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Centrus advises First Choice Housing on completion of £11.25m capital market fundraising

Transaction Overview

Cardiff based, First Choice is a prominent provider of specialist housing across Wales and Shropshire; a recognised expert in specialist, bespoke development of social housing to support people with disabilities, complex needs and veterans.

First Choice Housing Association has successfully completed a tap of GB Social Housing’s 2038 bond; receiving gross proceeds of £15.8m to support its key aim of improving quality of life through provision of quality, bespoke accommodation that enables tenants to achieve independence, fulfil their potential and optimise enjoyment of life.

Centrus Solution

Centrus worked with First Choice to identify a strategy to maximise debt capacity from existing unencumbered stock as well as utilising stock released with prepayment of the non-core lender. Owing to the specialist nature of First Choice’s stock, efficient use of existing security was a key priory.

First Choice’s portfolio has been materially simplified with a non-core lender refinanced while preserving the economic value, cost of funding reduced for another lender and new capital markets funding arranged through GB Social Housing following a procurement process.

Added Benefits

The treasury portfolio has been improved across key metrics with longevity and hedging ratio nearly doubling and introducing capital markets to further diversify funding sources.

First Choice have achieved excellent security efficiency, equivalent to 82% Asset Cover, allowing them to develop additional stock and further their objectives.

“Centrus were excellent partners to work with throughout the review of our Treasury Strategy. They worked together with our Board and the Exec team to fully understand our wider business, business plan as well as our borrowing requirements. Their strong market presence meant that the objectives set within the Treasury Strategy were either met or exceeded. We are delighted with the outcome look forward to delivering much needed specialist accommodation tenants as a result.”

Adrian Burke, Chief Executive – First Choice Housing Association

“First Choice is a great organisation doing vital work for individuals with specialist needs. Centrus was delighted to be engaged to develop and implement the treasury strategy, where all agreed objectives have either been met or exceeded. Successful delivery of the strategy means First Choice’s is better enabled to achieve its objectives and, importantly, to increase delivery of housing solutions for people with specialist needs”

Paul Stevens, Managing Director – Centrus

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

Centrus advises Accent Group on sale of £125m of retained bonds

Accent Group – a national housing association operating in the North, East and South of the country – has sold the £125 million of bonds remaining from its July 2019 debut issuance.

The 30-year listed bond was a first for the c 20,500 home landlord and was issued, at the time, at the lowest ever coupon for a bond greater than 12 years within the sector.

The successful sale of the retained bond followed a virtual marketing exercise by the Accent team in early October, which was well received by the investor community.

The funding will support Accent’s development programme in which it aims to deliver over 4,000 new, affordable homes over the next 10 years, in addition to investing in existing homes and transformational services for Accent’s customers.

“The Accent team are delighted with the success of the issue as this marks the culmination of many months of hard work to ensure we remain in a strong position to deliver our corporate strategy and make our contribution towards the UK housing crisis through the development of new, affordable homes. The response from the investors demonstrates their confidence in our financial strength and our future priorities. We are committed to accelerating and advancing the services we deliver to our customers, especially in the face of a turbulent economic and operating landscape.”

Paul Dolan, CEO – Accent Group 

“We are delighted to have successfully sold all of the retained bonds remaining from our record debut issuance in July 2019. These positions Accent well to continue successfully growing our land-led development pipeline and investing meaningfully in our existing homes and services in order to meet our clearly defined corporate objectives for our customers benefit.”

David Royston, Executive Director of ICT and Finance – Accent Group 

“We were pleased to work with Accent and the bookrunners on this successful transaction. The Accent team has a well-considered strategy and clear approach in terms of engaging with investors and that helped them achieve a good result in a slightly more challenging rates environment.”

Jonathan Clarke, Managing Director – Centrus

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

Centrus advises TRIG on its first ESG-linked inflation hedging transaction

Overview

In a continued drive to expand the financial aspects of the business which align to common Environmental, Social and Governance (ESG) goals, TRIG has entered into a series of inflation linked derivatives (RPI and CPI) which are directly linked to the Company’s sustainability performance.

Centrus Solution

Building on TRIG’s sector first ESG-linked revolving credit facility and subsequent ESG-linked FX hedging, InfraRed, TRIG’s investment manager, joined forces with financial advisor Centrus and hedge providers NatWest, Santander, ING, NAB and SMBC to implement what is the first ESG-linked multi-party inflation hedging programme for all parties involved across RPI and CPI. As part of the agreement, TRIG will receive a sustainability payment when it delivers against its established ESG goals and donate additional money to its community funds, benefiting the communities in which TRIG operates, should it fail to do so.

