth in rental income, profitability and

cash flow

Target dividend to 31 March 2021 reflects progressive dividend policy to seek to grow dividends each year broadly in line with

CPI inflation

Dividend Cover on

Ordinary Shares

87.4%

Year to 31 March

2020

Dividend Cover

Run Rate

100%1

as at 31 March

2020

Dividend for

quarter to 31 March

2020 of

1.325 pence

per Ordinary Share

March 2020

(£’000)

Profit after taxation 37,725

Less revaluation gains (8,912)

EPRA Earnings 28,813

Total dividends paid 32,970

Dividend cover on Ordinary Shares 87.4%

1 Includes all properties that had exchanged / legally committed prior to 31 March 2020

This is a target and not a formal dividend forecast or a profit forecast


Target Dividend for

financial year to 31

March 2021 of

5.4 pence

per Ordinary Share

Dividend Cover

18

FINANCIAL RESULTS

Conservative Debt Position

A broadly based leverage strategy with modest LTV and a high level of average interest cover

As at 31 March 2020:

• £272.5 million investment priced debt in place

• All covenants comfortably met (weighted average interest cover: 4.5x)

• Unencumbered freehold properties with a value of £212 million available as security for additional borrowing

• Discussions for new facilities or a private placement (£80m-£120m) to be in place during 2020

Gross Debt

£272.5m (fully drawn)

at 31 March 2020

Leverage

26.9%

at 31 March 2020

Weighted Average Interest

2.46%

at 31 March 2020

Inte

rest

Rat

e

0%

1%

2%

3%

4%

5%

0%

5%

10%

15%

20%

25%

30%

LTV

LTV and Weighted Interest Rate

LTV Weighted Averaged Interest Rate


FINANCIAL RESULTS

Summary of Debt Finance

• Current LTV of 27% based on portfolio GAV as at 31 March 2020

• £80m-£120m additional debt facility or private placement with

negotiations progressing

• Fully compliant with terms of existing debt facilities (see next

slide)

• Summary of existing facilities:-

Loan Notes RCF

Lender Scottish Widows NatWest Lloyds HSBC

Security Assets Assets Assets Assets

Facility Size £52.5m £60m £60m £100m

Drawn £52.5m £60m £60m £100m

Term 10 years 5 years +1+1 3 years +1 3 years +1 +1

Cost 2.99% fixed 2.60% fixed (2.00%

margin, 0.60% swap)

1.50% margin 1.70% margin

Debt Financing

35% Average Target Leverage /

Portfolio GAV

19Civitas Investment Management Ltd Full Year Results 2020

40% Average Maximum Target

Leverage / Portfolio GAV

OPERATIONAL REVIEW

OPERATIONAL REVIEW

Operational Highlights

New initiatives delivered in the period


4

21

3

Care Provider Relationships

ExtendedDelivering new state of the

art healthcare facilities

The Social Housing Family

CICA Multi-channel Approach

• Increasing number of national care

provider relationships

• Delivering back-to-back lease

protection

• Completion of first stage of delivery

of new Wales facilities

• No development or financing risk

• Auckland commences major

recruitment after joining the CIC

• Active discussions for new parties to

join CIC shortly

• Recent shareholder consent to

undertake transactions with NHS and

charities

• Now able to partner with wider range

of counterparties


OPERATIONAL REVIEW

Broader Care Provider Relationships

Civitas continues to drive the care acuity that can be delivered within its properties with a focus on mid-to-higher acuity care

Civitas has also established strategic relationships with many leading national, regional and local care providers across the acuity

range

33%+ of Civitas Portfolio benefits from back-to-back care provider leases

Civitas has developed an in-depth understanding of the care being delivered in the portfolio

More than one-third of the Civitas portfolio

is supported by c.25-year back-to-back care

provider leases

These leases guarantee all principle rental

obligations that housing associations owe

to Civitas

Most recent acquisitions are based on the

back-to-back lease structure


OPERATIONAL REVIEW

Completion – Stage 1 (Higher Acuity Facility - Wales)

Delivery of first phase of the new state-of-the-art higher acuity facilities in Wales

• New high-quality 16-bed facility

• Provision of mid-to-high acuity care around mental health, autism and learning disability

• First phase complete, to be followed shortly with delivery of larger part of the overall scheme with 49 beds due shortly

Community Kitchen Facilities

High-Quality Fit Out

Wide Accessible Halls Specialist Bathrooms

Professional Nursing Rooms

Bed Hoists / Tracking

Communal outdoor Space

Care Provider


Specialist bathrooms

Hydrotherapy Pool with Hoists

Wide Accessible Halls Specialist ‘Arjo’ Baths Nursing RoomsCommunity Washing Facilities Bathroom Hoists / Tracking

Community Kitchen Facilities

Bed Hoists / Tracking

OPERATIONAL REVIEW

Final Stage of Development: New State-of-the-art Healthcare

Facility, Wales

Extensive rehabilitation and support facilities

Large Multi-use Hydrotherapy

Pool

• Hydrotherapy pool with large

wide steps, seated pool hoist

and overhead hoist.

