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Centrus advises Broadacres on wholesale restructure and £50m funding

Transaction Overview

Centrus advised Broadacres on the wholesale restructure of £115m bank portfolio, as well as £50m new bank & bond aggregator funding from MORhomes

Broadacres Housing Association (“Broadacres”) is an innovative rural focused housing association providing over 6,500 homes in North Yorkshire.

Broadacres’ ambitions include delivering new homes (900 by 2025), along with an affordable warmth strategy, as part of its journey to SAP C by 2030 and longer-term carbon net zero strategies.

Centrus, following appointment as retained advisor, developed a treasury and funding strategy to provide a more flexible platform to achieve these ambitions, with a clear multi-staged project for implementation.

Centrus Solution

The first stage of this project focused on restructuring existing funding arrangements which were no longer fit for purpose. Centrus supported Broadacres through setting and supporting the achievement of restructured covenants, including carve outs for regulatory driven spending (fire-safety & decarbonisation) to provide further flexibility to meet future requirements and aspirations.

The second stage of the project involved new funding to enhance Broadacres’ liquidity position, providing greater resilience for the organisation, while securing longer dated cost efficient funding.

This has included new bank RCF funding, as well as securing £18m funding from bond aggregator MORhomes. The new funding supports lender diversity and extends the tenor of Broadacres existing portfolio.

Added Benefits

Each of the objectives set out at the start of this project have been achieved, a great achievement against the backdrop of the COVID pandemic and an excellent outcome for Broadacres.

“This banking restructure along with new funding ensures Broadacres is able to deliver new homes as well as our affordable warmth and net carbon zero strategy, providing the basis to achieve our long term ambitions, delivering great outcomes for our tenants and the communities in which we operate.

Centrus’ advice and support has always been excellent, proactive and tailored specifically to Broadacres needs. Their detailed market knowledge and insights, financial analysis, project management and negotiating expertise has been key in supporting Broadacres to achieve our treasury objectives.”

David Smith, Executive Director Resources – Broadacres

“The successful outcome of this restructure and funding project has provided Broadacres with a strong foundation and greater flexibility for the future. I am delighted to have supported Broadacres in these transactions, further enabling the organisation to continue to service the housing needs of its communities and achieve its ESG ambitions.”

Sam Goldman, Director – Centrus

For more information, please contact sam.goldman@centrusadvisors.com

Centrus consortium appointed to advise Ofgem under new four-year contract for offshore electricity transmission assets

Centrus is delighted that Ofgem has chosen its consortium to continue to act as financial adviser on the sales processes to select the offshore transmission owners (“OFTOs”) for the transmission assets related to offshore wind farms.

The contract will commence with the auction related to Seagreen Phase 1 Offshore Wind Farm under the Tender Round 9 process (“TR9”) with a capital value of approximately £1 billion. This follows the consortium’s appointment in 2020 as financial adviser to Ofgem on Tender Rounds 7 and 8 (“TR7” and “TR8”).

Seagreen wind farm is situated off the east coast of Scotland with the assets contributing over 1GW to the UK’s target of connecting 40GW of offshore wind generation by 2030.

The new contract is expected to last up to four years. In addition to supporting Ofgem in running robust competitive processes, the new contract provides for the consortium to give corporate finance advice to Ofgem on other aspects of OFTO licences, including extension or retendering of existing licences at the end of their term, forensic accounting reviews and potentially on other licence adjustments such as for income adjusting events.

The consortium remains unchanged from TR7 and TR8 comprising Centrus, Smith Square Partners and CEPA for financial and related economic advice, with tax advice provided by BDO and forensic cost reviews by Grant Thornton.

For more information, please contact Adam MacDonald, Managing Director – Centrus

Centrus advises Southern on £250m Sustainability Bond and  £100m+ of new Sustainability Linked RCF 

Transaction Overview

Southern Housing Group (“SHG”) is one of southern England’s largest housing associations providing 30,000 homes for 77,000 people and offering a range of services to people in the communities in which they operate.

Centrus has been working closely with Southern as retained advisor over the past year, to develop and successfully deliver a multi-stage treasury and funding strategy that supports SHG’s ongoing development aspirations, liquidity requirements and sustainability objectives.