These ESG goals, which are aligned to TRIG’s existing targets, also help to generate cleaner energy and support jobs in local communities. The metrics measured include:

  • The number of homes powered by clean energy from TRIG’s portfolio
  • The number of community funds supported by TRIG
  • Maintenance of a low Lost Time Accident Frequency Rate (LTAFR)*

“TRIG is delighted to have worked with Centrus and its hedging banks to implement a ground-breaking sustainability-linked inflation hedging agreement. We are committed to embedding sustainability into all our activities across the full investment cycle to help ensure sustainable returns for our investors.”

Phil George, Head of Portfolio Management – TRIG

“What TRIG has achieved through this transaction was no small feat, they intentionally chose the more difficult path to break new ground in ESG derivatives. The banks involved really went the extra mile to deliver for the client and to set a very high standard for the future of ESG derivatives. While this is certainly a first in many ways, we as a group hope to see and facilitate many similar transactions in the future continuing our goal of delivering finance with purpose.”

Mark Taheny, Director – Centrus

TRIG’s diversified portfolio includes onshore and offshore wind farms and solar parks in the UK and Europe. These assets generate revenues from the sale of electricity and government-backed green benefits, many of which are inflation linked, such as the Low Carbon Contract Companies Contract-for-Difference (CfD) and Ofgem’s Renewable Obligation Certificates. The Company aims to provide investors with long-term, stable dividends and to retain the portfolio’s capital through re-investment of surplus cash flows after payment of dividends.

TRIG was one of the first investment companies investing in renewable energy infrastructure projects listed on the London Stock Exchange. TRIG completed its IPO in 2013 raising £300m and is now a member of the FTSE-250 index.

For more information, please contact mark.taheny@centrusadvisors.com

Centrus arranges £120m of long term debt for Edinburgh Investment Trust

The Edinburgh Investment Trust announced that it agreed to issue £120m of long-term, fixed rate, senior, unsecured privately placed notes as follows:

  • £35m 2.26% Notes maturing in 2037 settling on 29 September 2022
  • £35m 2.49% Notes maturing in 2047 settling on 29 September 2022
  • £20m 2.53% Notes maturing in 2051 settling on 7 October 2021
  • £30m 2.53% Notes maturing in 2057 settling on 29 September 2022

Three tranches, totalling £100m, settled on the 29th September 2022. The proceeds of these Notes will be used to repay the Company’s £100m 7.75% debenture, which matures in exactly a year’s time on 30 September 2022. A fourth tranche of £20m is new debt and will settle on 7 October 2021. The weighted average cost of the Notes from 1 October 2022 will be 2.44%. The Company also has a £25m bank revolving credit facility which is currently undrawn.

There is no change to the Company’s gearing policy. The Company is committed to the strategic use of borrowings with the aim of enhancing long-term returns to shareholders over time. The level of net gearing* on 31 August 2021 was 8.2% of net assets.

“We are delighted to have arranged attractively priced long-term debt to replace the existing debenture next year and to expand the amount of long-term debt available. A key differentiating feature of investment trusts is their ability to borrow to enhance long-term shareholder returns. This new debt, at a much lower cost than that of the debenture, will help us achieve this goal.”

Glen Suarez, Chairman – The Edinburgh Investment Trust

“The additional £20m of debt comes at an opportune time when we have several strong investment ideas competing for positions in the portfolio. We expect to put this capital to work progressively in the months ahead.”

James de Uphaugh, Portfolio Manager – The Edinburgh Investment Trust

For more information, please contact robert.stjohn@centrusadvisors.com

Centrus advises Barcud on £70m post-merger sustainability linked funding

Transaction Overview

Barcud completed post-merger refinance, increasing capacity and enhancing financial resilience, with £50m sustainability linked private placement and £20m ESG linked RCF.

One of Barcud’s strategic objectives is to provide 5,000 affordable, mixed tenure, high quality sustainable homes by 2025. Barcud was formed in November 2020 following a merger between traditional and LSVT RSL’s, the first such combination in Wales.

Centrus was engaged pre-merger to develop a holistic treasury strategy for implementation post-merger, work which was then refreshed in January taking into account the actual treasury position following merger consents and the then market conditions. The strategy was essentially unchanged.

At its heart the treasury strategy was designed to simplify existing treasury arrangements, through reducing the number of lenders, maximising covenant headroom with alignment where possible and improving corporate flexibility while preserving value for Barcud, as well as reducing risk through increasing the longevity of fixed rate funding.

Centrus Solution

Having agreed the strategy, Centrus was engaged to lead on its implementation, involving negotiations with a number of existing bank lenders. Barclays was ultimately selected as the ongoing RCF provider, with ESG-linked KPIs enabling Barcud to benefit from a discount once achieved, as well as converting the facility to SONIA. Additionally, Centrus undertook full market engagement with potential investors to arrange a £50m Private Placement. The strength of Barcud and its positioning in the market resulted in 8 offers from potential investors. ASI was ultimately selected based upon its very competitive offer, including meeting the desired covenant package, in addition to agreeing Sustainability linkage with a KPI relating to EPC ratings which, when achieved, will enable Barcud to benefit from a reduced cost of funding.

