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Centrus arranges a £50m private placement with a £100m shelf facility for Melin

Transaction Overview

Melin is a leading registered social landlord in Wales, providing some 4,300 homes across five local authority areas, with an ambitious development target of delivering 1,000 new homes by 2025. In addition to offering homes for rent, Melin also offers properties for sale through its low-cost home ownership scheme and subsidiary Candleston.

Centrus Solution

Following a carefully orchestrated engagement with the market, Centrus arranged a £50m private placement, with Macquarie selected as the preferred investor – this represents Macquarie’s first direct investment in a Welsh housing association. The note has a final maturity of 2059 and was split across two tranches, including £20m deferred for 12 months. The agreement includes a £100m shelf facility, providing additional flexibility to meet future funding needs if/when appropriate, which we believe also represents a first for the Welsh sector. The note is unrated.

Added Benefits

In addition to attractive pricing, Melin will benefit from a covenant package with appropriate carve outs which provide substantial headroom and flexibility. Importantly, Melin has secured very long-term fixed rate finance to proactively manage treasury risks and provide a more robust platform on which to deliver its growth ambitions.

“We are delighted to have secured a long term funding package that will help deliver our growth aspirations. The certainty of future costs that this brings gives added comfort and assurance to our Board to aid future planning. The whole team at Centrus provided a great level of knowledge and support to the process which ensured the transaction was as smooth as possible.”

Peter Crockett, Deputy Chief Executive – Melin Homes

“Melin, a long-standing client of Centrus, has achieved an excellent result with this fundraising, accessing very long-term low-cost fixed rate finance, with built in flexibility aligned with its strategic objectives. Attracting a new investor is very positive for the Welsh sector overall and provides tangible external endorsement of the strength of Melin. It was a pleasure working with the Melin team to deliver a great outcome.”

Lawrence Gill, Director – Centrus

For more information, please contact lawrence.gill@centrusadvisors.com

Centrus arranges £30m institutional financing for Clipstone Industrial REIT plc to acquire new industrial properties

Transaction Overview

Clipstone is a specialist industrial property fund manager founded in 2008. It manages real estate funds, as well as operating segregated account mandates for larger investors. It currently has over £450m of assets under management. Whilst there are a number of specialist industrial funds in the UK, Clipstone Industrial REIT plc (“the REIT”) is the only pure London and South East focused industrial fund.  As at 31 March 2021 the REIT owned 41 industrial properties with a gross asset value of £253.3m and it is the fifth best performing fund in the MSCI UK Quarterly Property Index since it was incorporated into that Index in Q1 2019.

Given the scale of the business and its ambitions for further growth, the REIT’s board decided that it would be prudent to diversify its sources of debt finance and put in place some longer term, fixed rate funding provided by an institutional investor.

Centrus Solution

Centrus was appointed by Clipstone to arrange the finance which involved drafting an information memorandum, meeting with selected institutions and selecting the one that offered the best combination of terms, flexibility and cost. Having considered different amounts and maturities, a new £30m 7-year fixed rate financing was completed with Clipstone drawing down approximately £18m to finance the purchase of a new industrial estate in Chelmsford. While the cost of finance has been fixed for the full £30m, Clipstone has the flexibility of being able to draw down further tranches over the next nine months allowing time to identify and acquire new properties with the certainty of having low-cost finance available at short notice.

Added Benefits

The ability to secure committed funding has enabled Clipstone to lock in current market rates and allows its board and management team to continue with their acquisition growth strategy. The funding also represents a diversification of Clipstone’s source of debt finance and the creation of a new strategic relationship with a large and highly respected institutional investor.

“I am delighted to have secured term finance at a very attractive fixed rate and on very flexible terms. The first tranche we have drawn down from the £30m financing has allowed us to purchase a new industrial estate in Chelmsford and the remainder of the facility provides financial firepower for further acquisitions as and when we identify suitable new investment opportunities.