• Pool changing rooms with

ceiling track hoist from shower

bed directly into pool

Gymnasium

• Therapy

gym

• Non-slip

floor

• Specialist

equipment

25

Hydrotherapy

Pool

Gymnasium


OPERATIONAL REVIEW

Delivering New Build State-of-the-Art Healthcare Facilities

Specialist Bathrooms

• Specialist Arjo baths and

hoists

• Non-slip floor

CIM supported the establishment of a new not-for-profit Community Interest Company – “The Social Housing Family CIC” (“CIC”) –

active discussions for new housing association and charity to become members

• The CIC is intended to:

✓ bring together a group of housing associations and

charitable organisations holding Civitas and other leases

✓ provide access to CIC management skills and resources

✓ enhance and centralise housing association staffing and

operations

✓ target the objectives set by the Regulator of Social Housing

✓ Enable CIC members to develop own properties (without

development risk), strengthen balance sheets, grow

reserves and diversify sources of income

New Community Interest Company First Member Housing Association

• CIC governed by a non-executive board of directors, chaired by Paul Bridge (no remuneration)

• Largely to be funded by transaction vendors with no cost or recourse to Civitas

• New member firms expected to join shortly


OPERATIONAL REVIEW

The Social Housing Family CIC - Update

Since joining the CIC, Auckland has been further

strengthened with the following initiatives:-

• Recruitment of new COO from leading housing provider and senior level

property manager from the care industry

• Recruitment of three new board members, two with significant housing

experience and one with FTSE 250 financial experience

• Recruitment of a new business manager appointed to focus on working

with care providers, a rent and service charge manager, two housing

officers and a finance manager

• Review of all governance arrangements and policies updated and

implemented

• Increased number of bed spaces in management from 500 to 800

• New offices secured to be opened post COVID-19 in Durham thereby

improving working environment and building capacity for the future


OPERATIONAL REVIEW

A Multi-Channel Approach to Funding, Counterparties and

Regulation

As the Civitas portfolio evolves and becomes ever more diverse it will benefit from plural regulation and a wider variety of counterparties

Regulated and

unregulated housing

associations

Charities

Local Authorities

Care Providers

Community Interest

Companies

Regulatory Environment Counterparties

Care Quality

Commission

Care Inspectorate

Wales

Financial Conduct

Authority

Regulator of Social

Housing

Charities

Commission

Community Benefit

Societies

• Independent

regulator of

health and social

care in England

• Monitor, inspect

and regulate

services to meet

fundamental

standards

• Regulation and

inspection of

healthcare

facilities in Wales

on behalf of

Welsh ministers

• Registration and

regulation of

charities in

England and

Wales

• Registration of not for profit

mutual societies (Community

Benefit Societies)

• Regulates registered providers

of social housing

• Encourages and promotes the

use of private capital

CIVITAS PORTFOLIO


APPENDIX

The Civitas Portfolio – Key Characteristics

Portfolio: Key Characteristics As at 31 March 2020 (completed properties only)

Average 10-year

lengthSLAs between care

providers and Housing

Associations

613properties

4,216tenancies

23.7year WAULT

£48.4MM Annualised rentroll

15 Registered Providers

117 Care Providers

164local authorities

40/50 average care hours per

week

More than one third of

portfolio subject to

25-yearback-to-back agreements

between care providers and


Portfolio

100% let under long-term lease

commitments

More than one third

of portfolio comprises new, purpose

built or repurposed

properties

Two thirds of

portfolio comprises well located

community properties

subject to bespoke

adaptations for long-term

use by residents

Limited voids currently being paid for by


across the portfolio at

March 2020

£789MM capitaldeployed

OPENING OF NEW HIGHER ACUITY CARE FACILITY, WALES

Capital Deployment as at 31 March 2020Track Record of Capital Deployment

CIVITAS PORTFOLIO

Track Record Of Successful Capital Deployment

30

0

50

100

150

200

250

300

0

100

200

300

400

500

600

700

800

900

Mar 17 Jun 17 Sep 17 Dec 17 Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 Mar 20

£ m

illio

ns

Total Invested Debt


Attractive Investments

5.9%

Average acquisition

yield

(before initial purchase

costs)

Strong and

consistent

annualised rent roll

growth

Highly Selective Investments

Robust due diligence

process undertaken

Over £400 million of

rejected transactions

CIVITAS PORTFOLIO

Geographically Diversified Portfolio

North East

Yorkshire

East Midlands

London

East of England

South East

South West

Wales

West Midlands

North West

Market Value by Region1

Assets by Region1

1As at 31 March 2020, including completed properties only

Properties: 63

% of funds invested: 6.9%

Properties: 49


Properties: 58


Properties: 26


Properties: 20


Properties: 64


Properties: 120


Properties: 15


Properties: 99


Properties: 99


31

16.4%

13.0%

11.9%

10.6%10.5%

10.2%

9.3%

8.2%

6.9%

South West

London

West Midlands

South East

Yorkshire and the Humber

North West

East Midlands

Wales

North East

East of England (3.0%)

120

99

9964

63

58

49

2620 15

South West

North West

West Midlands

South East

North East

East Midlands

Yorkshire and the Humber

London

East of England

Wales (15)


CIVITAS PORTFOLIO

Diversified by Registered Provider

Rental Income by Registered Provider1

Market Value by Registered Provider1

Assets by Registered Provider1

Tenancies by Registered Provider1

1As at 31 March 2020, including completed properties only

32

117

103

7269

43

41

41

27

27

231615

Falcon Housing Association C.I.C.

