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Giant Hong Kong conglomerate CK Asset Holdings has extended a £485M offer to buy a UK social housing REIT as global investors begin picking up discounted assets among listed property companies.
CK Asset, founded by Hong Kong billionaire Li Ka-shing, whose nickname is Superman for his investment track record, has received approval from the board to buy Civitas social housing.
The 80p-a-share offer represents a 44% premium to Civitas’ share price before the offer was announced, but a 27% discount to the company’s last net asset value at the end of March, Civitas said.
Civitas’ chairman said the offer undervalued the company’s assets. But negative sentiment toward UK social housing investment and the fact the company’s shares have traded at a persistent discount to net asset value meant it was still the right thing to sell, the company said.
"Whilst the Civitas board believes that the offer undervalues the long-term prospects of Civitas as expressed by net asset value, we also recognise that 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," the company said in a statement.
"The offer provides liquidity to shareholders with the opportunity to exit in full and in cash at a significant premium to the current share price, in a time of macroeconomic uncertainty.”
CK Asset already has a significant UK affordable housing investment business, and build-to-rent investor Long Harbour is part of the same investment stable. CK said it would look to keep Civitas’ existing £368M debt facility in place.
The UK’s social housing regulator has downgraded Civitas tenants, housing associations, in the past year. That has brought the security of the company’s rental income into question and affected its share price.
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