Throughout the process Centrus has provided us with first class advice and support. Tapping into Centrus’s wide range of institutional investors we had a number of attractive offers to choose from. With advice from Centrus we selected an investor which offered an attractive combination of price, maturity and flexibility and with whom we can establish our own bilateral relationship for the long term as our business continues to expand.”

Toby Dean, Chief Executive Officer – Clipstone Investment Management Limited

“Clipstone’s history and performance is impressive and its proposition is compelling. The company has a small, very professional management team which operates decisively and with great integrity. It was a pleasure working with them on this financing.”

Robert St John, Director – Centrus

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

Centrus advises Beyond Housing on first long-dated sustainability bond in the social housing sector

Transaction Overview

North East-based Beyond Housing has become the first social housing provider to successfully issue a long-dated sustainability bond (30 years).

The 15,000-home landlord, which operates in Tees Valley and North Yorkshire, attracted orders from more than 30 institutions, resulting in it being four times oversubscribed.

The 30-year bond comprises £165m of immediate draw-down and £85m retained at an all-in cost of 2.216 per cent.

In line with Beyond Housing’s Sustainable Bond Framework, the bond will be invested in the long-term strategic approach of the company in delivering positive environmental and social change for its customers and partners.

“At Beyond Housing we are committed to sustainability, and genuinely care about the work we do in supporting customers and communities and having a positive impact on their lives. This bond will enable us to invest in existing homes, making them more energy efficient and helping us move to become a carbon zero organisation. In addition, it will help us deliver our ambitious development programme, providing value for money and securing the company’s long-term plans.

Securing the first long-dated sustainability bond in the social housing sector is a landmark achievement for Beyond Housing and a testament to the work of our team in delivering exceptional financial and sustainability credentials.”

Rosemary Du Rose, Chief Executive – Beyond Housing

“It has been a pleasure working with the Beyond Housing team, helping them to achieve a fantastic result on their inaugural sustainability bond. The bond is the culmination of a refinancing strategy which sees Beyond Housing’s treasury portfolio restructured into a longer-term and lower-cost platform. Another key element of this transaction is the development of Beyond Housing’s new sustainable bond framework set in line with the UN’s SDGs – meaning more sustainable and climate friendly homes for Beyond Housing’s customers in the North East, helping to tackle both climate change and fuel poverty.”

Lawrence Gill, Director – Centrus

About Beyond

Beyond Housing is one of the largest registered housing providers in the North East and North Yorkshire. With its regional offices in Redcar and Scarborough, the organisation is responsible for the letting, management and maintenance of over 15,000 homes across the north east and North Yorkshire.

Beyond Housing is committed to going beyond the bricks and mortar to help its communities and region thrive. By providing quality homes people want to live in alongside valuable additional services delivered by passionate people who want to help, Beyond Housing contributes to the prosperity, wider regeneration and sustainability of its communities, creating neighbourhoods that will flourish well into the future.

Beyond Housing is a Community Benefit Society registered under the Co-operative and Community Benefit Societies Act 2014 and regulated by both the Homes and Communities Agency and the Financial Conduct Authority.

For more information, please contact lawrence.gill@centrusadvisors.com

Centrus advises Paradigm on £350m sustainability bond to meet net zero commitment

Transaction Overview

The funding marks Paradigm’s first ever issuance in the public bond markets and follows the housing association’s creation of a Sustainability Finance Framework, which embeds environmental, social and governance (ESG) factors into its strategy.  Paradigm, a not-for-profit registered provider of social housing, is one of the leading providers of affordable housing in the South East, managing over 15,000 homes.

Over the last 30 years, Paradigm – a housing association formed through the very first large scale voluntary transfer of homes from Chiltern DC to Chiltern Hundreds HA – has become one of the largest social housing providers in the counties of Buckinghamshire, Hertfordshire and Bedfordshire.

A central part of Paradigm’s vision is to build much-needed affordable housing to help more people, while investing in safe and sustainable homes.