Centrus Solution

Centrus advised Southern on £300m own name sustainability bond issuance in October (£50m retained) supporting long term development aspirations.

Centrus has also supported Southern in arranging £100m of Sustainability Linked RCFs (SLLs), Southern’s first SLLs, along with extending a number of existing facilities.

The combination of the bond issue, additional bank liquidity funding, as well as achieving greater flexibility within a number of existing agreements, is that SHG now has a more dynamic treasury platform for future growth.

Features and Benefits

SHG will receive benefit from these SLLs, innovative new funding structures, that support SHG in achieving a number of ESG targets with reduced funding costs if these targets are achieved.

These new RCFs, along with the sustainability bond, support SHG’s ongoing sustainability strategy and align ESG aspirations with funding.

Bevan Brittan were Southerns’ legal advisors for the banking stream and Devonshires for the bond.

“Centrus has been invaluable in providing expertise, strategic advice and support for these transactions. From developing a clear, effective and detailed strategy to achieve our objectives for the medium term, to support in delivering both bond and new RCF funding, Centrus has provided the assurance, support and insight to ensure successful delivery at every stage of the process.”

Amanda Holgate, Chief Financial Officer – Southern Housing Group

“Centrus is delighted to have supported Southern achieve a range of treasury and funding objectives, including over £350m in new sustainability financing. This series of transactions provides a strong basis for Southern to deliver more homes, support its journey to net zero, continue to provide a key social role in its communities as well as aligning Southern’s funding with its ESG strategy and ambitions.”

Sam Goldman, Director – Centrus

For more information, please contact sam.goldman@centrusadvisors.com

Centrus arranges £100m funding for a student accommodation PPP project for LSE

Centrus is pleased to announce that we have arranged senior debt funding for a DIF Capital Partners‘ (“DIF”) student accommodation project for the London School of Economics & Political Science (“LSE”). The project is structured as a PPP with LSE holding a 19.9% stake and DIF holding the majority 80.1% stake. Over £100m of long-dated funding has been provided by Pension Insurance Corporation, the UK-based specialist insurer.

The project is a greenfield PPP that includes the design, build, financing, operations and maintenance of new student accommodation facilities that comprise 676 beds and associated communal spaces and services. Design, build, operations and maintenance will be completed by Engie Regeneration.

“DIF is excited to be growing its portfolio in the student accommodation sector. We look forward to partnering with a world-class university and to support it with its student accommodation delivery.”

Gijs Voskuyl, Partner and Head of Investments for the DIF V and VI strategy, says:

“One of the priorities in LSE’s 2030 strategy is to Develop the LSE for Everyone. For Residential Services this means guaranteeing an offer of accommodation to all first-year students. The Glengall Rd development takes us a significant step towards that goal by providing 676 affordable rooms for our graduate students.”

Ian Spencer, LSE Director of Residential Services:

LSE was advised by QMPF (financial), Pinsent Masons (legal), and Student First Group (technical). DIF was advised by Centrus (debt arranger), DWPF (financial), Mills & Reeve (legal), Grant Thornton (tax & accounting), Gleeds (technical) and JLL (commercial).

Centrus advises Merthyr Tydfil on £9m funding to deliver 200 affordable homes

Transaction Overview

 Merthyr Tydfil, Wales, UK

Following a review of their treasury position, Merthyr Tydfil housing association (“MTHA”) embarked on implementing the resultant strategy and this has now been successfully concluded. New finance has been obtained from the capital markets, via bond aggregator THFC, with the proceeds of c.£9m to be utilised to enable restructure of existing bank debt and to support ongoing growth.

MTHA is one of only two housing associations exclusively providing homes in the borough of Merthyr Tydfil and manages c.1,200 homes. Through their local roots and knowledge, MTHA strives to provide tenants and residents with a vital service that is second to none, ensuring the accessibility of high-quality accommodation for all, including elderly, disabled, single and young people.

Centrus Solution

Centrus was engaged to develop and implement a treasury strategy, aimed at obtaining long term fixed rate debt to underpin the business plan, while at the same time restructuring existing bank funding with 3 lenders to improve the structures, including financial covenants & controls.