The overall refinancing transaction reshapes treasury arrangements to fully support Barcud’s strategic objectives, unlocking additional investment and development capacity, while at the same time enhancing financial resilience, ensuring Barcud is well placed to deliver on the benefits arising from merger.

“Finalising this refinancing project within 9 months of merger has been a remarkable achievement for everyone involved and I would like to specifically thank Centrus for their support. We are pleased to be able to continue our excellent working relationship with Barclays Bank and look forward to working with ASI in the future. The additional funding will help Barcud achieve its strategic objective to provide 5,000 affordable, sustainable homes by 2025.”

Kate Curran, Group Director of Finance & ICT – Barcud

“It’s been a pleasure working with the Executive & Board of Barcud to successfully implement the treasury strategy, achieving outcomes which have exceeded objectives agreed as part of the business case. Barcud is now better placed to achieve its growth ambitions, with a stronger treasury platform underpinning investment decisions as well as maximising the benefits of sustainability-ESG linkage.”

Paul Stevens, Managing Director – Centrus

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

Centrus and fellow Smith Square Partners’ consortium members advise Ofgem on preferred bidder for £600m offshore wind transmission asset

TEPCO Selected as Preferred Bidder

The Office of Gas and Electricity Markets (“Ofgem”) has announced that ETEPCO, the Equitix and Japanese utility TEPCO Power Grid consortium, has been selected as preferred bidder for the offshore wind transmission asset connecting the 850MW Triton Knoll wind farm to the Lincolnshire coast. The asset is valued at over £600 million.

Floating wind turbines installed in sea. Alternative energy source

With its fellow consortium members – Smith Square Partners, CEPA, BDO and Grant Thornton – Centrus is delighted to have acted as financial adviser to Ofgem on the tender evaluation process for Triton Knoll and will continue to support Ofgem through to financial close.

The Smith Square Partners’ consortium is currently working on the second asset in the TR7 round, which is Moray East and is valued at £720 million. It has also been appointed in a similar role for the TR8 round in respect of Hornsea Two, which will be the world’s largest offshore wind farm when it becomes operational in 2022.

In addition to Centrus’ infrastructure finance expertise, the consortium brings together the highly regarded specialist capabilities and sector experience of Smith Square Partners and CEPA. Smith Square Partners is a leading independently-owned corporate finance firm, and a supplier under the Crown Commercial Service Corporate Finance Services framework. CEPA is a global economics and regulatory consultancy which has previously advised Ofgem on a wide range of assignments in the OFTO sector. In addition, as part of the consortium, tax and cost accounting advice is being provided by BDO and Grant Thornton.

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

Grŵp Cynefin on new £40m Private Placement and conversion to sustainability-linked facilities

Overview

Grŵp Cynefin completed an ambitious refinancing project to reduce risk, fund investment, and strengthen its financial profile.

The not-for-profit housing association, which manages more than 4,000 homes across North Wales and north Powys, provides highly positive impact to the lives of its tenants. The completion of this refinancing underpins delivery of 500 new homes over the next five years, whilst enhancing Grŵp Cynefin’s ability to champion sustainable communities and the Welsh language and culture.

A £40m, 33-year, part deferred, private placement was arranged allowing the refinance of c. £35m of legacy bank debt, whilst liquidity has been bolstered by a new £10m RCF.

The resulting transaction materially simplifies and extends Grŵp Cynefin’s treasury portfolio; the number of active lenders has fallen to 6 whilst the Weighted Average Life of the portfolio has increased by 10 years to 25 years. Financial covenants and controls have been revised, providing increased flexibility and resilience in the future.

Reflecting Grŵp Cynefin’s focus on sustainability, both its homes and the communities which it serves, the retained and increased bank funding  has been restructured into sustainability-linked facilities. Once defined Environmental and Social KPIs are met, Grŵp Cynefin’s borrowing costs will be reduced, further enhancing its capacity to invest into new and existing homes.

The private placement comprises three notes, of which two are deferred between 12 and 24 months and aligned to fund development and investment into existing assets. The all-in coupon reflects the attractive market conditions and taken together with the banking refinance results in a very positive NPV saving for Grŵp Cynefin, whilst materially reducing refinance and interest rate risk.

“The business case for this refinance was predicated on risk reduction, streamlining operational management, and reducing and locking our running interest costs into the medium term.

Across the board we have outperformed against our initial expectations. We are delighted to have strengthened our working relationship with two key funders and to have brought on board a new long-term funding partner which has recognised our financial strength and commitment to long-term sustainability.

Centrus and Devonshires are both long standing advisors to Grŵp Cynefin and both have really delivered for us; we are grateful to them both in working hard to ensure the success of this transaction.”

