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Cartrefi Conwy completes innovative sustainability & SONIA linked refinance to deliver 1,000 new homes

Transaction Overview

With just under 4000 homes owned Cartrefi Conwy is a leading provider of affordable, high quality homes in North Wales with a focus on innovation, both in how services are provided and how homes are built and developed.

This innovation is reflected in the refinancing now complete which sees in aggregate £39m in new funding obtained, introduction of a new banking partner, a restructure of existing covenants, and transitions bank facilities to a SONIA, largely ESG-linked basis; a first in Wales.

Existing facilities of £58.5m have been restructured and increased to £97.5m via a new single note, £25m, 30-year private placement part deferred over 2 years, and a net increase in RCFs of £14m to a total of £30m. The RCFs, along with the term bank facilities, have been transitioned to SONIA and now include margin reductions where Cartrefi Conwy meet a range of Environmental and Social KPIs. These KPIs are rooted in Cartrefi Conwy’s corporate strategy and incentivise pushing forward to maximise social impact and meet the climate challenge.

Financial covenants within existing facilities have been restated to provide additional flexibility. This includes revised financial assistance limits to facilitate on-going investment into Creating Enterprise, Cartrefi Conwy’s subsidiary that will allow expansion of existing Modern Methods of Construction (“MMC”) capabilities, supporting both the local community and delivery of more energy efficient homes.

This transaction reshapes treasury arrangements to fully support business ambition, unlocking an increased growth programme that will see 1,000 new homes delivered over the next 10 years across North Wales. Flexibility has been increased enabling elevated investment into innovative delivery models including MMC and financial risk has been reduced with bolstered liquidity, full SONIA conversion, increased portfolio longevity, and interest rate protection.

Centrus acted as sole arranger on the private placement, worked with management to develop strategy, and provided business planning and transaction advice and support. Trowers & Hamlins acted as borrower counsel, Addleshaw Goddard acted as lender counsel, and Savills’ provided valuation services.

“The new finance package allows us to bring our strategy to life is absolutely fantastic news for Cartrefi Conwy. It’s a win for our community because we’re spending our money in Wales and our tenants will also benefit from good quality, well maintained and cheap to run homes.”

Andrew Bowden, Chief Executive – Cartrefi Conwy

“For me this is all about delivering more social homes and tackling the climate crisis. That’s very much in keeping with the Cartrefi Conwy ethos. Access to the new funding package is going to propel Cartrefi Conwy to a new level. It’s the key to unlocking 1000 new doors. The skills and knowledge of the Centrus team have been essential in putting this deal in place.”

Peter Lewis, Group Director, Resources – Cartrefi Conwy

“This transaction represents a reset of funding arrangements for Cartrefi Conwy, bringing the covenants and controls in line with the broader business ambition and provides a solid foundation for future growth and investment. It also takes full advantage of the attractions of the current long term debt market to maximise value for money, proactively addresses SONIA, and leads the way in Wales to link RCFs to ESG metrics rewarding Cartrefi Conwy for pushing the envelope on energy efficiency and social impact. We have worked very closely with Cartrefi Conwy to define, shape, and deliver this transaction and are delighted to see such a strong outcome achieved.”

John Tattersall, Director – Centrus

Centrus advises Wales & West Housing on £75m private placement

Transaction Overview

Wales & West Housing (“WWH”) has a clear vision to achieve strong, sustainable growth, making a difference to people’s lives, homes and communities.

WWH manages more than 12,000 high quality, affordable homes, in 15 local authority areas across Wales, housing more than 22,000 residents. These include more than 3,000 dedicated properties for older people as well as innovative supported housing solutions for people with a range of particular needs.

WWH had identified a minimum £50m funding requirement to support growth plans, including the development of c.2,500 new homes by 2025. Although its liquidity position remained strong, WWH wished to explore opportunities to forward fund the business plan, conscious of the favourable interest rate environment. Previous institutional funding was largely sourced via THFC, including accessing bLEND. Approaching investors for Private Placement funding was therefore a new endeavor for WWH and one which required careful navigation in order to optimise terms. Centrus was appointed to advise and arrange.