We worked with MTHA to identify a strategy to maximise debt capacity to fund future growth, increase financial resilience by increasing interest rate protection and to increase corporate flexibility through improved covenants and controls.

The strategy was successfully delivered, following procurement of the capital markets funding and effective negotiations with all 3 bank lenders, ensuring all objectives were met or exceeded.

Added Benefits

  • MTHA has significantly increased its financial resilience; reducing interest rate risk, refinancing risk and liquidity risk, as well as obtaining additional funds to help meet growth objectives.
  • After engaging with all 3 bond aggregators. MTHA was able to attract an offer from THFC (No.3), representing the most cost effective solution.
  • The treasury portfolio has also been improved across key metrics, harmonising covenants across 3 existing bank lenders, increasing the longevity of the portfolio and related interest rate protection, while also creating more funding diversity and reducing counterparty risks.

“Finalising the treasury strategy will allow the Association to deliver on it’s objectives. Securing new funds at such a great rate with THFC and restructuring and simplifying existing treasury arrangements, will allow us to support our ambition to grow, invest in our stock and enhance the services we provide tenants. Centrus advised on the transaction and provided an excellent service throughout.”

Samantha Taylor, Director of Corporate Services – MTHA

“MTHA is a great example of very locally focused organisation, delivering much needed housing and support services to the community it serves. Its ability to obtain finance on attractive terms from a range of banks and THFC provides testament to the strengths of MTHA. Successful implementation of the strategy means Merthyr Tydfil has a more robust treasury platform to underpin the long term business plan.”

Paul Stevens, Managing Director – Centrus

For more information, please contact paul.stevens@centrusadvisors.com

Centrus advises ESB on £550m multi-tranche derivative portfolio

Transaction Overview

ESB engaged Centrus to support in formulating its strategy to manage inflation risk on certain UK assets, particularly its existing UK RPI derivative portfolio.

This involved dealing with the potential restructuring, extending or removing of mandatory breaks, assessment of counterparties and the delivery and execution of same.

Centrus’ Role

  • Delivery of inflation risk analysis and development of strategy.
  • Development of options analysis including market survey and market analysis and
  • Recommending the most appropriate and cost-effective strategy taking into consideration ESB’s risk appetite, liquidity, market dynamics and various stakeholder consideration.
  • The final outcome was an optimised restructure that met the clients’ objectives, managed associated risks and was delivered in a timely manner through a fair and transparent process.

Key aspects where Centrus added value included: 

  • Provided analysis on various market aspects such as LIBOR reform and RPI to CPI transition.
  • Coordinated all commercial aspects of transaction across a large number of counterparties.
  • Ensured appropriate level of competitive tension matched with all party satisfaction.
  • Utilised market knowledge to structure final position which optimised overall pricing.
  • Completed the final transaction within 1 day across all tranches and counterparties.

For more information, please contact Mark Taheny, Director – Centrus.

Centrus arranges £145m funding for South Staffordshire Plc

Transaction Overview

South Staffordshire Plc, an integrated services group that operates in essential services markets has agreed terms to borrow a total of £145m of new funding with terms ranging up to 10 years.

As part of the refinancing, and in line with Ofwat’s assumptions for the water sector, the group has committed to a new financing structure for its regulated water business, South Staffordshire Water Plc, that is intended to solidify its credit ratings.

This new structure was enabled by a liability management of debt across the group together with the new funding.

Centrus Solution

Centrus advised the client across the process, from the early structuring and credit rating considerations, to arranging the financing via a process including both institutional and bank terms.

Centrus also supported the delivery of the process to completion, including the terms of the liability management.

Features and Benefits

The new capital structure allows for additional credit rating headroom at South Staffs Water via the additional structural protective features of that insulated sub-group.

The new £145m debt raise at South Staffordshire Plc also introduces new lending relationships, both banking and institutional, that will continue to enable the growth plans for that part of the business.

“Centrus’ support throughout this process enabled the group to reinforce its capital structure via a dual-track liability management and fundraise process, delivered in a tight timetable and on competitive terms. This agreement provides a solid foundation from which the Group can continue to grow, building further on our existing successful track-record over many years.”

