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Centrus advises settle on £75m ESG-linked funding

Transaction Overview

settle has arranged a £75m RCF with National Australia Bank (“NAB”), of which £25m is unsecured. Both the ESG linkage and unsecured structure are a first for settle.

The leading Housing Association of around 10,000 homes, will use the additional liquidity and funding offered by this facility to continue its delivery of high-quality affordable homes across Hertfordshire, Bedfordshire, Buckinghamshire and South Cambridgeshire.

Centrus acted as sole advisor to settle and arranged the RCF.

Centrus Solution

  • We took a focused approach to the market, ensuring the terms were achieved, evaluating all offers against both cost vs tenor and strategic fit.
  • Centrus successfully negotiated a facility that is low cost, covenant friendly, and paves the way to move towards an unsecured structure in the future; the lender will also be able to lend more in the future which provides a good strategic fit.

Added Value

Whilst still relatively new to the sector unsecured facilities are increasing in prevalence. The attraction is two-fold; it offers increased agility whilst reducing operational complexity. Both are important for settle.

The ESG KPIs align with settle’s social purpose, ranging across the delivery of affordable properties, energy efficiency, and social impact.

Building more affordable housing is a key priority for us, and this new funding will go towards helping to meet the growing needs of the communities we serve.

“Centrus support and advice has been excellent throughout the process. Their expert market knowledge and project management has been instrumental in helping us achieve our funding objectives as well as being a leader in unsecured funding.”

Ebele Akojie, Finance Director – settle

“settle are a forward looking dynamic organisation that we are delighted to have supported in raising this innovative funding with NAB. The facility has quickly unlocked delivery of additional new homes. Centrus has been at the forefront of developing the RP market for both ESG-linked and unsecured where the ability to reduce borrowing costs and minimise security charging work offers tangible benefits.”

John Tattersall, Senior Director – Centrus

For more information, please contact john.tatterall@centrusadvsiors.com

Centrus advises Curo on £100m private placement to deliver new affordable homes

Transaction Overview

Bristol and Bath-based housing association, Curo has secured a new £100m fully deferred private placement from Scottish Widows. The facility will be drawn in two tranches; £40m in 2024 and £60m in 2025, in line with the development of Curo’s affordable homes programme.

The Housing Association aims to work with residents and partners to face external challenges and to deliver their purpose of “Homes for Good”.

Source: Curo

Centrus Solution

With a funding requirement not arising until 2024 and significant volatility in the macroeconomic environment, Centrus advised Curo that moving quickly to secure funding in advance could de-risk its programme significantly. Centrus supported as financial advisor throughout the process, leading on both delivery and execution.

Centrus lead the selective marketing process, engaging only with those investors which could provide the deferred funding, quantum and covenants required.

Added Value

  • Centrus effectively identified and negotiated the optimal terms for Curo in a short time period, ensuring the right fit with their Corporate Strategy and growth ambitions.
  • Deferred tranches will enable effective delivery of Curo’s programme over the next five years, whilst avoiding the heavy cost of carry by drawing the full £100m day one.
  • Both an EBITDA only interest cover ratio and limited restrictions on intra-group activities will be essential in delivery of the programme and Curo’s wider group activities.

“It is always a pleasure working with Curo and it was great to be able to deliver a suitable structure quickly and efficiently. This deferred funding will enable Curo to maintain its properties to a high standard and continue to grow with confidence.”

Lawrence Gill – Director, Centrus

For more information, please contact Lawrence.Gill@centrusadvisors.com

Centrus arranges £60m private placement for Irwell Valley

About Irwell Valley Homes 

Irwell Valley Homes is a leading registered provider in the North West, with a direct relationship with 20,000 people who live in its over 7,000 homes. With an ambitious vision to deliver over 1,000 new homes over five years, whilst continuing to invest its existing homes on the journey to decarbonisation, a requirement for new long-term funding was identified.

Centrus Solution 

Centrus worked closely with Irwell Valley throughout the process, from producing a ‘teaser’ for initial market testing, to compiling the Investor Presentation, selection of the preferred investors and closing out the transactions and documentation. The process enabled Irwell Valley’s leadership team to convey its strong credit story, its clear vision and its ESG journey to drive optimal terms.