Centrus Solution

Centrus worked closely with WWH throughout the procurement of this funding, from producing a ‘teaser’ to initially test market appetite, to compiling and supporting the Investor Presentation, selection of the preferred investors and closing out the transactions and documentation. This process enabled WWH to convey its very strong credit risk story, in order to negotiate and drive optimal terms, with no need to obtain an external credit rating. As well as highly competitive pricing and c.60% of the funding deferred for up to 18 months, covenants and controls were minimised to ensure full flexibility.

The strength of investor interest resulted in WWH deciding to raise £75m and splitting this across two investors, Aviva Investors and PIC. This split has enabled WWH to agree a range of maturities, up to 40 years, and importantly creates two new investor relationships with future growth potential.

“We are delighted to have secured this funding with PIC and Aviva Investors and look forward to a long and fruitful relationship with both of them. These loans offer excellent value over a great many years and provide us with the funding to meet our ambition of strong sustainable growth to make a difference to lives, homes and communities throughout Wales. We intend to build nearly 2,500 new homes over the next five years, the vast majority of which will be social rented homes for those in the greatest housing need. Many thanks to Paul, Maria, Conor and the team at Centrus for organising and running the process for us and for helping us to achieve such a great outcome.”

Stuart Epps, Executive Director (Resources) – Wales & West Housing

For more information, please contact Paul Stevens, Managing Director – Centrus

Centrus appointed by Rooftop on £50m fundraise from bLEND Funding PLC

Transaction Overview

Rooftop Housing Group provides affordable housing for all household types and needs across the Midlands and the South West, this includes those in social and affordable housing need, key worker homes for hospital staff, private rental properties and care and support services to young and older people. Formed in 1994, Rooftop has helped people in housing need get a safe, secure, and appropriate home. Rooftop provides 7,000 homes in South Worcestershire and North Gloucestershire.

Centrus was initially engaged in late 2019 to undertake a strategic review of Rooftop’s treasury portfolio, which included identifying the likely sources of future funding. Subsequently in August 2020 having been appointed as retained advisor and Private Placement advisor, following a tender and selection process, Centrus proactively engaged with Rooftop to set out the case for bLEND providing an alternative to the previously intended Private Placement strategy.

Having considered the pros and cons of each option as well as the targeted timeline for completion and in the context of our shadow credit rating analysis and views around increasing market volatility, Centrus’ clear advice was to proceed with bLEND. Following Board approval, Centrus worked with Rooftop through the process of obtaining £50m of funding from bLEND 2054, of which £30m was spot (at 2.09%) and £20m deferred for 12 months (2.24%). This represents an excellent outcome, delivered in record time of 6 weeks as a result of excellent team work between Rooftop, Centrus and THFC.

“Since appointing Centrus as our retained advisor and Private Placement advisor, we have been extremely pleased with their very clear advice, guidance and professionalism. Paul Stevens and the team have worked closely with us on bLEND and have supported us through the whole process, including obtaining a private Moody’s credit rating, in an incredibly short time frame. The new funding, especially at such low rates of interest, is an excellent outcome for Rooftop that will support our development programme to build 1,000 new homes by 2023.”

Caroline Dykes, Finance Director – Rooftop Housing Group

Centrus and eppf create innovative financing structure for London Borough of Sutton

Transaction Overview

The London Borough of Sutton has priced a debut £250 million bond with a 35-year final maturity and a coupon of 1.732%. An initial £100m has been issued with £150m retained for future sale. Sutton will use the proceeds to refinance short term debt and finance projects within their approved capital programme.

