Centrus advises CHP on £100m bank finance raising to support ambitious growth plans
Based in Chelmsford, CHP owns and manages 10,000 homes throughout Essex, enabling economies of scale and geography to be harnessed as reflected in strong financial performance and peer group benchmarking results.
With its track record of development, CHP’s vision is to provide a new home every day and to delight its customers. CHP has a strong ‘A’ rating from S&P and the strongest possible ratings for governance (G1) and financial viability (V1) from The Regulator of Social Housing. CHP is also frequently recognised through external awards and accreditations.
Centrus has been the retained corporate finance advisor to CHP since 2017, and has previously successfully advised on CHP’s retained bond sale through its Myriad Capital PLC subsidiary. Following a comprehensive funding options appraisal, it was determined to raise up to £100m from the bank market as flexible liquidity to support the development program. Within the context of undertaking a competitive procurement exercise, we engaged constructively with existing relationship banks, Lloyds and Barclays, to establish if ‘win-win’ outcomes could be achieved, including unlocking additional development capacity for the future. The outcome of this comprehensive approach was a very positive response from the existing banks and from a range of prospective lenders, enabling CHP to benefit from a multitude of choices and to consequently optimise the terms and conditions, including the cost of funds.
Paul Edwards, Deputy Chief Executive and Chief Financial Officer of CHP, commented: CHP had two main aims in this process: Maximising capacity for growth and increasing liquidity in these uncertain times. I’m delighted to say that we have achieved both of these – building on our strong relationships with existing lenders Lloyds and Barclays and starting a new relationship with National Australia Bank too. We’ve set up the right treasury structure to deliver our ambitious new corporate plan which focuses on building a home per day, and at the same time increased our secured revolving credit facilities to act as further risk mitigations.
The Centrus team, throughout the project, added huge value and were instrumental in helping CHP deliver a great result. The Information Memorandum they produced for us provided everything the prospective lenders needed in order to produce really competitive terms. They then worked with my team and the Board to select and negotiate the best terms from the three lenders.
Paul Stevens, Managing Director at Centrus, commented: CHP have achieved a truly excellent result, enhancing existing strong banking relationships including unlocking additional development capacity at negligible cost, whilst at the same time establishing a new relationship with NAB which fits well with the overall treasury mix and enables strategically important diversification of funding. We were delighted to work with CHP, delivering outcomes that exceeded expectations and which leave CHP optimally placed to maximise growth opportunities.
Claire Simpson, Relationship Director in Lloyds Bank Commercial Banking’s Large Corporates team, said: CHP is a modern, progressive housing association which is playing a key role in helping to tackle the housing shortage in the area where it operates. This latest fundraising supports its strategy of raising finance to provide services and build more high-quality affordable homes. Our support for CHP and the wider sector is part of our commitment to helping Britain prosper.
Andy Taylor, Director, Barclays Public Sector - Social Housing commented: Barclays has a strong and longstanding relationship with CHP and for us to provide them with further funding to support their development programme of 350 new homes a year was an obvious fit with our ongoing commitment to the Social Housing sector. We continue to work with our valued clients as they develop homes that provide much needed shelter, and support, to those in our communities.
Michael Carr, Director at National Australia Bank said: National Australia Bank was very pleased to close this transaction with CHP as part of our new UK social housing strategy. The transaction enables us to commence a relationship with CHP and will help it continue its invaluable work in providing much needed homes in the Essex region. The NAB UK social housing team is committed to building relationships with housing associations to help reduce the housing shortage. Providing finance to this sector isn’t just about assets and financial transactions; it’s about projects that make a difference to people’s lives.
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