Multiple funding offers were received, resulting in a highly competitive pricing process and ensuring that Irwell Valley was able to achieve the funding structure it had set out to despite a challenging market backdrop. The £60m, 40-year private placement with Scottish Widows, comprised three £20m deferred tranches at 6, 12 and 18 months, enabling funds to be received when required while locking in the rate at the outset.

“With the rising cost of living, building more affordable housing and making existing homes more cost effective for our customers are key priorities for us. We are delighted to have secured this funding to help meet the growing needs of the communities we serve across Greater Manchester.”

Helen Nicholson, Executive Director of Finance and Governance – Irwell Valley Homes

“Centrus is delighted to have worked with the Executive and Board of Irwell Valley Homes to deliver this successful transaction. The funding provides long-dated, fixed rate funding to de-risk the financial plan, and support Irwell on its ambitious journey.”

John Tattersall, Senior Director – Centrus

For more information, please contact john.tatterall@centrusasvisors.com

Grand Union Housing Group implements titanTreasury

Overview 

Grand Union Housing Group (“Grand Union”) has successfully completed the implementation of titanTreasury, the Treasury Management System (TMS) delivered by Centrus. ​

​The housing association provides 12,000 homes for more than 27,000 people across Bedfordshire, Buckinghamshire, Northamptonshire and Hertfordshire and aims to build nearly 2,000 more new homes in the next 5 years. 

Centrus Solution

titanTreasury is an expert Treasury Management System (TMS) that offers financial departments and treasurers the best functionalities for monitoring and controlling operational market risk (rate, foreign exchange, commodities), credit and liquidity risks.​

​The Centrus team supported Grand Union throughout the implementation, taking the time to understand specific goals and objectives. ​

Advised on best practices to add value and efficiency to Grand Union’s current treasury process, the client team are now well trained and prepared to use titanTreasury for their day-to-day activities, including month end and regulatory reporting. 

titanTreasury Benefits

  • Immediate access to accounting entries and forecast results​
  • Control of liquidity and cash payments​
  • Smart tracking of payment schedules and due dates​

With streamlined financial operations, Grand Union is in a better position to focus on targets which include building more affordable homes, stronger communities and better lives for tenants. 

“titanTreasury has revolutionised the way we manage and control our treasury portfolio. It provides us an effective and efficient way to control and validate interest budgets and the reporting functionality enables us to not only take control of our performance reporting in the treasury area but also enable quicker and more informed decision making.​

The implementation project ran very smoothly and the Centrus team were very professional in their systematic approach. This ensured we were kept up to date with project progress, meant any issues were resolved promptly and deadlines were met. I would not hesitate to recommend the platform or the Centrus implantation team based on our experiences.​”

Chris Bellamy, Director of Finance & Treasury – Grand Union Housing Group ​

For more information on titanTreasury, please contact Gilles Bonlong, Director at Centrus.

Flagship Housing Group implements titanTreasury

Overview

Flagship Housing Group (“Flagship”) has successfully completed the integration of titanTreasury, the Treasury Management System (TMS), delivered by Centrus.

Flagship provides 32,000 homes that house over 76,000 tenants in the East of England.

Flagship required an integrated TMS to calculate the rate of SONIA interest rates, calculate the cost of fix rate debt as well as automate the production of monthly treasury reports.

Centrus Solution

titanTreasury is an expert Treasury Management System (TMS) that offers financial departments and treasurers the best functionalities for monitoring and controlling operational market risk (rate, foreign exchange, commodities), credit and liquidity risks.

Centrus worked closely with the team involved in the treasury function at Flagship throughout the implementation, providing full training and support.

titanTreasury provides accuracy in calculating their Sonia-linked interest amounts and ensures that payments are made on the exact dates. With a complex syndicated loan, Flagship can rest assured that the system will help check their capital repayments as well as calculating the break cost value of their embedded fixes.

titanTreasury Benefits

  • Immediate access to treasury committee reports.
  • Control of liquidity and cash payments.
  • Clear view of debt maturity ladder.
  • Access to a compliance diary to track covenants review

With streamlined financial operations, Flagship is in a better position to focus on their target to solve the housing crisis in the East of England region.

“The implementation of titan went very smoothly and was a positive experience for the team. We were well supported throughout the process and ‘go live’ was reached with little drama.

We are looking forward to achieving the benefits of greater accuracy and improved reporting.”

