A North Wales housing association has completed a £155 million refinancing deal with new lenders to help it build more “affordable” homes.
Adra, previously known as Cartrefi Cymunedol Gwynedd, is based in Bangor and manages over, 6400 homes, making it one of the largest in North Wales. It was formed out of a stock transfer of local authority homes from Gwynedd council in 2010.
The funding, achieved at what the organisation says are “very attractive interest rates”, will mean it will make “significant” interest cost savnigs in future. The deal also increases Adra’s borrowing capacity by £72 million.
“Securing this new refinance deal gives us much more flexibility to grow as a company and has enabled Adra to reduce its overall interest rate payable by half,” said Rhys Parry, the housing association’s director of finance.
“It was time to remove the restrictive covenants and business plan controls that we faced on the legacy debt as a result of being a stock transfer association, so that we could fulfil our potential to deliver new homes and drive even more investment in our current stock, delivering much needed new housing across north and mid Wales.”
Parry added: “We are also very pleased that Adra’s financial and operational strength meant that we were able to attract significant interest from lenders. Funding offers of almost £500 million were received — three times higher than our funding requirement. It is also particularly pleasing that we attracted a new lender to the Welsh social housing sector, and we look forward to enjoying long-term relationships with all our lenders.”
JCRA, now part of Chatham Financial, acted as debt and treasury advisor to Adra.
Sohail Singal, JCRA’s associate director, said: “The combination of a private placement and new bank funding has allowed Adra to significantly cut interest payments. The team can now grow and achieve its ambitions to support the local community with new homes.”
The refinancing package included Adra’s debut private placement, with NatWest Markets acting as sole arranger.
George Flynn, vice president at NatWest Markets, said: said: “As a bank we are delighted to have supported Adra on this private placement transaction, delivering a new investor to the Welsh Social Housing market. This transaction provides a flexible and attractively priced offering and is testament to the value of running a syndicated and competitive process.”
Law firm Trowers & Hamlins advised on all legal aspects of the project. The team was led by partner Neil Waller, who said: “We are very pleased to have played our part in achieving this fantastic outcome for Adra, demonstrating once again our commitment to support our Welsh housing clients on large scale refinancing projects.”
Savills provided the security valuations. The company’s Nigel Williams, a director in the affordable housing valuations team, said: “Savills is very proud to have been able to work on this important deal. We used our experience from working with Welsh stock transfer organisations to ensure Adra was able to make the most efficient use possible of its homes as loan security.
“This meant Adra could value its homes more highly – using Market Value Subject to Tenancies (MV-STT) for 60% of the homes. As a result, fewer homes were required as loan security, helping increase Adra’s overall financial capacity and supporting its increased stock investment and development programme.”