Auckland Home Solutions C.I.C.

Bespoke Supportive Tenancies Limited (BeST)

Inclusion Housing Community Interest Company

Trinity Housing Association Limited

New Walk Property Management C.I.C.

Westmoreland Supported Housing Association Limited

Harbour Light Assisted Living C.I.C

Pivotal Housing Association

Chrysalis Supported Association Limited

Encircle Housing Ltd

Hilldale Housing Association Limited

IKE Supported Housing Limited (10)

My Space (8)

Blue Square Residential Ltd (1)

858

718

526455

242

239

238

214

205

194145










New Walk Property Management C.I.C.


My Space (71)

IKE Supported Housing Limited (68)

Hilldale Housing Association Limited (39)

Blue Square Residential Ltd (4)

24.4%

20.4%

11.0%

8.7%

6.3%

6.1%

5.5%

4.0%

3.8%

3.5%











New Walk Property Management C.I.C. (2.9%)

My Space (1.2%)

IKE Supported Housing Limited (1.1%)

Hilldale Housing Association Limited (1.0%)

Blue Square Residential Ltd (0.1%)

24.9%

20.9%

11.3%

8.7%

6.2%

5.4%

5.1%

4.0%

3.8%3.5%











New Walk Property Management C.I.C. (2.9%)

IKE Supported Housing Limited (1.1%)

My Space (1.1%)

Hilldale Housing Association Limited (1.0%)

Blue Square Residential Ltd (0.1%)


CIVITAS PORTFOLIO

Diversification Achieved Via High Quality Acquisitions

2019

2020Location: Bournemouth, South West

Tenancies: 13

Care Need: Learning Disability / Autism

Housing Association: Inclusion

Location: Nottingham, East Midlands

Tenancies: 4

Care Need: Learning Disability / Acquired Brain

Injury

Housing association: Inclusion

Location: Essex, South East

Tenancies: 5

Care Need: Learning Disability / Mental Health

Housing Association: Auckland

Location: East Sussex, South East

Tenancies: 10


Housing association: BeST

Location: Surrey, South East

Tenancies: 5

Care Need: Learning Disability / Epilepsy /

Physical Disability

Housing Association: Inclusion

Location: Bedfordshire, East of England

Tenancies: 8


Housing Association: Falcon

Location: Essex, East of England

Tenancies: 8

Care Need: Learning Disability

Housing Association: Auckland

Location:South Gloucestershire, South West

Tenancies: 9

Care Need: Learning Disability

Housing Association: Chrysalis



CIVITAS PORTFOLIO

SSH Rents Setting – RSH Guidance

Regulator of Social Housing (RSH) informs regulated housing

associations over rent setting for specialist supported housing (“SSH”). “2. Exclusions from this Rent Standard

2.1 This Rent Standard applies, subject to the

exceptions in 2.2-2.5 below, to ‘low cost

rental’ accommodation, as defined by section

69 of the Housing and Regeneration Act

2008. All other terms used in this Rent

Standard are defined within the ‘Policy

Statement on rents for social housing’ “

“2.2 This Rent Standard does not apply to the following categories of property, as

defined in Chapter 5 of the Rent Policy Statement:

• Shared ownership low cost rental accommodation

• Intermediate rent accommodation

• Specialised supported housing • Relevant local authority accommodation

• Student accommodation

• PFI social housing

• Temporary social housing

• Care homes. “

“Exceptions from rent requirements

4.7 We expect organisations to have internal

controls in place to ensure that exceptions

are being applied appropriately, and that

boards and councillors receive assurance on

the adequacy and effectiveness of those

controls at intervals that are proportionate to

the risk. We have seen evidence of some

providers taking an overly simplistic

approach to interpreting definitions of

excepted stock categories which increases

the risk of them being applied

inappropriately.

4.9 One specific issue we have identified that increases the risk of non-compliance

is in relation to agreements for rent charges for SSH. If asked, providers should be

able to evidence that the rental charge for the SSH has been agreed by the

commissioning body i.e. the local authority or health service in accordance with the

definition. Evidence that a tenant’s rent is being met by Housing Benefit or Universal

Credit is not sufficient”

March 2020 – “Addendum to the Sector Risk Profile” sets out guidance for

housing associations in setting SSH rents:

• Demonstrating the appropriate control environment

• Evidencing properties qualify for SSH exemption

• Local authority commissioner support for each rent

April 2020 – Annual “Rent Standard 2020” from RSH confirms that SSH

properties are specifically exempted from normal social housing rent

standard

Civitas portfolio focused on mid-to-higher acuity care delivery assists in

confirming SSH status

CIM continues to work closely with housing association partners to assist

them in meeting the guidance in respect of SSH rents

“Working together with Civitas Housing, we were able to deliver 29 self-contained units of

accommodation for our most entrenched rough sleepers, ensuring that they are no longer on

the streets and exposed to the virus. We appreciate the assistance and support provided by

