Newport City Homes unshackled by the successful restructuring of legacy debt portfolio

Transaction Overview

Newport City Homes (NCH) has successfully completed a major treasury portfolio restructure, raising £125m of debt facilities, including a debut £95m private placement, advised by Centrus. The private placement marks one of the lowest all-in interest rates ever achieved in the housing sector, aiding delivery of NCH’s ambitious growth plans.

Newport is the third largest city in Wales, home to over 150,000 people. Since NCH was formed in 2009 with the Large Scale Voluntary Transfer (LSVT) of housing stock from the council, it has substantially reinvested in the stock and made a significant contribution to a programme of ongoing regeneration.

NCH is the largest social landlord in Newport, providing homes and services to over 20,000 people. With strong economic growth in the area and boasting the largest housing price growth across the UK in 2018, the demand for affordable housing is deep and increasing. This refinancing will enable NCH to develop around 1,000 new homes over the next four years.

Centrus was responsible for formulating the corporate finance strategy, focused on refinancing expensive debt originally structured on typical LSVT terms with a syndicated bank facility. Recognising its well-established track record for delivery, it was time for NCH to remove the shackles of restrictive covenants and controls, including annual business plan approval by the lenders. The full refinance means NCH has significantly reduced ongoing financing costs and diversified its sources of funding.

In order to repay a syndicated facility between three lenders, a private placement was successfully raised. The private placement benefits from fit-for-purpose covenants, providing long-term interest rate protection at a very attractive coupon and average weighted maturity.

In addition, ongoing liquidity is provided by five and ten-year revolving credit facilities with attractive margins, resetting the relationships with two of NCH’s long-standing banks.

Newport City Homes has now laid a treasury foundation suitable to support its 2020 vision and beyond, creating substantial capacity for sustainable growth over the long term.

“The decision to refinance is never taken lightly, it was important to NCH that we worked with advisers who understood our purpose and ambition. Centrus perfectly fitted this bill. The deal enables NCH to fulfil our potential, supporting and sustaining our existing communities and delivering much needed new housing in South East Wales.”

Ceri Doyle, Chief Executive – NCH 

“We are extremely pleased with the price, covenant structure and other terms in the package of refinancing deals, which will support NCH’s drive to fulfil its potential, supporting and building sustainable communities in South East Wales. Centrus were part of our team from the outset and provided us with excellent support and guidance throughout the whole process. This deal is testament to their commitment to achieve the right funding package for NCH.”

Tim Jackson, Executive Director of Finance – NCH

“NCH achieved a tremendous result which will greatly contribute to its ability to make a step change to the delivery of much needed housing and support for the people of Newport. Centrus appreciated the opportunity to showcase its holistic end-to-end offering, providing independent advice which assisted NCH in the development of the refinancing strategy, lender negotiations, debt raising & structuring, and execution of hedge breakage.”

Paul Stevens, Managing Director – Centrus

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