The bonds (which will be listed on the International Securities Market of the London Stock Exchange) have a Moody’s rating of Aa3 (stable) in line with the UK Sovereign rating. The bonds were issued via the european primary placement facility (eppf) S.A. acting for its compartment London Borough of Sutton. eppf is an established, regulated Luxembourg limited liability company whose principal activities are the issue of securities via compartments within the limits of Luxembourg law. eppf is set up to provide borrowers including local authorities, corporates and governments with an innovative, simple and cost-efficient route to accessing the debt capital markets.

Centrus Solution

The transaction was arranged by Centrus who worked with eppf to design and deliver a financing structure which can be utilised by other local authority issuers. London Borough of Sutton was advised by Link Group’s Treasury Team. Centrus and Link Group have an existing partnership which provides debt capital markets solutions to Link Group clients.  RBC was sole bookrunner.

Sutton launched their £100 million debut transaction on Monday morning with price guidance of Gilts + 100bps attracting a strong order book and allowing the Bookrunner to price the 2055 bond at a coupon of 1.732% (95bps over the Oct-50 Gilt). The bonds amortise from 2045 to 2055 translating to a 30-year weighted average life.

The Arranger and the Bookrunner were advised by Clifford Chance London, eppf by Simmons & Simmons Luxembourg and London Borough of Sutton was advised by Allen & Overy.

“We are really pleased with the outcome of this transaction that shows the strength of the London Borough of Sutton credit. We were looking for a long-term funding at the best rate possible which this option has clearly provided and locks in that value for the long-term.”

Richard Simpson, Strategic Director of Resources (Section 151 Officer) – Sutton

“This transaction represents a breakthrough for local authorities seeking a simple, robust and low-cost route to accessing the debt capital markets. We are pleased to have worked with London Borough of Sutton in delivering such a successful financing outcome as well as arranging the first transaction in the GBP bond market through eppf, which applies innovation and technology to streamline the traditional bond issuance process.”

Robert St John, Managing Director – Centrus

“RBC Capital Markets is proud to have acted as Bookrunner on this important transaction, which demonstrates the confidence that bond investors have in the London Borough of Sutton. The timing of the transaction was opportune as long-term fixed rates of interest are at historically low levels.”

Rob Lamb, Managing Director and Head of European Corporate Debt Capital Markets – RBC Capital Markets

“We at eppf are pleased to have worked with the London Borough of Sutton, Centrus, RBC and Link in the successful launch of the bond, the bond and compartment having been rated by Moody’s at Aa3 (stable). eppf provides a fast, cost efficient and straightforward route to accessing the capital markets by local authorities, corporates and governments. eppf has assisted in raising funds for entities both in Europe and the United Kingdom and will continue to do so in the same way after Brexit.”

Robert Koller, CEO – eppf

“We are delighted to have advised the London Borough of Sutton on the successful issuance of its debut public bond financing, which has resulted in the Authority securing long-term conventional funding at the tightest spread (over the conventional UK Gov. Gilt) achieved by a UK local authority in the public market over the last couple of years, using a new low cost, efficient route to market. The transaction was oversubscribed which is testament to the Authority’s high credit quality and strong management team. The Authority has successfully demonstrated that it is possible for local authorities to secure cheaper General Fund borrowing from the institutional investor market, than that currently available from the PWLB.”

David Whelan, Managing Director – Link Group

Centrus advises Platform Housing on £350m bond issue

Transaction Overview

The bond received outstanding support from a broad range of institutional investors with demand well in excess of £1 billion from 60 investors, providing a very strong endorsement for Platform Housing’s strategy, a key part of which is to expand the availability of new affordable homes across the Midlands. Raising these funds will enable Platform Housing to continue with these plans with even greater confidence.

Platform Housing is the largest housing association in the Midlands and one of the largest in the country, owning over 45,000 homes. Over the last 2 years, it has built more social and affordable homes in England than any other social housing provider and is a strategic partner for Homes England.

The 35 year maturity is amongst the longest dated publicly listed debt ever raised by a UK housing association. The 1.625% coupon is the lowest ever achieved in the long-dated sterling bond market for this credit rating category (across all sectors) and recognition of the strong credit and low risk business model of Platform Housing.

