Archives: Credential

Transaction Overview

Advised by Centrus, North Wales Housing has today finalised the refinancing of its £35m banking portfolio via three new bi-lateral facilities totalling £62m.

Founded in 1974, North Wales Housing today is a successful and ambitious social enterprise that provides homes and services to over 2,500 households across North Wales with ambitions to deliver a further 250 new homes over five years.

With completion of this transaction four of the five legacy banking relationships have been refinanced in full via a new £39m long-term fixed rate loan from Scottish Widows, of which £10m is deferred by two years. Principality Building Society has been retained via an extended and increased £5m ten-year term loan, with liquidity and day to day banking provided by Lloyds who have also extended a new £18m five-year RCF.

The loan from Scottish Widows, which represents the investor’s first entry into the Welsh social housing sector, has a blended weighted average life of 21 years and a coupon comfortably below 3%. The deferred tranche has been structured back to back with a maturing THFC advance, reducing refinance risk and locking in funding from the currently attractive debt markets.

Despite the incurrence of break costs to exit the legacy bank loans, the refinance will tangibly reduce North Wales’ running interest costs which paired with optimisation of other covenants has resulted in increased financial resilience and overall development capacity.

This was a complex refinancing with numerous stakeholders involved and its successful completion places North Wales in a robust and well capitalised position to deliver the organisation’s ambitious corporate objectives.

Centrus acted as sole financial advisor to North Wales, with Devonshires acting as legal advisor.

“The North Wales Housing Board set a number of strategic aims which included raising new finance to pursue our development program, the simplification of the loan portfolio, reduction of interest costs and removal of onerous covenants which were restricting the growth of the organisation. With the help of our financial advisor Centrus, we delivered against these aims and can now focus our efforts on developing affordable homes across North Wales. We were impressed by our funders’ commitment to the Social Housing sector and, in particular, welcome Scottish Widows to Wales.”

Jayne Owen, Finance and Resources – Director of North Wales

“Centrus has worked with North Wales Housing over the last twelve months to structure and deliver this exciting transaction which sees Scottish Widows’ entry into the Welsh sector for the first time. The reshaped portfolio now has fewer lenders, increased longevity, stable fixed/floating ratios, and lower cost of carry, despite the increase in overall facilities, and will underpin North Wales’ future ambitions.”

John Tattersall, Director – Centrus

“We are pleased to be supporting North Wales Housing’s strategic plan of delivering much needed new affordable housing in the region and have been able to provide a tailored long-term funding solution that meets the requirements of both parties.

This transaction is a further investment for Scottish Widows in UK social housing, our first social housing investment in Wales and demonstrates our experience in and commitment to this nationally important sector.”

Gavin Reid, Associate Director – Scottish Widows

Transaction Overview

Newport City Homes (NCH) has successfully completed a major treasury portfolio restructure, raising £125m of debt facilities, including a debut £95m private placement, advised by Centrus. The private placement marks one of the lowest all-in interest rates ever achieved in the housing sector, aiding delivery of NCH’s ambitious growth plans.

Newport is the third largest city in Wales, home to over 150,000 people. Since NCH was formed in 2009 with the Large Scale Voluntary Transfer (LSVT) of housing stock from the council, it has substantially reinvested in the stock and made a significant contribution to a programme of ongoing regeneration.

NCH is the largest social landlord in Newport, providing homes and services to over 20,000 people. With strong economic growth in the area and boasting the largest housing price growth across the UK in 2018, the demand for affordable housing is deep and increasing. This refinancing will enable NCH to develop around 1,000 new homes over the next four years.

Centrus was responsible for formulating the corporate finance strategy, focused on refinancing expensive debt originally structured on typical LSVT terms with a syndicated bank facility. Recognising its well-established track record for delivery, it was time for NCH to remove the shackles of restrictive covenants and controls, including annual business plan approval by the lenders. The full refinance means NCH has significantly reduced ongoing financing costs and diversified its sources of funding.

In order to repay a syndicated facility between three lenders, a private placement was successfully raised. The private placement benefits from fit-for-purpose covenants, providing long-term interest rate protection at a very attractive coupon and average weighted maturity.

In addition, ongoing liquidity is provided by five and ten-year revolving credit facilities with attractive margins, resetting the relationships with two of NCH’s long-standing banks.

Newport City Homes has now laid a treasury foundation suitable to support its 2020 vision and beyond, creating substantial capacity for sustainable growth over the long term.

“The decision to refinance is never taken lightly, it was important to NCH that we worked with advisers who understood our purpose and ambition. Centrus perfectly fitted this bill. The deal enables NCH to fulfil our potential, supporting and sustaining our existing communities and delivering much needed new housing in South East Wales.”

Ceri Doyle, Chief Executive – NCH 

“We are extremely pleased with the price, covenant structure and other terms in the package of refinancing deals, which will support NCH’s drive to fulfil its potential, supporting and building sustainable communities in South East Wales. Centrus were part of our team from the outset and provided us with excellent support and guidance throughout the whole process. This deal is testament to their commitment to achieve the right funding package for NCH.”

Tim Jackson, Executive Director of Finance – NCH

“NCH achieved a tremendous result which will greatly contribute to its ability to make a step change to the delivery of much needed housing and support for the people of Newport. Centrus appreciated the opportunity to showcase its holistic end-to-end offering, providing independent advice which assisted NCH in the development of the refinancing strategy, lender negotiations, debt raising & structuring, and execution of hedge breakage.”

Paul Stevens, Managing Director – Centrus

Transaction Overview

One Housing has secured £150 million to continue to sustainably expand their housing, care and support portfolio across London and the South East. The new finance was raised through approaching North American investors, alongside those in the UK, resulting in a diversified final investor group which includes one US investor who is new to the social housing market.

