The deal significantly extends the level of commitment from NatWest to the 5,000-home housing association, in terms of both loan maturity and funding amount. This additional commitment, coupled with a unique approach to the covenant suite, will allow GCH to continue delivering its important investment in existing and new homes.
As part of its plans, GCH will spend £19mn on energy efficiency improvements ensuring all its homes are at least EPC C by 2030. It will also invest a further £60mn to deliver almost 400 new homes – including 150 through the regeneration of some existing estates – to help tackle housing need in Gloucester.
Anne Southern, Executive Director of Business Resources at Gloucester City Homes, said: “In a time when the sector is facing so many challenges in tackling the housing crisis, GCH is delighted to have completed a new funding arrangement with our existing funders at NatWest and we look forward to building on our already strong relationship with them.
“The new arrangement will enable us to continue to invest in communities across Gloucester, improve the energy efficiency of many of our homes, deliver regeneration in our communities and build much-needed new homes. The team at NatWest, along with those at Savills Financial Consultants and Anthony Collins Solicitors, have worked with us to create a deal that allows us to build on our success and also create certainty on cost for a significant amount of our funding.”
The total portfolio refinancing by GCH sees £100mn in existing loans extended to a maturity of 10 years, with a renegotiated covenant suite and the restructure of an interest rate swap with a more effective arrangement aligned to the new funding.
The new £30m funding is a five-year Revolving Credit Facility (RCF), also with NatWest.
The new covenant suite has been agreed between GCH and NatWest ready for use in the future when GCH is ready to move to using corporate covenants. This is the first time this approach has been used by NatWest and provides certainty on next steps for GCH and NatWest as GCH continues to deliver against its business plan.
Alexander Morgan, Director at Savills Financial Consultants, said: “Our team is very proud to have been able to support Gloucester City Homes through this complex refinancing process which has spanned many months and encountered several economic and sector-specific challenges along the way. The result provides a fantastic base for GCH to commence the exciting next stage of its development from stock transfer in 2015. GCH is ambitious to do all it can for its customers and this funding deal gives the team the flexibility to continue investing in making homes more affordable, as well as regenerating existing areas.”
Dean Holleyman, Director, Housing Finance at NatWest, said: “We are delighted to be able to provide Gloucester City Homes with this new funding to enable more people to have an affordable, energy-efficient and safe place to call home. We have supported Gloucester City Homes since its inception and, during that time, we have seen the great work it does in the communities that it serves. We are proud to help GCH continue this great work with further investment in its new and existing homes in Gloucester.”
Natalie Singh, Partner at Anthony Collins, said: “We are pleased to have supported GCH on this significant transaction which secured both the restructuring of its existing funding and a new RCF, allowing GCH to continue to deliver investment in its communities. Our team advised GCH in respect of all legal aspects of this transaction including the funding and the property charging elements, with our key focus, at all times, being on GCH’s requirements and its funding strategy, ensuring GCH can continue to deliver regeneration and the development of new homes.”