Civitas Housing during this period, they have shown that the spirit of community still exists

through actively working to provide us options to solve our housing needs”

The Head of Private Housing Partnerships, Islington Council

OVERVIEW

Detailed Response to COVID-19

35

FINANCIAL

OPERATIONAL

SUPPORT

CASE STUDY


• Rents collected as expected, no impact from COVID-19

• Housing associations and care providers paid 100% by state

• No significant delays reported in underlying payments from local authorities / NHS

• Positive response to additional fee requests for PPE and other COVID-19 related costs

• Specialist housing associations met challenge of COVID-19 supported by care providers

• Properties remain fully operational with delivery of care and enhanced property services

• Increased demand reported from local authorities, NHS and central government

• Limited number of COVID-19 cases reported by residents and staff, and isolation

procedures enacted

• Regular contact with all housing association partners and major care providers

• Offers of operational assistance and sharing best practice and experience across

portfolio

• Rolling surveys of COVID-19 procedures across all Civitas housing partners

• 29 newly refurbished self-contained flats made available to Islington Council for

Government homeless COVID-19 action plan – 26 March 2020 (see letter opposite)

During the COVID-19 pandemic Civitas has continued to deliver on all financial and operational metrics, supported partner

organisations and made properties available directly for the Government’s COVID-19 “call to action”

Civitas responds to

government call to house all

homeless people to protect

them from COVID-19

COUNCIL

SOCIAL IMPACT, ESG AND SECTOR AWARDS

SOCIAL IMPACT

Delivering Social Impact and Social Value


• 64% of new properties in last six months brought into social housing

sector for the first time

• 63% of professional support workers reported improved tenant mental

health and wellbeing

• £114 million in Social Value generated on an annual basis

• £64.7 million of direct savings to local and national government

per year

• £1 billion+ of direct savings to the taxpayer projected over duration of

Civitas leases (25 years)

• 32 years average age of tenant

Social Impact Report – June 2020

• The latest report by independent specialist social

impact consultants, The Good Economy (TGE) confirms

Civitas “… have established themselves as a leading

specialist investment fund in specialised supported

housing”

• Additional independent study conducted by specialist

impact consultancy, the Social Profit Calculator (SPC) in

conjunction with TGE to establish Civitas' social value

• In the light of Covid-19 pandemic, findings based on

proactive remote engagement with organisational

stakeholders and partners including local authority

commissioners, RPs and care providers

• Civitas’ social impact analysis aligned with the five

dimensions of impact as set out by the Impact

Management Project - a widely recognised and

established approach to impact measurement,

management and reporting.

“positive [rate of growth] and

evidencing an impact-led rather than

deployment-led investment approach.”

The Good Economy, June 2020

Highlights:


Embedded social impact strategy – Civitas is an Accredited Impact Investor under IFC Principles

• Civitas has embedded social impact and social value objectives in its business model

• All transactions have to meet both economic and social objective

• Key objectives can be summarised as follows:

Delivering social impact also extends externally to include the Civitas Partnerships

• Civitas is a responsible impact investor that aims to deliver positive social impact alongside a financial return

• Civitas integrates environmental, social and governance considerations into all stages of the investment process

To increase the availability of

social housing across the UK,

particularly for vulnerable

people

To improve the quality of social

housing and ongoingmonitoring

of housing maintenance and

tenant support

To offer value for money for

the public purse

Ongoing monitoring of housing

maintenance and tenant

support

Commissioned regular

independent social impact

report

Civitas Partnerships

SOCIAL IMPACT

Delivering Social Impact and Social Value


SOCIAL IMPACT

Environmental Performance

• An active programme is underway across the portfolio to enhance environmental performance

• Currently 98% of homes meet the government’s energy efficiency standard (MEES)

• Currently 51% of homes are rated A – C and meet or exceed the governments Clean Growth Strategy

• Civitas is seeking to accelerate the pace of cutting carbon emissions and to move as quickly as possible to announce a zero-emission target

Current EPC Ratings – Civitas Portfolio

0.2%

16.2%

34.2%

34.9%

12.8%

1.3% 0.4%

50.6%

EPC Rating A - 0.2%

EPC Rating B - 16.2%

EPC Rating C - 34.2%

EPC Rating D - 34.9%

EPC Rating E - 12.8%

EPC Rating F - 1.3%

EPC Rating G - 0.4%


SOCIAL IMPACT

Care Sector and Financial Industry Awards

Civitas and CIM are award winners and finalists across a number of leading financial and social care/housing sector organisations

2017 2018 2018 2019 2020

CIM: Property Investor of the Year

September 2020

PIPELINE


PIPELINE

Significant Pipeline of Opportunities when New Resources

Available

1

2

3

4

5

6

7

8

9

10

Project 1

Project 2

Project 3 Project 5 Project 7 Project 9

Project 4 Project 6 Project 8 Project 10

5.5% - 6.0% NET INITIAL YIELD ASSUMED

ESTIMATED UP TO 10 PROJECTS

VALUE c.£200 MILLION

All existing capital is allocated to transactions completing in 2020 or to contingency reserves. New capital is required to meet the opportunity of

growing investment pipeline of higher-acuity properties.

