Hertfordshire association agrees new £45m facility with Barclays

Paul Richmond, director of finance and resources at Watford Community Housing, told Social Housing that in securing this month’s new funding, the provider was keen to keep its debt book “as simple and straightforward as possible, so we didn’t want to add a new loan book on top”.

Covenants and securities are in line with the existing facilities, he said, with a term length of five years and a floating rate.

Asked whether any costs had been incurred in replacing the existing facility, Mr Richmond said: “Given we only signed the deal last year, it was more a continuation of that existing arrangement, rather than us having to tear up and rewrite anything. And Barclays are clearly keen to retain their existing partners.”

He added: “We already did all of the difficult work last year, in bringing our loan terms onto… a more modern basis.”

Mr Richmond said that the extension was “very much about liquidity”, meeting two key aims. “One is developing our future development aspirations, making sure we’ve got enough liquidity to do that, and the other point is maintaining a strong financial footing given the current market situation.”

On 3 June, the Regulator of Social Housing’s (RSH) quarterly survey showed £4.5bn in new funding secured by providers in the final quarter of 2018/19, representing the highest amount of new finance arranged in a single quarter since the RSH began collecting this data in 2008.

This echoed the estimated figure reported by Social Housing in March, which some commentators attributed to providers pulling their funding requirements further forward ahead of the UK’s planned exit from the EU, which had originally been scheduled for 29 March.

Addressing the decision to secure the funding at a time of continuing uncertainty over the UK’s departure date and terms, Mr Richmond said: “I don’t think we can put our plans on hold for Brexit, but we just need to make sure we’ve got the financial platform to do so and I suspect each HA is going to manage the situation differently based on their own view of exposure to Brexit.”

He added: “Clearly in our minds we have a robust plan in place for Brexit, regardless, but this is additional security for us and it means we can keep our development programme moving forwards.”

Mr Richmond said that, where sales risk was concerned, although Watford Community Housing has a development strategy that includes some level of exposure, “it’s very much a managed level of market exposure and it’s something we are actively reviewing on an ongoing basis with our board, and we also have a number of golden rules that go alongside it as well”.

On its development programme, Mr Richmond said that the association would continue to support its commitment to 1,000 new homes by 2020, while a new business plan target would be announced in due course.

Mr Richmond said that at present, the RCF was the right requirement, but where longer-term funding is concerned, the landlord was “open-minded” about what this might be, and who might provide it. “We would look at the markets, we’d look at the development programme and then we’d go and find the appropriate funding.”

Commenting on the announcement of the deal, Andy Taylor, director at Barclays Corporate Banking, said that the deal further underlines the bank’s “ongoing commitment to the social housing sector”.

He added: “Barclays has supported Watford Community Housing for many years as they have developed and grown into a key provider of affordable housing, and to agree further funding to support their ambitious development programme was a natural decision for us.”

Watford Community Housing was advised by JCRA, with legal advice from Devonshires.