Issuing a sustainability bond under Paradigm’s recently established framework reinforces Paradigm’s commitment to becoming a net zero carbon business by 2050, in line with the objectives set out in its recently published Corporate Plan 2021-26.

Paradigm priced its debut 30-year bond on Wednesday (12 of May 2021) at a coupon of 2.250%, with £250m of bonds sold to investors in the first instance, and £100m of the proceeds retained for later sale, as and when the group requires the further funding.

“We are pleased to have issued our debut sustainability bond to support our newly published corporate plan. The rating we received and the feedback on the issue reinforces our financial strength, strong management and our commitment to building and investing in safe and sustainable homes in our operating area.”

Nicola Ewen, Executive Director of Finance – Paradigm

“The feedback we got from investors and the margin we achieved reflected the strength of the business and the grip we have on efficiency, risk, development and operational delivery.”

Matthew Bailes, Chief Executive – Paradigm

The bond, which forms part of a wider refinancing, gives Paradigm a strong long-term foundation to deliver on its main objectives set out in their new corporate plan, such as providing new homes focused in their core operating areas of Buckinghamshire, Bedfordshire, Hertfordshire and eastern parts of Oxfordshire. It also provides investment for existing homes, with the aim of making Paradigm a net zero carbon business by 2050.

Paradigm will publish an annual report disclosing the use of bond proceeds, which will be made available on the group’s website.

The bond comes after Paradigm was awarded an A+ credit rating, with a stable outlook, by Standard & Poor’s (S&P). An A+ rating is one of the stronger ratings in the HA sector, with S&P observing that it is “underpinned by the group’s focus on affordable development, strong demand for the group’s units stemming from its geographical footprint, and its excellent asset quality”.

S&P also remarked on the group’s very strong liquidity and robust operating margins, with financial performance expected to remain solid despite the commitments to increase investments in the energy efficiency of the group’s existing homes.

Bookrunners on the bond included Barclays, Lloyds and NAB.

Centrus acted as financial advisors, with Trowers as legal advisors to Paradigm, Pinsent Masons providing legal advice to the joint bookrunners and JLL conducting the valuation.

“It was a pleasure working with Paradigm on this landmark bond issuance – Centrus is committed to sustainability and ESG and we’re thrilled to be part of Paradigm’s first foray into Sustainability Financing, allowing the group to align its financing with net-zero targets and wider corporate strategy. Additionally, we are delighted to have structured the refinancing for Paradigm who will benefit from a lower cost of debt, improved asset efficiency and less restrictive covenants.”

Lawrence Gill, Director – Centrus

For more information, please contact lawrence.gill@centrusadvisors.com

Centrus advises Yorkshire Water on restructuring index linked derivatives with mandatory breaks in 2023

Centrus continues its longstanding relationship with Yorkshire Water with the successful execution of mandatory break extensions across £72.4m notional of the inflation linked swap’s portfolio with mandatory breaks in 2023. This completed the extensions of the 2023 mandatory breaks portfolio with a total notional of £151.5m. The total index-linked swap portfolio of c£1.29bn is used to hedge long term interest rate risk in the business.

Multiple solutions were followed to effectively utilise the most efficient bank and institutional capital to deliver the optimal result for Yorkshire Water. The outturn result extends mandatory breaks between 5 and 17 years to limit future concentration risks. This was achieved at competitive pricing and without the use of maturity extensions.

In now addressing the majority of the remaining mandatory breaks in their derivatives portfolio Yorkshire Water have again illustrated their proactive and prudent risk management approach to addressing mandatory breaks well in advance of due dates and with strong continued support from its relationship banks and investors.

“We are really pleased to have delivered on our commitment to manage mandatory breaks on our derivatives portfolio in a timely and efficient manner and I would like to thank our counterparties and our advisors, Centrus, for delivering a great result for the Yorkshire Water business.”

David Gregg, Head of Corporate Finance – Yorkshire Water

“We are delighted to have worked with our long-term client, Yorkshire Water, to deliver pragmatic and efficient solutions to the mandatory breaks and in a way that has worked well for all parties.”