Rob O’Malley, Group CFO – South Staffordshire Plc

“Our work with South Staffordshire Plc is a great example on how we can read across our client’s requirements and implement clear financial and structuring advice to deliver them. South Staffordshire Plc is now better equipped to deliver its growth agenda, with new lending relationships to support them.”

David Cerqueira, Director – Centrus

To find out more, please contact geoff.knight@centrusadvisors.com

Castles and Coasts implements titanTreasury

Castles and Coasts Housing Association (CCHA), has successfully completed the implementation of titanTreasury, the Treasury Management System (TMS) solution provided by Centrus in the UK.

Castles and Coasts, the social landlord based in Carlisle, Cumbria, manages over 7,000 homes with a mission to provide affordable homes and sustainable communities with pride, passion, principles, and partnership.

CCHA’s implementation was well managed by the Centrus team. They took the time to understand the goals and objectives of CCHA, in order to supply the best suited project plan. CCHA were well informed of the progress during their transformation program and at the end of the process were well trained and prepared to use the system for their day-to-day activities, month end and regulatory reporting. They are now ready to retire the manual spreadsheets and time-consuming processes and achieve a more efficient, reliable, and agile treasury function. CCHA are now better positioned to focus more on their strategy and mission to build more affordable homes.

Centrus works with housing associations of all sizes and locations since formed in 2012. Helping to deliver more social housing in the UK is one of our business goals and why we  believe in finance with purpose.

“Our TMS implementation was a very positive experience where we felt well supported by Centrus project management throughout. As a result, our target date for go live was reached and confidence in the system and in team members ability to use it is high.

The benefits in terms of time savings, improved accuracy and reporting, and better controls were apparent within the first month following going live.”

Lisanne Whitaker, Financial Strategy Manager – CCHA

“Centrus is thrilled to welcome CCHA as a titanTreasury client, building on our established role as retained treasury advisor.

Through the use of technology CCHA is now well placed to achieve a more efficient treasury function, including improved data and reporting, transaction management, and risk management allowing them to focus on their core objective to deliver more affordable homes. We are pleased to have collaborated in this transformation”

Gilles Bonlong, Head of System Implementation – Centrus

For more information on titanTreasury, please contact gilles.bonlong@centrusavisors.com

Centrus arranges £20m private placement for 900 unit housing association, Heart of Medway

Overview

Heart of Medway, an ambitious and growing registered provider with a 900-unit housing association, has recently issued a £20m private placement. Heart of Medway is part of the mhs homes group playing an important part in helping end the housing crisis in North Kent.

The £20m, 34-year private placement, comprised a £10m 3-month deferred tranche as well as a £10m 12-month deferred tranche, enabling Heart of Medway to receive funds as and when required while locking in the rate at the outset. The transaction supports Heart of Medway’s growth ambitions and highlights an interesting development in the ability of capital markets to invest in smaller HAs.

The resulting transaction provides flexible, long-term fixed rate funding directly to Heart of Medway, enabling stock improvement works in relation to fire safety, and future development.

Pension Insurance Corporation (‘PIC’) plc was the sole investor in the transaction. Centrus acted as sole arranger on the private placement, worked with management to develop the funding strategy, providing full business planning and transaction advice and support.

“This is a great deal for Heart of Medway which both supports our current development aspirations and increases our funding options in the future. We were pleased to once again work with PIC following previous investments of £70m in our parent company, mhs homes. We were particularly impressed with PIC’s flexible approach to our lending needs. I thank Centrus for their support in arranging the transaction and ensuring a great outcome for Heart of Medway.”

Bruce Shelmerdine, Group Finance Director – Heart of Medway

“Delighted to have supported Heart of Medway on this transaction. The funding allows for the organisation to continue its journey towards developing its own funding base, while providing long dated and flexible financing to support its future ambitions.”

Sam Goldman, Director – Centrus

“We are pleased to have worked again with mhs homes and their subsidiary, Heart of Medway in this latest transaction. PIC is an experienced investor in social housing and specialising in the design of bespoke transactions that include features such as deferred borrowing. Working with mhs has led to the development of significant local social value so far and this latest transaction will add to that. The development of social value is entirely aligned to our purpose of paying the pensions of our current and future policyholders.”

Elizabeth Cain, Deputy Head of Debt Origination at PIC

For more information, please contact sam.goldman@centrusadvisors.com