Housing for the most vulnerable offers safety for tenants – and investors’ cash
CIVITAS
CIVITAS Social Housing invests mainly in homes for tenants with special needs. The company completed a £350 million stock market flotation last year and is now keen to raise the same amount again with a new 100p-a-share offer.
The initial yield (the dividend divided by share price) is expected to be 3 per cent, rising to about 5 per cent by next year.
Civitas buys homes from housing associations, local authorities, care providers and private developers. The homes are already built and occupied but, once they are sold to Civitas, the money raised can be used to build more properties for tenants with special needs.
Most of these tenants are under 30, with conditions such as autism, learning difficulties and acute physical disability. Their rents are almost exclusively paid by the Government, which means that income for Civitas investors is secure. It also means investors can feel they are contributing to the wellbeing of some of society’s most vulnerable people. Often, they have come from institutions or long-term hospital care, and independent homes are both cheaper and have a very positive effect on residents. Civitas is also involved in trying to alleviate the UK’s homeless problem. There are 11,000 people at risk of sleeping rough every night in London alone. Many end up in hostels or temporary accommodation, which can be tough and costly. Civitas works with Crisis, the homelessness charity, and local authorities, to help these people adapt to life in permanent rented accommodation.
Civitas shares have done well since it listed a year ago, rising from 100p to 109½p. The group has invested £300 million and its homes now accommodate over 1,800 tenants. Demand for specialist supported homes is high and Civitas has a £500 million pipeline of transactions to complete.
The shares are available from most large stock brokers and the deadline for applications is Wednesday. Midas verdict: Civitas was the first social housing Reit, it has great experience in the sector and has proved its mettle in the past year. Taking part in this new share offer should deliver a decent, long-term dividend income and allow investors to feel they are doing good.
GOLDEN LANE HOUSING
GOLDEN Lane Housing is also involved in providing homes for people with learning disabilities. A charitable housing association, it was formed in 1998, since when it has housed over 1,700 tenants with special needs.
Golden Lane was the first organisation to launch a charity bond on the London Stock Exchange’s retail bond market, raising £11 million in 2014.
Having used the money to buy 30 homes for 112 people, Golden Lane has returned to the market with another retail bond, offering an annual coupon of 3.9 per cent. That means an investor buying a £100 bond will receive £3.90 in interest payments a year.
The bond matures in 2027, at which point the cash will be repaid. If investors want to sell holdings before then the bonds can be traded on the stock exchange.
Golden Lane differs from Civitas in that it is a charity, rather than a firm. It also creates new housing direct, whereas Civitas buys existing properties from housing associations. In both cases, however, the income is derived from Government-backed rent so Golden Housing bonds, like Civitas shares, are a fairly secure investment. The offer period closed on Friday – much earlier than expected – but the bonds can be bought on the retail bond market. Midas verdict: Golden Lane’s 2014 bonds have risen from 100p to 108p – a very strong performance, which bodes well for the latest batch. These bonds offer yet another altruistic way to earn income.