Welsh Housing Partnership completes £68m refinance

In the latest funding exercise, the newer entity’s two bank revolving credit facilities were refinanced. In total, £68m of bank debt was refinanced via a new 10-year, £38m fixed rate note from the Pension Protection Fund (PPF) and a 12-year, £30m fixed rate loan from the Welsh government. Interest rates were not disclosed.

To date, WHP2 has acquired 573 properties across Wales. They have been leased to the registered social landlords’ partners and, in turn, made available on an intermediate (discounted) rent basis to tenants.

All properties charged for the latest refinancing are owned by WHP2, but leased to the registered social landlord members, which rent the properties out.

WHP1 was refinanced around four years ago via a private placement.

According to Centrus, which advised on the latest deal, the structure was “leveraged and capital efficient”, increasing the supply of low-cost homes without consuming the investment capacity of the partners.

Centrus said the transaction had reduced running interest costs by around £2m per year, with the savings passed on directly to the four registered social landlord partners, enabling increased investment in building new affordable homes.

The advisory firm added that risk had been reduced, while negotiated covenants ensured the vehicle’s efficiency.

Simon Jones, chair of WHP2, said: “The WHP concept is a great example of collaboration in the Welsh housing sector enabling the supply of much-needed affordable housing. Across the two WHP vehicles, over 1,500 homes have been available to working people in housing need across Wales that wouldn’t have otherwise been there. 

“Whilst the structure is, by nature, complex and leveraged, the refinancing now complete stabilises the WHP2 financial profile, reducing costs to the partners, whilst ensuring these homes are available for the longer term. It has been great to see PPF and [the] Welsh government support the partnership and recognise the value-add we make to the Welsh housing sector.”

Centrus acted as advisor and arranger on the refinancing, while Devonshires served as legal counsel for WHP2, Addleshaw Goddard acted for PPF, and Capital Law acted for the Welsh government.

WHP2 also engaged HA Financial Solutions to support the work required, as it does not directly employ staff.

John Tattersall, managing director of Centrus, said: “Securing this refinance is a fantastic achievement for WHP2 and its members and ensures much-needed affordable housing is available to those that need it in Wales.

“Given the very structured and highly leveraged nature of the vehicle, delivering the funding was challenging and I’m grateful for the efforts of both my colleagues and all stakeholders involved at WHP2, alongside the flexibility and professionalism of PPF to get this deal done.”