Alex Fitzgerald, Head of Treasury and Regulation – Flagship Group

“We are thrilled to have added Flagship Housing Group to the growing list of housing association clients with titanTreasury.

With the ever-increasing pace of change, the remit of a treasurer is now much wider, having the responsibility of risk management, corporate finance, as well as partaking in the strategy and objectives of the business. Titan will help Flagship Housing manage its treasury and risk management processes from start-to-end, whilst minimising operational risk and improving reporting processes.”

Gilles Bonlong, Director – Centrus

For more information on titanTreasury, please contact Gilles Bonlong, Director at Centrus.

Centrus advises Yorkshire Water on £170m new Debt Service Reserve Guarantee

Transaction Overview

Yorkshire Water is a water supply and waste water treatment company serving the Yorkshire and Humber region. It treats and supplies approximately 1.3 billion litres of drinking water and collects, treats and returns approximately 1 billion litres of wastewater safely back to the environment every day.

Under Yorkshire Water’s ring-fenced financing structure, the business must have 12 months interest held as either cash or through committed amounts under liquidity facility agreements.

Previously, banks provided debt service liquidity facilities, whose agreements were continually renewed each year.

Interview with David Gregg, Head of Corporate Finance at Yorkshire Water

Centrus Solution

Centrus introduced an innovative five-year debt service reserve (DSR) guarantee provided by Assured Guaranty UK Limited (AGUK). This is only the second facility provided to UK utilities and the first in England. This was structured as an efficient long-term solution which also allows a recycling of bank capital into supporting other requirements in the business.

AGUK’s DSR guarantee was structured to fit within Yorkshire Water Services Limited’s existing financing documents and covers certain senior payment obligations due to secured creditors.

“Centrus has been a long-term financial advisor to Yorkshire Water and identified this innovative facility to us. We welcomed the opportunity to work with them, Linklaters, our legal advisors, and Assured Guaranty on structuring the debt service reserve guarantee to ensure an appropriate fit with our existing financing terms.

The successful outcome reflects a collaborative approach, providing a long-term, cost-effective solution to our requirements. We thank all our advisors, including Centrus, for their support and expert advice through a complex process.”

David Gregg, Head of Corporate Finance – Yorkshire Water

“Centrus is delighted to have introduced this solution and thereafter advised Yorkshire Water in delivering a valuable alternative to the long used bank market. This facility removes the need for the time consuming annual renewal of bank facilities for the debt service reserve and provides a welcome diversification of liquidity support to Yorkshire Water and its customers.”

Scott Wilsher, Senior Associate – Centrus

Centrus advises Yorkshire Water on the refinancing of £95m HoldCo facilities

Transaction Overview

Yorkshire Water is a water supply and waste water treatment company serving the Yorkshire and Humber region. It treats and supplies approximately 1.3 billion litres of drinking water and collects, treats and returns approximately 1 billion litres of wastewater safely back to the environment every day.

Yorkshire Water has refinanced its HoldCo £65m term loan facility and £30m RCF held by Kelda Finance (No.2) Limited, which were signed in 2015 with new 7-year and 5 year extendable facilities respectively.

To facilitate a future where all facilities at this level will be on the same terms, the opportunity was taken on this refinancing to introduce a common terms agreement for these facilities.

Interview with David Gregg, Head of Corporate Finance at Yorkshire Water

Centrus Solution

Given the improved credit environment for UK Water holding companies’ credit margins, Centrus ran a competitive process introducing new lenders to supplement the existing providers.

A Commons Term Agreement was established with the new lenders, Intesa Sanpaolo and Bank of China, not only to refinance the existing 2015 facilities but to facilitate, for the benefit of all parties, all HoldCo borrowings to be under common terms in the future.

Added Benefits

Centrus managed a process that allowed the company through introducing new lenders, to refinance its facilities on similar terms to those achieved in 2015, and as a result, create a new benchmark for subsequent refinancings at the HoldCo level. Bank of China, already a relationship bank, has increased its investment into one of the largest water utilities in the UK. Intesa Sanpaolo has become a new relationship bank, making its first investment into the group.

“I am delighted that we achieved this positive outcome, with efficient pricing and the introduction of a common terms platform. We would like to thank Centrus and Linklaters for their expertise, advice and support on this transaction.”

