Centrus arranges £56m debt refinancing for Funding Affordable Homes

Transaction Overview

Funding Affordable Homes (FAH), a social impact fund which invests in UK affordable housing, has completed a £56 million debt refinancing, reducing its interest payments by more than half.

FAH’s portfolio comprises 768 existing homes across 10 schemes, valued at £135 million, offering affordable homes to up to 1,300 people across the UK. It’s real estate and investment adviser, Edmond de Rothschild Real Estate Investment Management (EdR REIM), intends to grow the portfolio to more than £500 million, delivering up to 3,000 affordable homes across the UK. EdR REIM benefits from an experienced, specialist residential team and its broader vertically-integrated residential platform, which also includes private rental strategies across the UK.

Our Role

Centrus acted as advisor and arranger to FAH on the refinancing which involved: 

• Developing a financial model for the business and the transaction.
• Working with FAH and their legal counsel to develop a suitable funding structure for the business.
• Engaging with potential lenders to discuss structuring options to ensure we could align FAH’s requirements with lender preferences.
• Running a roadshow process to find the most competitive funding.
• Negotiating with lenders to agree a final term sheet.
• Driving the transaction through to closing, requiring detailed legal and structuring work throughout the documentation process.

Outcome

• FAH has secured a £56 million, 20-year facility from a European bank, replacing nine existing facilities provided by three lenders, including Barclays and Secure Trust Bank. 
• FAH’s loan portfolio is greatly simplified, both reducing the number of lenders and complexity of the lending within the group
• The transaction removed expensive development facilities which were not fit-for-purpose for stabilised assets.
• The interest rate on the new facility is based on an inflation-linked gilt rate, aligned with FAH’s inflation-linked rents.

“This refinancing is a significant milestone for FAH, more than halving our previous cost of debt and providing a stable base from which to raise and deploy equity. In a challenging financing market, Centrus’ deep market knowledge and advice was central to securing the new facility, which now enables us to move forward, focusing on delivering more, much needed affordable homes across the UK”.

Adrian D’Enrico, Fund Manager – FAH

“We are pleased to have supported Funding Affordable Homes in arranging funding so key to its long-term strategy, supporting objectives to deliver more affordable homes and social impact. The successful outcome of this refinancing project has provided FAH with a strong foundation and greater flexibility in the future”.

Lawrence Gill, Director – Centrus

For more information, please contact Lawrence Gill, Director at Centrus.

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