Geoff Knight, Managing Director – Centrus

Centrus supports Abri in simplified group restructure to improve financial capacity and resilience

Transaction Overview

Abri is one of the South’s leading housing providers with 80,000 customers across 35,000 homes with plans to build at least 10,000 high quality and sustainable homes in the next decade.

Centrus has worked closely with Abri, building on changes implemented as part of the formation of the group from Radian and Yarlington in 2019, to simplify their group structure. The changes will support efficient working and value for money with the use of the existing balance sheet across the group to support funding going forward.

The new group structure reduces the number of companies in the Abri Group and combines existing loan agreements into fewer entities, enabling Abri to optimise capacity and reduce complexity.

“The changes we’ve made will allow us to consolidate capacity within the group, affording greater ability to build more sustainable homes, invest in our existing homes, and our thriving communities.

The team at Centrus has worked with us throughout this transaction. They provided real commercial insight and helped us make sometimes finely-balanced decisions on structure and terms, as well as supporting through some relatively complex financial close pricing exercises.”

Vimal Gaglani, Director of Treasury and Financial Planning – Abri

“This transaction will help Abri to deliver homes and services for local communities, as well as simplifying the credit story for investors. It was a pleasure working with an experienced and commercial treasury team to deliver this successful outcome.”

Jonathan Clarke, Managing Director – Centrus

Onward Homes completes group restructure and achieves record breaking spread on debut bond issuance

Transaction Overview

Onward is a leading provider of affordable housing to rent and own, with over 35,000 homes owned or managed across the North West.

Formed in 2018 from the merger of five housing associations, Contour Homes, Liverpool Housing Trust, Hyndburn Homes, Peak Valley Housing Association and Ribble Valley Homes, Onward has until now retained Contour Homes as a separate entity.

The now complete amalgamation of Contour is the culmination of the group’s ambition to create a single, streamlined and operationally efficient structure and has been supported by Onward’s debut bond launch on 18th March. The £350m bond, of which £135m has been retained, was used to fully refinance three legacy funders whilst also providing capital to support Onward’s aim to deliver 500 new homes per annum.

Centrus Solution

Centrus has worked closely with Onward to deliver this complex transaction, from strategy and business case development, through Onward’s initial credit rating process with Moody’s and bond issue, to completion mechanics across multiple bank lenders.

The transaction has seen Onward achieve an A1 (stable) credit rating with Moody’s, launch a debut bond that achieved a record setting spread of 88bps for a 32-year tenor, and refinance three banks with associated break costs of c. £40m.

The outcome is a streamlined, unified organisation with significant financial strength to deliver real social, environmental, and economic impact across the North West.

Centrus provided broad corporate finance advice to Onward, whilst Devonshire’s provided the legal advice across financing, governance, and security aspects of the transaction.

“Our successful bond issue is the completion of a five-year process to create a single organisation from five separate housing associations. We are now realising the financial strength of our united organisation. The investment raised will underpin our business plan for the years ahead, to deliver considerable social, environmental and economic impact in the North West.”

Bronwen Rapley, Chief Executive – Onward

“We have worked with Onward over a number of years to realise the ambition of a strong, simplified group structure and robust risk averse funding structure. What began in 2018 has now been completed, whilst leveraging management’s acknowledged strength and sector leading financial credentials to gain an A1 rating with Moody’s to achieve a record low spread on a debut bond. The new funding structure really sets Onward up to deliver in the future. Refinancing risk has been proactively reduced, the fixed floating ratio has been significantly enhanced, liquidity has been bolstered, and treasury operations simplified.”

John Tattersall, Senior Director – Centrus

“Centrus led the development and delivery of Onward’s treasury strategy, culminating in our first bond issue. John Tattersall and his colleagues gave an excellent and wide-ranging service. While you would expect strong technical knowledge and support, Centrus’ strengths are also visible in other key areas. Perhaps most importantly, they provided excellent assurance to the Board and Treasury Committee, engaging them with the benefits and risks of the planned approach and making clear and concise recommendations via well-written reports and presentations.