Additional Debt Facility

• Discussions proceeding with bank lenders

• Consideration for private placement transaction

• Total additional debt capacity c.£120m at 35% gross leverage

• Objective to enhance further dividend cover and increase portfolio diversity

Target

£80-120 million

Transaction Pipeline

OUTLOOK

OUTLOOK

Well Positioned for Sustainable Growth


Demand for the accommodation provided by Civitas is strong and expected to remain so over the long-term. Civitas is a go-to

partner for an increasing range of major vendors and counterparties.

Civitas is the market leader with the largest portfolio of care-based housing in the UK and deeply ingrained relationships with care

providers, local authorities, housing associations, care providers and charities across the UK

Now taking delivery of new build higher

acuity properties with more opportunities

being offered

Following recent shareholder consent now

actively exploring opportunity to work with

a broader range of counterparties

Continuing to work closely with the CIC to

enable it to expand and play a broader role

in the sector

Entering other significant markets in

addition to England and Wales – Scotland

and Northern Ireland

Continuing to deepen relationship with

important local authorities and

counterparties with whom Civitas has long-

term relationships

Strategy For

Growth

Strategy For Growth

OUTLOOK

Increased Political Commitment and Support for Healthcare and

Social Care

➕ Matt Hancock, Secretary of State for Health and Social Care in April 2020: “We are committed to doing

whatever is needed; that promise applies just as much to social care as it does for the NHS.”

➕ Department of Heath And Social Care, June 2020: “We are committed to ensuring people with a learning disability

and autistic people are supported to have the best possible quality of life in their community.”

➕ Care-based housing remains one of the fastest growing parts of the UK healthcare pathway

➕ Increasing momentum to help people move out of remote institutional settings and to help address the COVID-19

risk

Government acknowledges the vital role of social care sector with long-term commitment and provision of

additional funding



We have created a robust and diversified mid-to-

higher acuity portfolio to underpin long-term income

and capital growth whilst delivering

social impact and social value.

46


APPENDIX

48

BACKGROUND

Civitas Social Housing PLC

Investment Strategy / Performance

• Market leader, dedicated to investing in care-based housing and

healthcare facilities in the UK

• Unbroken track record of asset growth, revenue and dividend

uplifts since IPO in 2016

• Purchasing existing established and occupied properties with a

focus on healthcare driven assets for mid-to-higher acuity care

• Acquiring newly built properties on completion without taking

development or financing risk

• All properties offer the potential for life-long residency (average age

32 years)

• Part of community-based social infrastructure, 100% funded

ultimately by central government

• Long-term structural demand and growing audience in need of this

accommodation

• High level of measurable social impact, ESG delivery and

significant cost saving for the State

• Aggregation play by building national portfolio of smaller

community based local assets

Fund Overview

Investment Sectors

• Real Estate

• Healthcare

• Investment Funds

Equity Capital Raised £652 million

Current IFRS £’000

(31 March 2020)

NAV GAV

£670,564 £947,955

Dividend Yield c.5.0%

Target Return c.8%

Current Leverage

(31 March 2020)27%

Fund Structure • Closed Ended

• Permanent Capital


BACKGROUND

Government Underwrites Funding For Supported Housing and

Social Care


Ministers recognise that supported housing is a vital service for some of the most vulnerable people in our communities, and last year

consulted on possible alternative funding options.

“Having listened to views from providers, stakeholders and councils, the government has decided housing benefit will remain in place

to fund this accommodation.”

H.M. Government, August 2018

“Protection of the most vulnerable has always been our primary concern, and following our consultation, the case for keeping supported

housing in the welfare system became clear. The sector also recognised that our aim of improving the quality of homes must be

addressed, and we look forward to now working with partners to make sure we have strong measures in place.”

Kit Malthouse MP, Housing Minister, H.M Government – August 2018

“We are committed to ensuring that vulnerable people have access to the supported housing they need to live safely and independently.

We value the expertise of stakeholders and have listened carefully to their concerns during the consultation. As a result we will continue to

pay housing benefit for all supported housing –making sure safe homes are provided for those that need it most.”

Justin Tomlinson, Minster for Family Support, Housing and Child Maintenance, H.M Government – August 2018

“All supported housing funding to be retained in welfare system”

“We should be proud of our incredible care sector…our care staff come to work, day after day supporting our most

vulnerable”

Matt Hancock, Secretary of State for Health and Social Care, April 2020GOV.UK

BACKGROUND

Social Housing – A Sector with Acute Shortages

SOURCE:1Sector Risk Profile – Regulator of Social Housing 20182The Guardian – June 20183Affordable Housing Supply 2018 – Ministry of Housing, Communities & Local Government4Whats Happening to Rented Social Housing in England? Full Facts, December 2018


Over 4.0 million social

homes (2.8 million

managed by housing

associations)

1 in 5 homes

is a Social

Home

4.5 million waiting

list2 (1 in 15 million

families)

