Centrus joins Housing Solutions at annual GTYK event

Centrus was delighted to join Housing Solutions at their annual GTKY (“Getting to Know You”) event on June 19th 2024, connecting with residents to gather feedback on their experiences and needs.

Housing Solutions provides approximately 7,500 quality, affordable homes across Berkshire. The Centrus housing team enjoyed speaking with residents across the Maidenhead area, witnessing the positive impact that Housing Solutions has in the local community.

A big thank you to everyone involved!

Centrus sponsors St Paul’s Panthers football tournament

Centrus Communities is proud to have supported the St Paul’s Panthers football tournament 2024 on Saturday 22nd June 2024.

The tournament hosted over 750 children from 5-13yrs old with the mission of inclusion for boys and girls of any standard from local primary schools and local football clubs, giving them the chance to play in the Meadowbank stadium – home of the Surrey FA and Dorking Wanderers FC.

Centrus’ Chief Sustainability Officer, George Roffey played a key role in organising the tournament along with other committee members Stuart Dodds (Chair), Grant Spooner, Ben Green, Gareth Key and Amy MacKinnon. A massive thanks to everyone involved!

UK Affordable Housing Market Update | June 2024

Market update

  • The wait for CPI to fall to target is over, with the May 2% result meeting economist expectations. Will CPI hold at this level, will we now see interest rate cuts?
  • Higher than expected service inflation (5.7%) led the market to dial back bets on interest rate cuts in 2024. The service economy continues to resist higher interest rates and until there is a meaningful change in this trend, interest rate cuts will likely be delayed.
  • The market expectation for SONIA in 2025/26 and 2026/27 is 10 bps and 20 bps lower than a month ago respectively. It is higher for longer in 2024, with a steep fall priced in through 2025 to c. 4% later in 2026.
  • Swap and gilt curves for 10 and 30 year are down 25 and 20 bps respectively on a month ago. Gilt yields combined with tight spreads look appealing, despite a c. 10 bps tick up in spreads from the lows a month ago.


Implications for clients

  • We may wait a little longer for the first rate cut but there is a little more headroom in June business plans with forward SONIA down for 2025/26 and 2026/27. Locking in that fall could be attractive unless hedging ratios are already at the upper end of policy range.
  • Bookrunners continue to suggest modest premium on sub-benchmark issuance for good credit, and investor demand for medium-term notes is more than sufficient to meet supply leading to attractive spreads. Housing Associations have a wide range of DCM funding options, and an unusually low cost of carry thanks to high short-term rates.
  • With the election looming there is a chance of domestically driven volatility. The global financial system continues to adjust to higher bond yields and there is always a chance of further shocks as we saw in 2023 with the various bank failures. It makes a lot of sense for Housing Associations to avoid delay in locking in cost of capital and funding for fresh investment plans.


Recent client activity

At Centrus, we are actively developing hedging strategies and participating in business planning and assurance engagements for our housing clients. Recent activities include:

  1. Business planning and assurance engagements: Centrus recently worked with Capital Letters, providing their Board with confidence and assurance that their business plan was founded on informed assumptions and driven by a best-in-class model.
  2. Investment policy reviews: Investment policy reviews are a recent common trend, with a focus for some of the best way to look after significant chunks of cash post asset disposal or capital raise. Beyond paying down RCF, we have focussed on money market funds.

To learn more about our work in the affordable housing sector, click here.

For more information, please contact Paul Stevens or John Tattersall.

Proxima launch: France’s first independent high-speed train company

Proxima: France’s first independent high-speed train company

Rachel Picard and Tim Jackson together with Antin Infrastructure Partners have announced the launch of Proxima, France’s first independent high-speed train company.

Centrus is proud to have acted as a key commercial and financial advisor to Antin Infrastructure Partners and Proxima founders, Rachel Picard and Tim Jackson, securing Antin Infrastructure Partners as the sole equity provider for the project.

Proxima will strengthen the offer available to high-speed rail travellers in France, providing more than 10 million new seats per year.

Click here to read the full story in Railway Gazette


For more information, please contact Stephen Layburn

Centrus Spotlight with L&G Affordable Homes

Centrus Spotlight with L&G Affordable Housing

For-Profit Registered Providers (FPRP) have prompted a significant shake-up of the UK affordable housing market. Savills estimates that by 2028, there’ll be roughly 100 FPRPs, with 113,000 units – a significant rise from 2023.

Omer Fazal, Managing Director and Head of Real Estate at Centrus sat down with Ben Denton, CEO at L&G Affordable Homes, a leading for-profit affordable housing provider, to discuss the evolution of for-profit affordable housing and its impact on the sector.

Our recent In Focus report takes a closer look at the For-Profit Affordable Housing sector, discussing challenges faced by the UK affordable housing market and the benefits of partnership opportunities for housing associations and investors. Click here to read the report.