Bryn Ellis, Group Director of Resources – Grŵp Cynefin

“This transaction, which follows an initial partial refinance in 2019 finalises the modernisation of Grŵp Cynefin’s treasury structure. This proactive treasury strategy is reflected in the excellent outcomes achieved, which will enable Grŵp Cynefin to invest into social impact with confidence going forward.”

John Tattersall, Senior Director – Centrus

Centrus arranges £1bn of sustainability linked funding for housing and care provider Anchor Hanover

Transaction Overview

Anchor Hanover Group, England’s largest not-for-profit provider of housing and care for older people, has successfully issued its first sustainability bond, raising £350m. The transaction attracted strong engagement from investors with the issue being more than two times oversubscribed, with a spread of 0.93% and an all-in coupon of 2%.

Anchor Hanover supports more than 65,000 people in later life in retirement housing and residential care homes at almost 1,700 locations across England. The refinancing has provided increased financial resilience, strengthened liquidity and new funding to build thousands of additional homes for later living. Anchor Hanover will use the investment as part of its commitment to deliver 5,700 new sustainable homes over the next 10 years and expand its care home portfolio, alongside ongoing investment in its existing services.

Building on the organisation’s strong focus on sustainability, it is committed to achieving a minimum Energy Performance Certificate rating of B or above for every new home developed and all new homes will have access to sustainable, renewable energy sources.

Centrus Solution

The successful bond issue follows a ground-breaking £300m unsecured sustainability-linked revolving credit facility and a £350m unsecured bridging loan alongside a first-for-the-sector sustainability-linked hedging transaction. The bridging loan has been refinanced by the public bond.

The bonds were distributed to around 30 high-quality UK, European and global institutional investors with priority given to those investors likely to retain a long term relationship with Anchor Hanover. The investors also included specialist impact focused asset managers.

As part of its refinancing, Anchor Hanover has secured a long-term A+ credit rating from S&P Global Ratings. This is one of the highest in the sector, reflecting the quality of management and underlying operational and financial strength.

Centrus acted as sole financial advisor to Anchor Hanover, supporting the development of the refinancing strategy as well as its structuring and implementation. The bookrunners were Barclays, NAB, MUFG and Santander.

“We have ambitious plans to meet the increasing needs of older people in a sustainable way. This very successful issue means we can continue to evolve our housing and care offer so more people can have a home where they love living in later life.”

Sarah Jones, Chief Financial Officer – Anchor Hanover

“Centrus is fully committed to sustainability and ESG, so we are thrilled at the immense investor demand for Anchor Hanover’s debut sustainability bond issue reflecting its position as one of the best rated organisations in the housing sector. This successful deal is the culmination of the innovative refinancing of Anchor Hanover’s treasury portfolio. We are delighted to have worked closely with Anchor Hanover, who are pioneering leaders in the housing and care for older people.”

Phil Jenkins, Managing Director – Centrus

For more information, please contact phil.jenkins@centrusadvisors.com

Centrus arranges equity capital raise for Auxesia Homes to address critical shortage of affordable housing

About Auxesia Homes

Auxesia Homes is a Registered Provider (RP) of affordable properties committed to providing high quality, affordable homes throughout the whole of the UK. Auxesia Homes primary client group includer former and current Armed Forces, NHS and Emergency Service Personnel, who all deserve to be given the highest priority in securing high-quality affordable homes for rental, rent to buy and shared ownership purchase.

Centrus Solution

Centrus was appointed to arrange an equity capital raise to scale Auxesia’s portfolio to over 1,300 homes within the next five years, helping address the critical shortage of affordable housing for the key workers it serves.

Centrus applied its deep understanding of the affordable housing sector to help formulate the investment case and to approach equity potential investors in the business across its broad investor network. Given its dominant position in providing financial advice and raising capital for the not-for-profit housing association sector, Centrus is now leading the market in the provision of both debt and equity capital raising and strategic financial advice for the growing for-profit housing associations market.

“The Centrus team did a great job, using their unrivalled expertise in the affordable housing sector and their investor relationships to identify Matter Real Estate as an ideal investment partner for Auxesia. We were delighted with their input and the financing they have delivered which will help with Auxesia’s growth plans.”

Christopher Perry Metcalf, Co-Founder – Auxesia Homes

“We are very pleased to have supported Auxesia in securing this new investment to achieve its growth ambitions. Auxesia is a great example of a for-profit business providing essential and affordable housing solutions for key workers and former military personnel. With our excellent network in affordable housing and unique knowledge of the sector, Centrus is well positioned to play a crucial role in connecting long-term capital with the providers of high-quality affordable housing.”

Phil Jenkins, Managing Director – Centrus

For more information, please contact phil.jenkins@centrusadvisors.com