£20 billion turnover1

(housing associations

only)

£Affordable homes delivery since 1991-923

Supply of affordable housing completions by tenure, England,

1991-92 to 2017-183

Dwelling stock rented from local

authorities and housing associations in

England, annual figures 1971-20174

Dwelling stock rented from local

authorities and housing associations

as a % of all stock, England, 1971-20174

APPENDIX

Supported Housing: A Vital Role

Over

4.8 million social

housing units in Great

Britain1

86%

All Supported Housing Units

Care-Based Housing

• 651,500 Units (with support needs) – (14% total Social Housing

Units)1

• 716,000 People live (with appropriate support) in Supported

Housing2

171,840 People2 (working age with certain care needs) live in care-

based housing – 24% of people living in Supported Housing (data

excludes certain care conditions)

Civitas Social Housing PLC – Care-Based

Housing Sector Share

4,216 People 2.4%

1Dept for Communities & Local Government - “Supported Accommodation Review”: November 20162House of Commons, First Joint Report of the Communities and Local Government and Work and Pensions Committees– “Future of Supported Housing”: May 2017

• Learning Disability

• Physical Disability

• Mental Health

• Autism

• Homelessness

• Domestic Abuse

Includes people with these long-term care needs

14%

• Multi-decade requirement for stable housing

• Average age 32 years in Civitas portfolio

Smaller Housing Associations (1,000 – 5,000

units)Supported Housing 43% of Total Stock


APPENDIX

How We Define Care Based Housing

DEFINITION

✓ Part of delivering life-long care and support in the community

✓ Provides accommodation for residents with life-long care needs

including learning disabilities, autism and mental health

BENEFITS

✓ Enabling residents to live closer to family and friends

✓ Improving quality of life

✓ Rehabilitation

✓ Value for money for public purse

✓ Measurable social impact

PROPERTIES

✓ Typical 1- 20 individual units in each scheme

✓ £300,000 to £4m+ scheme size

✓ Designated Care Based properties with rent paid by government

✓ Leased long term to housing associations and other not-for-profit

organisations

THE RESIDENTS

✓ Focus 18-65 years (no upper limit)

✓ Average age of resident in Civitas portfolio 32 years

New build properties with good access

High quality purpose built properties

Simple construction

Fully renovated properties within community

settings


BACKGROUND

Supported Housing – 0.6% of Total UK Welfare Spending


Significant Untapped Market

Opportunity

Civitas Share

c.£1.4bn

Civitas Current Target Rent Roll(3)

2017 Total UK Government

Welfare Spend £264bn(1)

c. £25bn Housing Benefit Spending(10% of total welfarespending)

Pensions

£112bn

42%

Incapacity, disability

& injury benefits

£44bn

16%

Family benefits, income

support & tax credits

£46bn

18%

Personal social

services & other

benefits

£35bn

13%

Unemployment

benefits

£2bn

1%

Housing

benefits

£25bn

10%

c. £1.4bn For

Supported

HousingAccommodation

only(2)

c. £25bn

~4% £55MM

1. Office for National Statistics

2. H.M. Government “Supported Accommodation Revenue”, November 2016

3. Target Rent Roll is net rental income based on 35% gross LTV and acquiring SSH properties within the net acquisition yield of 5.5% - 6.5%

Supported Housing ~ 6% of Housing

Benefit Spending

Annual savings resulting from

Supported Housing

Older

tenants

Learning Disabilities

and Mental Health

Per Person, Per Year £3,000 £15,500

BACKGROUND

Supported Housing – Offers Value for Money


Average weekly cost Supported Housing Registered CareInpatient Settings

(Hospital)

Housing cost per week1 £232 - -

Care package cost per week £1,337 - -

Placement cost per week2 - £1,760 £3,500

Total £1,569 £1,760 £3,500

1Including service charge2Care and accommodation together

“While supported housing is more expensive than

general needs accommodation it generates substantial

cost savings for other parts of the public sector.”

House of Commons Communities and Local Government and Work and Pensions Committees – April 2017

“The net benefit of providing supported housing to the wider public purse

was estimated to be £3.5 billion per year.”

Marcus Jones MP Minister, Local Government - 2017

“Significant cost savings to the social care budget arose from Supported

Housing.”

Caroline Nokes MP, Parliamentary Under Secretary of State for Welfare

Payments - 2017

“A stay on an acute ward in the

NHS could amount to many

multiples of the cost of the average

daily rent for working age people in

Supported Housing.”

Gillian Connor, Head of Policy and Development

BACKGROUND

Supported Housing – Demand Outstrips Supply

What is driving increased demand for Supported Housing (growing

5/6% a year)?