For more information, please get in touch with Omer Fazal.

In Focus Report: For-Profit Affordable Housing

Introduction

For-Profit Registered Providers (FPRP) have prompted a significant shake-up of the UK affordable housing market. But the landscape is an unusual one. At present, a majority of providers are small developers, yet a significant majority of the stock is with a few larger institutions – and there have been few trades between FPRPs, a function of the nascent nature of the sector.

Analysis based on Savills research earlier this year suggests 39% of the 70 registered For-Profit Registered Providers (FPRPs) are independent developers, yet they account for only 6% of homes.

In comparison, 90% of all stock is owned by institutions, despite the fact that they make up less than a quarter (21%) of the FPRPs; highlighting the weight of capital residing with the institutions.

Recent successful fundraisings of c £250m in aggregate by the likes of Octopus, Savills Investment Management and Edmond de Rothschild, reflect a growing appetite by institutions to access this sector.

Our report In Focus: For-profit affordable housing explores:

  • For-profit affordable housing
  • Challenges faced by housing associations and local authorities
  • Market demand and opportunities
  • Benefits of partnerships between housing associations and investors

Download the report below. For more information on any of the topics discussed, please contact Omer Fazal, Managing Director and Head of Real Estate at Centrus.

UK Affordable Housing Market Update | May 2024

Market update

  • We had farcical scenes at 10 Downing St this week as Rishi Sunak’s election announcement was drowned out by the pouring rain and a protester blasting out D:Ream Things Can Only Get Better!
  • The Government has solved inflation, masterful, I wonder if Brian Cox could write us a song about that…
  • Paul Krugman, a distinguished Professor and Nobel Prize winner said, “On interest rates, I am actually fanatically confused”. He commented on the long period of low interest rates that we thought was grounded on fundamentals, and now a period of high interest rates with the economy remarkably robust. Has the long-term sustainable interest rate gone up?
  • Within the April 2.3% CPI result (2.1% was expected) is notably higher service inflation (5.9%) and core inflation (3.9%) than a Reuters poll forecast (5.5% and 3.6% respectively).
  • The UK economy, largely services driven, is proving resilient to higher interest rates, and the April inflation results sparked a rally in sterling and revised projections of rate cuts, with the chance of a June cut now below 20%.


Implications for clients

Expectations on timing of the elusive first cut have bounced around in recent months and the 3-month forward SONIA curve for 2025/26 is c. 15bps higher than it was a month ago. But looking out 2 or 3 years, the curve hasn’t really moved so variable base rate assumptions in prudent financial plans are unlikely to need knee jerk review.   

Longer term rates remain stable and are beginning to look stubbornly static at c.4% on the 10-year swap and c.4.6-4.7% on the 30-year gilt. Our recent development assumptions survey showed clients using an average 5.3% discount rate, having crept up from sub 5%. Expectation that the cost of long-term capital will fall materially appears to be waning.     

The relatively insatiable investor demand and falling HA bond spreads has helped offset gilts, and issuances from Clarion, Platform and Paradigm in the 5.3% to 5.4% coupon range is cause for optimism. Bookrunners are suggesting modest premium on sub benchmark issuance for good credit, highlighting the variety of DCM funding options currently available to HAs, and an unusually low cost of carry thanks to high short-term rates is another factor to consider.     


Recent client activity

1. Tai Tarian refinance: Tai Tarian completed a £95m full re-finance. This involved two new bank funders and a PP investor, all on terms reflective of Tai Tarian’s high credit quality. The refinance will drive a substantial £6m NPV benefit, significantly reducing WACC, optimising financial covenants and corporate controls, and enhancing debt capacity and operational flexibility. Despite current rates, this transaction highlights opportunities to refinance debt and deliver a positive impact.

2. Strategic advisory: We continue to advise on strategic asset disposals and acquisition strategies, highlighting the sophisticated approaches some HAs are exploring to unlock capacity.

3. Risk management: Hedging strategies and interest rate risk management continue to be areas in which we are helping clients.

To learn more about our work in the affordable housing sector, click here.

For more information, please contact Paul Stevens or John Tattersall.

Centrus runs for Single Homeless Project

Battersea Half Marathon for SHP

Join us in cheering on our Centrus colleagues Rachael Hickey and Gleb Pilipenko as they take on the Battersea Park Half Marathon on the 11th May 2024. They’re running to support Single Homeless Project, a cause we deeply care about.

Single Homeless Project works tirelessly across all 32 London boroughs, helping individuals tackle the root causes of homelessness. From providing critical support to those facing eviction to assisting with mental health challenges and substance dependency, their work is truly impactful.
Centrus is a proud long-standing supporter of this incredible charity.

Every donation, no matter how small, will make a real difference. Please consider supporting Rachael and Gleb in their efforts – Centrus Communities will match donations.


PLEASE CLICK HERE TO DONATE