The deal is a mix of secured and unsecured finance ranging from 10 to 20 years in duration at a blended interest rate of just under 2.84%. Over 50% of the finance (£80m) was raised on an unsecured basis. For the secured funds, One Housing used a Numerical Apportionment Basis (‘NAB’) security structure, which is the first time it’s been applied in a private placement market transaction.

The finance will be put towards the delivery of One Housing’s Corporate plan ambitions to develop 5,000 new homes over the next ten years, alongside expanding their care and supported housing offer.

“We have successfully raised £150m from the private placement markets at a blended interest rate of just under 2.84%. We were able to attract interest from investors achieving a significantly oversubscribed orderbook. This demonstrates investors’ confidence in the diversity of One Housing’s service offering and our commitment to sustainable growth.”

Ebele Akojie, Chief Financial Officer – One Housing

“US investors again provided a competitive alternative to the UK market with significant funding flexibility, meaning One Housing achieved a very strong outcome despite challenging market conditions. We at MUFG were pleased to bring a new investor to the sector, and it is especially encouraging to see not only the increased demand for UK social housing in the US but also the ability of investors to meet borrowers bespoke funding requirements.”

Mark Wells, Head of Structured Debt Capital Markets – MUFG in EMEA

“This transaction represents attractive and flexible financing to support OHG’s ongoing development programme. This transaction has been carefully planned, reflecting OHG’s sophisticated approach to aligning their financing with their business & strategic plan needs.”

Jonathan Clarke, Managing Director – Centrus

Transaction Overview

The University of Essex appointed Centrus to undertake a complete review of their existing debt and hedging arrangements, in preparation for capital raising. The fast-growing competitive university, which was awarded ‘University of the Year’ in 2018, currently has 16,500 students across 3 campuses.  The review assessed the current use of cash resources, considered the balance between fixed and variable debt, and ensured that the university had sufficient liquid facilities.

Centrus Solution

Centrus evaluated the current portfolio to ensure its compatibility with current spending trajectories, and developed a scenario impact model in order to arrive at a recommendation, based on the agreed objectives.

The conclusion of the review was the recommendation that the university repaid a fixed-rate bank facility from cash reserves and for the cash to be replaced with a capital raise of £20m through a competitively priced 3-year bank Revolving Credit Facility (RCF).

Centrus supported the University through the repayment and breaking of the fixed rate loan and in establishing the new facility.

“Centrus provided excellent support throughout the process and we found them to be highly professional, efficient and knowledgeable. They used their technical knowledge to ensure we got the best outcome and market knowledge to smooth the overall process. They demonstrate an excellent understanding of the Higher Education sector and of our institution’s debt and liquidity needs, which gave everyone involved confidence in the excellent outcome we achieved.”

Marc Albano, Deputy Director – University of Essex

“We were very pleased to work with the University of Essex on this transaction which resulted in more flexible bank funding together with near-term interest savings.”

Tony Oakley, Director – Centrus

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

Transaction Overview

An ambitious and growing Housing Association, Sovereign has significant debt requirements to meet its development programme over the next five years. Centrus helped Sovereign to develop a corporate finance strategy that focuses on reshaping its portfolio in readiness for continued capital markets access over the coming years.

As a result of this strategy Sovereign has entered into a ground-breaking three-year £250m unsecured revolving credit facility, syndicated across five lenders. This deal will provide the 58,000-home HA with financial security through a potentially uncertain political and economic period.

Centrus Solution

Centrus assessed Sovereign’s current treasury portfolio and identified a potential Tier 1 banking group that could offer Sovereign the lending capacity and ancillary services required. The new approach would require a more “corporate” approach to the management of banking relationships, with Sovereign able to shape its treasury portfolio to serve its needs whilst working constructively with key lenders so they are able to continue providing balance sheet and DCM support.

Given Sovereign’s large development programme and ongoing liquidity requirements, Centrus advised that a bridge facility would not present good value for money and instead recommended an innovative solution: an unsecured RCF with extension options to five years. This provided immediate liquidity for Sovereign with no requirement to secure a facility that is unlikely to be drawn. The unsecured RCF was structured as a club deal with five lenders each taking £50m.

This is Sovereign’s first unsecured borrowing and one of the first major unsecured bank facilities in the sector. In parallel to the new RCF process, Centrus negotiated a restructure of an existing facility in order to release significant capacity under Sovereign’s gearing covenants.

The deal was arranged by Centrus, who negotiated on Sovereign’s behalf.

“We have an ambitious strategy, to take control and build more affordable homes, to invest more in our existing properties and communities, and to become leaders in customer service. To achieve this we need the fast and flexible access to finance offered by this new deal in order to keep building much-needed affordable homes through potentially uncertain times ahead.”

Barry Nethercott, Chief Financial Officer – Sovereign

“We were very pleased to work with Sovereign to deliver this exciting and innovative transaction which delivers large scale, unsecured bank facilities on competitive terms. The facility includes a new lender as Sovereign continues to widen its banking group on attractive terms and provides flexibility and a strong platform from which to approach the debt capital markets.”

Phil Jenkins, Managing Director – Centrus

Transaction Overview

Centrus advised Broadland St Benedicts Limited (“BSB”) on the development funding of 55 high quality new residential units from February 2019 as part of the Canary Quay Scheme at Norfolk.

The Real Estate development is located on the north bank of the River Wensum near Norwich City Football’s grounds. The site is on a sustainable location and it is a key regeneration opportunity for the city to deliver new housing.

The Centrus team was appointed by BSB to raise £6.7m of development funding. The opportunity was showcased through a detailed funding prospectus and attracted substantial interest from development funding lenders.

The competitive process was met with positive responses from the existing relationship banks and from a range of new prospective lenders, enabling BSB to select an optimally priced and structured facility.