1980

7.0MM

2017

4.5MM

UK Social Housing Stock

1980

56MM

2017

65MM

UK Population

At the same time:


1Medical Advance

(survival rates at

birth)

2Longer

Life Expectancy

4Closure of long-

stay hospitals

3

Government

Policy to

promote Care

in the

Community

125,196lettings needed for people of

working age during 2015/16

109,556places available for people of

working age during 2015/16

15,640shortfall in supported housing for people of working age during 2015/16

29,053annual shortfall in supported

housing by 2019/20

46,771annual shortfall in supported housing by 2024/25

If the current trend continues:

APPENDIX

Supported Housing 100% Government Funded Framework


APPENDIX

Civitas is Enhancing Professionalism in the Sector


Onboarding fee paid

to each RP for all

properties to cover

take-on costs

New or fully

refurbished properties

delivered to RPs

Rents agreed with

commissioners,

independently tested

and set at median

level

Void fund financed for

RP to provide

additional financial

buffer

Engagement with care

operators and LA

commissioners

establishes long-term

demand and suitability

of properties

Risk sharing clauses

within leases

(change in law or

formal government

policy)

Social Impact reviews

on all transactions

prior to purchase/

commitment LEASE COUNTERPARTY

2 3 4

5

678

KEY STEPS

A nine-key step programme

established and promoted by

Civitas to ensure responsible,

stable investment

Indexation set below

recent government

approval levels. (CPI

vs CPI+1)

“Caps” and “Collar”

within leases to

protect against

inflation

1

9

57

APPENDIX

Local Authorities: Primary Drivers Of Demand For Supported

Living

Source: Connell Consulting interviews

“It is probably the rising numbers of young people coming

through transition that is driving demand. If you look at our

demographics, we’ve got a lot of young people with autism.”

Joint Head of Commissioning, Rotherham Council and CCG

“We have people with a learning disability coming from

children’s homes and transitioning to adults’ services, we

have people coming out of long-stay hospitals, we will have

people whose community support is limited with maybe

ageing parents.”

Contracts Officer - Care and Support, Nottingham City Council

“There is growing demand, more so for learning disabilities

and autism than mental health. The Transforming Care

agenda is a driver behind that increase.”

Case Manager – Complex Mental Health and Learning Disability,

Bassetlaw CCG

“We have Transforming Care, which is driving demand. We

have a growing number of children who are coming through

transition, because medical improvements are allowing

disabled children to live after childbirth. That is really where

a lot of our ‘new’ people are coming from.”

Commissioning Outcome Manager, Gloucestershire County

Council

• Closure of long-stay hospitals and movement to

residential care homes

• Shift from local authority operated provision into

more efficient independent provision

• Following on from Winterbourne View, the

Transforming Care Programme continues to shift care

from inpatient settings to the community

• Increasing acuity of service users in children’s services

and transitioning into adult services

• Babies are surviving with more complex conditions,

increasing prevalence

• Underlying growth in the population

• An ageing population of service users with complex

health and care needs

• People with profound and multiple learning

disabilities are living longer

• Policy and commissioning behaviours

His

tori

c

dri

ve

rsC

urr

en

t tr

en

ds

Fu

ture

gro

wth

58

Civitas operates in 164 local authorities in England and Wales, and has extensive knowledge and experience of working with commissioners and housing benefit teams


59

FINANCIAL RESULTS

Summary of Debt Covenants

The covenants for the term loan facilities and the revolving credit facilities were comfortably met during the period, with details

included below.

Covenant

Quarter ended

31 March 2020

Scottish Widows

£52.5m term facility

Interest for the quarter

Projected interest cover for the next 12 months

Loan to value of secured assets

>325%

>325%

<40%

535%

548%

30%

Lloyds

£60m revolving credit facility




>250%

>250%

<55%

543%

554%

38%

HSBC

£100m revolving credit facility




Loan to vacant possession value

>250%

>250%

<60%

<120%

424%

434%

48%

74%

NatWest

£60m term facility




>250%

>250%

<50%

575%

458%

48%


60

Abstract from Annual Report 31 March 2020

FINANCIAL RESULTS

Calculation Of EPRA And Other Alternative Performance Measures


APPENDIX

Local Authorities: Supported Living Is The Preferred Model Of

Care

Providers

Long-stay NHS hospital Rehabilitation service Care home Supported living Community

NHS/ Independent NHS/ Independent Local Authority/

Independent

Care-Based

Housing & Care

Providers

Care Providers

Funding NHS NHS/ LA NHS/ LA LA LA

Care and support toService Hospital-based care and facilitate transition Residential care and Home-based care and Community basedUsers/ Offer support from hospital to support support care and support

residential

• Whilst supported living is typically the preferred model of care, local authorities are

facing a chronic shortage of housing stock that is both affordable and suitable

to meet the needs of adults with specialist care needs

• The development of supported living, such as that provided by Civitas Social

Housing, is helping to meet this high and rising demand for social housing

Source: HSCIC; RCPsych (2013); Improving Health and Lives (2010); Connell Consulting analysis, 2019

Commissioners prefer to place adults with specialist care needs in supported living settings, as it is perceived to be morecost-effective

and offers a better experience of independent living. However, there is a chronic shortage of supported living to meet demand.

Long-stay NHS

hospitalRehabilitation

serviceCare home Supported living Community


ALASTAIR MOSS

Independent Non-Executive Director

Chairman of the Investment Committee of the City of London Corporation and Chairman of Property Investment Board.

Non-executive Director of Notting Hill Housing Group and Audit/Treasury Committees.