“Centrus supported the Treasury Team as Platform launched our successful debut bond onto the DCM. Centrus provided the Platform Board with a valuable support role in clarifying risk and documentation and helped us to hit our very tight deadline. As our critical friend Centrus clearly understood and supported our strategy and gave us valuable advice to reach our successful goal. Investors recognised Platform’s strong credit and our bond a record low price which will help us to invest on more homes for low rent.”

Rosemary Farrar, CFO – Platform Housing Group

For more information contact Phil Jenkins, Managing Director – Centrus

Northern Gas Networks implements titanTreasury

Northern Gas Networks Limited (NGN) is the British company responsible for distributing gas to homes and businesses across Yorkshire, the North East and northern Cumbria, England.  NGN is based in Leeds and is one of eight gas distribution networks in the United Kingdom.

After an extensive request for proposal process, NGN chose to acquire and implement titanTreasury. titanTreasury is both a risk and cash management solution developed by 3V Finance and supported by Centrus.

Thanks to the close collaboration between the NGN, Centrus and 3V Finance teams, implementation has been achieved in 4 months and NGN is now live with titanTreasury covering its treasury management and risk analysis while also integrating with existing internal systems.

“We originally selected titanTreasury to meet our system needs for derivatives valuations and IFRS9 hedge accounting but already it is giving us so much more, including the automation of interest payments and monthly finance charges accruals and streamlining our reporting and forecasting processes. We expected implementation and training to be very challenging as the COVID-19 pandemic meant that everything had to be done remotely but the expertise of the Centrus and 3V Finance teams combined with their relentless focus on our needs as the customer meant that the process ran very smoothly.”

Ian Clark, Head of Treasury – NGN

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

Centrus advises Clúid Housing on landmark €54m fundraise with Legal & General

Transaction Overview

Clúid Housing, is one of the State’s largest approved housing bodies (AHBs) with more than 8,000 properties under management across all counties in Ireland. Clúid was established in 1994 and leads the way in delivering social housing solutions to those on local authority housing lists. Clúid has an ambitious growth strategy to deliver an additional 3,000 new social homes before the end of 2022.

Centrus Solution

Clúid engaged Centrus to assist in developing a debt financing strategy including identifying new sources of private debt capital. Following the completion of this work, Centrus was appointed to implement the agreed funding strategy, including debt structuring, financing competition, funder negotiations, and assistance with bringing the transaction to financial close.

Outcome

The result is a landmark €54m debt finance agreement with Legal & General Investment Management. The competitively priced, long term finance will enable the delivery of c.200 new social homes across Ireland and marks the first Irish AHB to secure a financing agreement of this scale with an international institutional asset manager. The first homes financed through the agreement are expected to be delivered in Q1 2021.

“This new funding will support Clúid to deliver its social mission of providing good quality, secure, affordable housing. The homes delivered through this funding agreement will be available as social housing in perpetuity, providing a home for generations to come. Centrus acted as financial advisers to Clúid on this agreement, enabling us to successfully navigate the process.”

Brian O’Gorman, Chief Executive – Clúid Housing

“Centrus is delighted to be advising our long-standing client Clúid on this exciting new financing package. This is the first direct institutional investor financing of this size for an AHB and provides access to long term efficient finance at a time when market interest rates are at historically low levels. Clúid’s work in securing institutional investor funding should provide a template model for other AHBs to access alternative sources of finance enabling continued value for money for the Government.”

Jason Murphy, CEO – Centrus

Centrus advises Bernicia on £75m multi-deferred tranche private placement

Transaction Overview

Bernicia, a North-East housing association with over 16,000 units, has provided quality homes and services in North East England for more than 50 years. It has over 60,000 customers, employs 550 staff and has an annual turnover of c.£75m. Bernicia invests in homes, services and people to make a positive impact on North East communities.

