Civitas Social Housing has defended a £485m takeover offer by CK Asset Holdings, saying it is “fair and reasonable” despite undervaluing the REIT’s assets.
In May, Civitas’ board recommended an offer of 80p per share from the Hong Kong-based property giant, despite the deal equating to a 26.7% discount to the REIT’s net asset value.
In its latest full-year results, the social housing landlord said its net asset value per share had fallen from 110.3p to 109.16p.
The total portfolio value increased from £968.8m to £978.1m, while net assets were more than £615m. Contracted rent roll rose by nearly 6% to £56.3m.
Chair Michael Wrobel said: “Our share price has been disappointing over the year under review, reflecting in part the broad derating of real estate investments, higher interest rates and investor concern about our sector.”
He added that “whilst the board believes that the offer undervalues the long-term prospects of Civitas as expressed by net asset value”, it recognised that this was the best deal it could hope to get.
“Civitas, and its sector as a whole, faces a number of challenges in sentiment which the public markets are unlikely to overcome in the short to medium term,” he said.
He added that the discount had to be weighed against the liquidity the offer provided to shareholders, and the “significant premium to the current share price, in a time of macroeconomic uncertainty”.
“The board therefore considers the terms of the offer to be fair and reasonable and we have recommended it to our shareholders.”
While Civitas’ share price now stands at 80p, reflecting the offer, it was down to just 52.6p before the offer was made. Two years ago it stood at 120p.
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