David Gregg, Head of Corporate Finance – Yorkshire Water

“Centrus is very pleased to have worked with Yorkshire Water, Intesa Sanpaolo and Bank of China on this financing, which has developed existing banking relationships and introduced new lending relationships to support Yorkshire Water.

This transaction reflects the value of the ongoing relationship between Centrus and Yorkshire Water. Centrus’ insight into Yorkshire Water’s business and requirements has delivered a successful outcome for all parties.”

Scott Wilsher, Senior Associate – Centrus

Centrus advises Onward Homes on a new £90m unsecured RCF

Transaction Overview

Onward are a leading provider of quality, affordable homes for rent and sale in the North West. From Southport to Stockport, the housing association owns and manages over 35,000 homes right across the region.

The housing association plans to build 500 homes a year whilst continuing to invest into existing homes. Onward’s successful bid to become a Homes England Strategic Partner in late 2021 accelerated this programme and increased liquidity requirements.

A new £90m RCF was required to meet this goal – with security being prepared to support the issuance of retained bonds and on-going challenges with local searches an unsecured solution was preferred, subject to cost.

Centrus Solution

  • Centrus provided early assurance to board on the potential viability of an unsecured facility.
  • We led development of a best-in-class information memorandum to support efficient lender credit assessment processes.
  • Advised on which lenders to target, how to position key mechanical / covenant requirements, and ensured initial terms were optimised.
  • Evaluated and negotiated the initial terms to ensure effective governance and the best possible outcome.

Added Benefits

  • Centrus identified the right lenders, maximised competitive tension, and enabled very strong initial bids.
  • With a number of attractive bids, we were then able to further tighten pricing whilst protecting covenants.
  • In initial documentation we ensured the unsecured mechanics where user-friendly and efficient, creating a template for future use.
  • The resulting outcome is a cost-efficient, flexible liquidity facility.

“Security is time-consuming and costly to put in place so our new unsecured RCF is a key part of our treasury strategy. John and the Centrus team supported this process throughout: from strategy through to final documents and Onward greatly benefited from Centrus’ treasury expertise and thorough understanding of our business. Their market engagement was excellent and I’m delighted with the outcome.”

Mike Gerrard, Executive Director of Finance – Onward

“This transaction has advanced the availability and attraction of unsecured finance for the whole sector. It also reflects the value in the holistic relationship between Centrus and Onward; from strategy development, through market testing, to close, Centrus’ insight into Onward’s business and requirements and what the market can offer have underpinned this successful outcome.”

John Tattersall, Senior Director – Centrus

For more information, please contact john.tattersall@centrusadvisors.com

Centrus advises Harworth on new £200m senior debt facility

Overview

Harworth is one of the leading land and property regeneration companies in the UK with a market leading portfolio: 

∼26.2m sq ft of industrial & logistics space (9.0m consented).

∼31k+ residential plots (c. 10k consented).

∼£271m premier logistics investment portfolio.

Harworth successfully refinanced the existing RCF debt facility of £150m with a new £200m RCF to provide the business with sufficient liquidity and flexibility to deliver on its business plan.

Strategic Rationale

Following a review of the business, Harworth is now implementing its new business plan strategy to double the size of the business in the next 5 – 6 years.

To meet strategic objectives, it was established, following comprehensive advice from Centrus, that the company’s debt capacity will need to be optimised to increase financial resilience and flexibility via tailored covenants and controls.

Centrus’ Added Value

  • Strategic advice on funding options leveraging Centrus’ knowledge base and experience of the real estate banking & broader capital markets. 
  • Utilising our network of relationships to drive competitive tension, leading and supporting with negotiations.
  • Dedicated support throughout the transaction to enable smooth execution and drive optimal result. 

“Harworth’s strong balance sheet and prudent gearing is one of the key enablers of our ambitious growth strategy. This new debt package, which adds another established institutional lender to our banking group, will provide Harworth with additional firepower and flexibility as we step into this strategy and deliver our Purpose of creating places where people want to live and work.”

Lynda Shillaw, Chief Executive – Harworth Group plc

“We are thrilled to have supported Harworth in this successful debt capital raise to allow the business to deliver its strategic ambitions of growing to double the current size, providing much needed new premier industrial developments and attractive and affordable family housing in the UK.”

Omer Fazal, Head of Real Estate – Centrus