Case Studies
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Coastal Housing Group completes restructure of £250m portfolio with a new £60m private placement and £50m Revolving Credit Facility unlocking development of over 900 new homes

Coastal Housing Group (‘Coastal’) has now completed its refinancing project with its first institutional private placement bolstering liquidity, enhancing risk management, and funding the groups ambitious plans to deliver over 900 new homes over the next five years.

Swansea based Coastal is a prominent provider of social housing in South Wales and a recognised expert in complex regeneration with over 6,000 homes and a portfolio of commercial properties under management.

Coastal’s legacy treasury portfolio has been materially simplified with the number of active finance partners reduced by 2. Longevity has been increased by 25%, the weighted average cost of capital has been reduced by 10%, and covenants which are now more harmonised, have been reset unlocking additional development capacity and enhancing financial resilience.

Key banking partners have restructured the £140m of existing lending arrangements and provided a new £50m RCF whilst three lenders have been refinanced in full via a new £60m placement with Aviva Investors (on behalf of the Aviva UK Life annuity business).

Centrus acted as sole financial advisor to Coastal supporting strategy development, implementation, and arrangement of the private placement. Devonshires advised Coastal on the corporate and financing aspects, Blake Morgan advised on the property security elements, and Addleshaw Goddard acted as investor counsel.

Simon Jones, Finance Director - Coastal Housing Group This is the largest refinance that Coastal has carried out, and to deliver it in the current environment is testament to the hard work of everyone involved within Coastal, our advisors and our funders. We are delighted to be working with Aviva, who demonstrated a strong understanding of our business, our social purpose and strategic goals. We are also pleased to continue working with key funding partners while reducing the number of active relationships we have. It was important to us not only to take advantage of current interest rate conditions, but also to ensure that our funding portfolio was fit for the longer term. We have now achieved this with a portfolio consisting of strong funder relationships and harmonised, up to date covenants. We have also increased our proportion of fixed rate debt while providing new liquidity for the medium term.
Munawer Shafi, Head of Structured and Private Debt - Aviva Investors This transaction demonstrates our ability to structure bespoke funding solutions, aligned to counterparty businesses and investors’ needs. The counter-cyclical nature of social housing, coupled with high relative value and a strong regulatory underpinning, make it an attractive sector in the current environment. This deal fits well with our strategy of investing in long-dated predictable cashflows, which aim to offer attractive risk adjusted returns to our investors.
John Tattersall, Director - Centrus Coastal delivers high social impact and this complex transaction re-positions treasury arrangements to optimally support the ongoing delivery of new homes and services over the next five years. Risk management has been enhanced, borrowing costs minimised, and overall financial resilience maximized. This outcome is very strong. It demonstrates the ongoing attractions of the social housing sector to long term investors and it is great to see Aviva entering the Welsh market. It is also a product of the continued support of key banking partners who have re-affirmed their commitment to the sector.

Press release date: 20th July 2020