Civitas has assigned all of its leases with First Priority Housing Association to Falcon Housing Association after First Priority fell into financial difficulty in February.
First Priority leased 44 properties from Civitas, all of which have been transferred to Falcon following First Priority’s censure from the Regulator of Social Housing in February.
In a statement, the regulator said First Priority “[Did] not have sufficient working capital or the financial capacity to meet its debts as they fall due” and that it was dependent on the goodwill of landlords in relation to rent payments, which “indicates a fundamental failure of governance”.
Since then Civitas has sought to reassure investors and said it has been in discussions with First Priority and “other interested parties to seek an appropriate outcome that protects the interests of the company’s shareholders and tenants”.
In total Civitas now leases 86 properties to Falcon, which represents 12.7% of its gross asset value as of December.
The REIT has added an option to increase the length of the leases to 40 years from their start dates, exercisable at its discretion.
Michael Wrobel, chairman of Civitas, said: “I am delighted that we can now provide clarity for all our stakeholders. Our team at Civitas Housing Advisors has achieved a successful outcome for our shareholders in preserving their interests and I am equally encouraged on behalf of our tenants that their homes have been secured for the long-term. We are also very much looking forward to continuing our positive relationship with Falcon over the coming months and years.”
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