2Triple Point Social Housing REIT tenant
As at September 2022, Auckland represented 15.9% of Civitas Social Housing’s £55m annual contracted roll.
Civitas Social Housing REIT’s second largest tenant, Auckland Homes, has been served an enforcement notice for failing to comply with regulatory standards.
On Thursday (20 April), the Regulator of Social Housing published an enforcement notice and made three statutory appointments to its board to "improve its capacity and capability, and to help address its failures".
In August 2021, the regulator published a regulatory notice for Auckland, a small lease-based provider of specialised supported housing, after concluding it had breached the governance and financial viability standard and did not meet the rent standard.
Since then, RHS said it has "engaged intensively" with Auckland to address its "persistent non-compliance", but it has been "unable or unwilling to do so".
Civitas secures £71m five year debt facility
"Auckland has breached our standards across a range of areas, and we have serious concerns about its governance, business planning, and approach to setting rents," said Harold Brown, senior assistant director for investigation and enforcement.
The regulator added that Auckland has not demonstrated that it is appropriately managing actual or potential conflicts of interest, while failing to submit its statutory accounts, which are now more than six months overdue.
As part of the enforcement action, the provider will need to commission an independent review and develop a clear action plan and timetable to return to compliance with the regulatory standards.
This must include measures to improve board effectiveness, business planning, and management of risks to ensure the provider's long-term viability, the regulator said. Auckland will also need to engage with the regulator before acquiring any new homes.
As at September 2022, Auckland represented 15.9% of Civitas Social Housing's £55m annual contracted roll and 16.9% (£160.9m) of its market value of £999.5m, with 100 of the REIT's total 697 properties. In March 2021, Auckland represented 23.7% of the rent roll.
Civitas Social Housing trust sees 4% NAV rise
Andrew Dawber, group director of Civitas Investment Management, the REIT's investment adviser, told Investment Week: "Civitas has a long track record of supporting and helping to drive improved governance in the sector including enhancing the boards of our RP partners.
"In our last update on 8 February we confirmed consistently robust financial and operational performance, in line with the Board's expectations and if this was not currently the case we would have updated the market accordingly in the usual manner."
According to Companies House, Auckland's principal shareholder is The Social Housing Family CIC - the community interest company set up by Civitas, of which Auckland became the first member.
Civitas' website states that the CIC is "operationally independent" with a stated aim to "enable housing associations holding Civitas leases to increase skills and experience and to provide funding if required to promote enhanced performance".
According to the Association of Investment Companies, Civitas Social Housing has over £1bn in assets and is trading on a 46.9% discount to NAV.
Triple Point Social Housing REIT
Auckland is also a tenant of the Triple Point Social Housing REIT, comprising about 4.6% of its portfolio value and rent roll as of December 2022. The trust has 30 assets leased to Auckland with an aggregate value of £30.8m.
In a stock exchange notice today (21 April), the board of the trust said that all rent due from Auckland under the leases with the Group had been paid in full as of 31 December.
However, by the end of March, it added there was a "small amount of rent" outstanding, £41,064, which the board said "is expected to be resolved shortly".
"The group's investment manager, Triple Point Investment Management, has an established relationship with Auckland and welcomes the additional skills the new directors will bring to Auckland's board," the statement said.
"The manager notes that Auckland has been working towards addressing the matters raised by the regulator in August 2021, and has already begun the commissioning process for the independent review required by the regulator."
QuotedData: Why are social housing specialists struggling?
Auckland Home Solutions is the second tenant of the two listed specialised supported housing funds to receive an enforcement notice in recent months.
My Space Housing, an exempt accommodation provider, was hit by the enforcement notice by the RSH due to a "serious and recurrent case" of non-compliance, including conflicts of interest. My Space is Triple Point's fourth largest tenant and represents 1.3% of Civitas' annual rent roll.
In a February update, Triple Point acknowledged that another tenant, Parasol Homes, which makes up 9.6% of its specialised supported housing portfolio, failed to pay all of the rent due in the latter half of last year because of "operational issues".
Triple Point Social Housing has over £772.2m in assets and is currently running on a 59.6% discount to NAV, according to the AIC.
Another social housing trust facing rent collection issues is Home REIT, which revealed a serious deterioration in rent collection in February, collecting just 23% of rent in the quarter ending 30 November 2022.
Two of its largest tenants, Lotus Sanctuary CIC and Gen Liv UK CIC, respectively comprising 12.5% and 5.7% of the company's annual rent roll, have gone into administration.
Lotus Sanctuary did not pay any rent for the quarter to 30 November 2022, with the last payment received in August that year. Other tenants, including Big Help Group and Nobel Tree Foundation, are withholding rent over disputes about the poor state of housing provided.
Home REIT nears loan covenant breach as rent collection faces further deterioration
Home REIT's shares have been suspended since the start of 2023 for failing to publish its annual accounts. Forensic accountant Alvarez & Marsal has sent the homeless accommodation provider its initial report into alleged wrongdoing, which followed the publication of a damning report by short-seller Viceroy Research in November.
QuotedData property analyst Richard Williams wrote in a briefing this morning that regulatory intervention in the social housing sector "can only be a good thing", as standards are driven up and maintained across the "relatively nascent" sector.
"Both Civitas and Triple Point have stated that they are working with their housing association tenants, along with the regulator itself, to help improve standards. Some people seem to have linked these issues with that of Home REIT," he said.
"They are completely different sub-sectors, with completely different characteristics. Firstly, the social housing sector is regulated, while the homeless sector is not, which means unscrupulous housing associations are easily identified."
No comments:
Post a Comment