Centrus has really delivered for Onward.”

Mike Gerrard, Executive Director of Finance – Onward

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

Centrus advises housing and care provider Anchor Hanover on £300m sustainability-linked facility

Transaction Overview

Anchor Hanover, which offers retirement properties and specialist care homes to over 65,000 people in later life at almost 1,700 locations across England, is rebalancing its portfolio focused more on financially benefiting from long-term stability from debt capital markets (DCM) that will underpin its ambitious growth plans.

At the forefront of Anchor Hanover’s restructured portfolio is a new £300m unsecured syndicated Sustainability Linked Revolving Credit Facility (RCF). In addition to establishing the first syndicated Sustainability Linked Loan in the sector, Anchor Hanover becomes the first housing association to move its banking facilities to a fully unsecured basis.

The banks providing the RCF are Barclays, MUFG , National Australia Bank and Santander UK, with Barclays acting as Global coordinator and National Australia Bank acting as Sustainability Coordinator.

Anchor Hanover employs more than 9,000 people and in addition to the retirement housing operates 114 care homes in England. The organisation’s strong commitment to environmental, social and governance (ESG) performance is demonstrated by the fact that the banking facility will be structured as a Sustainability Linked Loan.

Centrus acted as sole financial advisor to Anchor Hanover, supporting the development of the refinancing strategy as well as its structuring and implementation.

DNV GL has issued a second party opinion confirming the alignment of the facility with the LMA Sustainability Linked Loan Principles.

“We are delighted to have agreed the first sustainability linked unsecured banking portfolio in the sector, with current and new bank partners. This refinancing represents excellent value for Anchor Hanover and will underpin our strategy to provide more and better homes, to offer more opportunities for colleagues, to be more efficient, and to be a more influential voice for people in later life. The ESG component underlines our commitment to sustainability for our current and future residents, colleagues, and the communities in which they live.”

Sarah Jones, Chief Financial Officer – Anchor Hanover

“Centrus is committed to finance with purpose. Therefore, we are thrilled to have worked with Anchor Hanover on this innovative refinancing which is designed to meet Anchor Hanover’s ambitious growth plans in providing housing and care services to older people. In establishing the first fully unsecured banking portfolio in the sector, Anchor Hanover will benefit from strengthened liquidity, improved asset efficiency and reduced operational risk.

Additionally, we are delighted to have structured the refinancing for Anchor Hanover in ways which reinforces our commitment to sustainability and ESG.”

Phil Jenkins, Managing Director – Centrus Financial

Centrus Advises Southbank Centre on new loan facility from the Cultural Recovery Fund

Transaction Overview

Southbank Centre is the largest arts centre in the UK and one of the nation’s top five visitor attractions. Southbank Centre seek out the world’s most exciting artists, from household names to fresh new talent, and give them space to showcase their best work. The centre, alongside many cultural sites across the UK, had been closed since the outbreak of the COVID 19 pandemic.

Centrus Solution

As a result of the closure, Centrus was asked to provide strategic advice and to help the trustees and management secure the future of Southbank Centre (“SC”). This work involved helping to develop, review and refine the narrative around SC’s recovery strategy and programme with regard to the key financial stakeholders of SC.

Following the development of the strategic approach and narrative, Centrus supported SC throughout the negotiation process with its lenders to arrive at the most suitable terms for SC, reviewed SC’s application to the Cultural Recovery Fund, the UK Government support scheme for the arts and provided advice on how to make this work with proposals from lenders.

The outcome of the negotiation lead to satisfactory agreements with lenders and a loan to be agreed with the Cultural Recovery Fund, securing the future of Southbank Centre.

“Centrus made the time to understand Southbank Centre and were incredibly responsive within a very tight timescale. Centrus’ expertise allowed us to find and agree the right solution for Southbank Centre.”

Andrew Gambrell, Finance Director – Southbank Centre 

For more information contact london@centrusadvisors.com