Counsellor at Westminster City Council for 12 years and tenure as Chairman of the Planning & City Development Committee.

Currently property development Partner at Memery Crystal LLP.

APPENDIX

PLC BOARD

MICHAEL WROBEL

Independent Non-executive Chairman

Non-Executive Chairman of the Diverse Income Trust plc, a Trustee of British American Tobacco Pension Fund and Chairman of the Thorntons Plc pension fund.

Formerly Group Advisor Pension Investments at Rio Tinto plc, a director of JPMorgan European Smaller Companies Trust plc and Gartmore Investment Management plc

and was Head of Investment Trusts at F&C Asset Management. He was previously an investment manager at Fidelity and Morgan Grenfell.

PETER BAXTER

Independent Non-executive Director

Formerly chief executive of Old Mutual Asset Managers from 2005 until 2011, having joined the firm in 2000 as Chief Investment Officer. Previously worked for Schroders

and Hill Samuel in various equity analysis, fund management and investment strategy roles. Member of the board of Trust for London, where he chairs the investment

committee, and a member of the Financial Reporting Council’s Conduct Committee. Non-Executive Director of BlackRock Greater Europe Investment Trust plc

CAROLINE GULLIVER


Caroline spent a 25-year career with Ernst & Young LLP, from where she retired in 2012 to pursue other interests including non-executive directorship positions. She is a

chartered accountant with a background in the provision of audit and advisory services to the asset management industry, with a particular focus on investment trusts.

Non-executive director of JPMorgan Global Emerging Markets Income Trust plc, International Biotechnology Trust and Aberdeen Standard European Logistics Income PLC.

62

ALISON HADDEN


Alison started her career at Dudley Metropolitan Borough Council and Birmingham City Council. She then went on to hold Chief Executive positions at several major housing

associations, including Paradigm Housing, a 13,000-home housing association based in Buckinghamshire. Alison has also been an executive director at Circle Housing, one

of the largest housing associations in the UK with over 67,000-homes. In these roles she has worked with many of the stakeholders in the industry, including the Regulator

of Social Housing. Alison is currently Chair of Housing Plus Group, an 18,000-home housing association group in Staffordshire and Shropshire, and a non-executive director

and member of the Audit and Risk Committee of Yorkshire Housing, a 20,000-home housing association operating in the Yorkshire area.


APPENDIX

CIM TEAM

ANDREW DAWBER

Group Director

TOM PRIDMORE

Group Director

STEVE TRAVERS

Director, Healthcare

PAUL BRIDGE

CEO, Social

Housing

PHIL ELLIS

DirectorNICK ABBEY

Director

CHUDE CHIDI-OFONG

Director

SIMON CAIRNS

Investment Director

SUBBASH THAMMANNA

Group CFO

WILL KEY

Business Analyst

ELEANOR COREY

Transaction Director

TARA HULME

Associate Director,

Healthcare

VICTORIA

MALLELA

Associate Director

ALEX PARRY

Transaction

Manager

GEORGINA

MCGUINNESS

Operations Manager

VICTORIA

FLEMING

Office Assistant

ADAM WORDLEY

Transaction

Assistant

JEREMY KAPE

Consultant, Asset

Management

63

TAYO BILEWU

Investment Director

CLAIRE FAHEY

Group Financial

Controller

TOM FALCONER

Director, Asset

Manager

MATTHEW

DUNBAR

Transaction

Manager, Consultant


A Leading Team Experienced in Social Housing, Healthcare and Fund Management

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All investments are subject to risk, including the loss of the principal amount invested. Past performance is no guarantee of future returns. The value of Shares and the income from them is not guaranteed and can fall as well as rise due to stock market

and currency movements. When you sell your investment you may get back less than you originally invested. You should always seek expert legal, financial, tax and other professional advice before making any investment decision. Neither the

receipt of this Presentation by you or any person, nor any information contained herein or subsequently communicated to you or any person is to be taken as constituting the giving of financial, tax, accounting, legal or investment advice or the

making of a personal recommendation as defined in the rules of the Financial Conduct Authority (the “Rules”), by CIM or any of its affiliates (together, the “CIM Group”) and you acknowledge that you are not relying on any member of the CIM Group

for any such advice or recommendation. No member of the CIM Group owes any duties of responsibilities of the kind referred to in the Rules relating to the making of personal recommendations in connection with the Company.

No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this Presentation is accepted and no representation, warranty or undertaking, express or implied, is or will be made by any member of the CIM

Group or the Company, or any of their respective affiliates, directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements.

None of the Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to the Company or as to the truth, accuracy or completeness of this Presentation, or any other written or oral statement

provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this Presentation and nothing in this

Presentation is or should be relied on as a promise or representation as to the future.

This Presentation is strictly private and confidential, may not be distributed to the press or any other person, may not be copied, re-produced, discussed, published, quoted or referenced to, in any form, in whole or in part, for any purpose whatsoever,

without the prior written consent of CIM and in particular, may not be distributed to any U.S. person or to any U.S. address. Any distribution or reproduction of this Presentation in whole or in part is unauthorised. Failure to comply with this restriction

may constitute a violation.


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