Centrus undertook a strategic treasury and funding review, as well as becoming Bernicia’s treasury advisor in late 2019, identifying a number of areas for portfolio optimisation and supporting on development of a long term funding strategy. This review identified a number of opportunities, including rationalisation and restructuring of a number of legacy facilities as well as accessing the capital markets to obtain longer term funding to support development ambitions.

Centrus worked closely with Bernicia to position its strong operating position and governance, ESG credentials and astute strategy, to private placement investors, as well as to demonstrate the underlying strengths of the North East and Bernicia’s key role in the region.

The credit was strongly received by investors, demonstrating confidence in Bernicia’s inherent strengths and the North-East more generally. The transaction with Legal & General Investment Management as sole investor, resulted in low all-in pricing (enabling further rationalisation of legacy facilities), flexible covenants (supporting long term resilience) and multiple deferred tranches (reducing of carry implications and enabling forward funding of the business plan for several years, taking advantage of historic low rates and strong investor appetite).

Overall Bernicia has achieved increased weighted average life for its debt, lower cost of funds, further diversification of funding as well as locking in historic low cost long term funding, to further enable it to achieve its development ambitions. This is a great result for Bernicia, especially in a challenging economic environment.

“Centrus has been seminal in supporting us throughout the process, from reviewing our funding portfolio, supporting us in formulating our long term funding strategy, to support in executing the private placement. Centrus’ knowledge of investor drivers, the sector at large, our organisaiton specifically (including positioning our intrinsic strengths and strategy), along with their support in positioning the North East as a region that is attractive and open for investment, strongly contributed to the success of this deal.”

Janette Longstaff, Executive Director of Finance – Bernicia

“We are delighted to support Bernicia on this landmark transaction, representing the fundamental strength of their business, long-term strategy and their position in and support for the North East. The structure provides cost effective deferred funding, with flexible covenants, a foundation that further supports Bernicia in achieving its long-term strategy.”

Sam Goldman, Director – Centrus

Centrus advises RHA Wales on refinancing of bank debt through arrangement of new £30m Private Placement

Transaction Overview

RHA is a Registered Social Landlord based in Rhondda Cynon Taff. One of the oldest Housing Associations in Wales, with over 40 years’ experience of delivering high-quality services to tenants and stakeholders, RHA owns and manages approaching 2000 homes and properties and provides a range of services to over 3000 people. RHA’s mission is to provide quality homes, regenerate communities and improve lives.

Centrus Solution

Following a strategic treasury review and options appraisal undertaken by Centrus, we were appointed to implement the agreed strategy which had at its heart a rationalisation of existing bank funding and refinance through accessing the debt capital markets, enabling RHA to take advantage of historically low long-term interest rates. Rationalisation has enabled RHA to simplify and streamline its financing arrangements, maximise financial covenant headroom and therefore debt capacity and financial resilience, while at the same time building on established and supportive relationships, with Barclays retained for RCF & Term facilities and M&G providing an additional £30m Private Placement.

Added Benefits

This competitively priced finance when coupled with a flexible package of covenants and consents, has enabled RHA to increase the longevity of its debt portfolio (with the weighted average life of refinanced debt increasing by c.20 years), thereby better matching its asset base and investment decisions, whilst providing greater interest rate protection for the business plan.

“I am delighted that we have managed to achieve this positive outcome in a challenging operating environment. Our strategic review into our treasury management strategy has been expertly led by Centrus and I am very pleased with the way in which our Board and Executive team have worked closely over the last 12 months to deliver on the objectives we set.”

Luke Takeuchi, CEO – RHA

“The key to successful implementation of this strategy was ensuring objectives were clearly articulated and understood by all stakeholders at the outset, planning and preparation for engagement with funders, including potential new investors, and guiding RHA through navigating a somewhat volatile market and the complexities of achieving this restructure and refinance. It has been a pleasure working with the Executive and Board of RHA and we are delighted with the excellent outcome.”

Paul Stevens, Managing Director – Centrus

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