North Wales’ largest housing association completes £155m refinancing deal

North Wales’ largest housing association, Adra (previously known as Cartrefi Cymunedol Gwynedd) has just completed a refinancing deal worth £155m with new lenders.

The company, with its headquarters in Bangor, is a leading north Wales supplier of social and affordable housing and was established in 2010 to take on the housing stock from Gwynedd Council.  Adra was previously known as Cartrefi Cymunedol Gwynedd (CCG) and is the largest housing association in north Wales. The housing association manages over 6,400 homes.

As the demand for affordable homes and homes for social rent is set to increase across north Wales, securing £155m in new funding at very attractive interest rates will mean significant future interest cost savings and will increase Adra’s borrowing capacity by £72 million, to help build more affordable homes in the region.

Rhys Parry, Adra’s Director of Finance, said: “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. 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.”

Rhys added: “For the past ten years, Adra – as we are now known – has developed a well-established track record for delivery. With 178 units currently in development, Adra has a strong reputation for building new properties.  The refinancing now means we can start developing over 1,350 additional homes over the next 10 years. This is around 1,000 more homes than we would have been able to deliver under our old funding arrangements.”

“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 £500m 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.”

Sohail Singal, Associate Director at JCRA – now part of Chatham Financial, commented: “We were delighted to act as debt and treasury adviser to Adra and achieve such a great result in refinancing its legacy debt. 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 commented: “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. Nigel Williams, a Director in the Affordable Housing Valuations Team at Savills commented: “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.”

This refinancing comes at a time when Adra celebrates its tenth year in existence having undergone a new look and name when it rebranded from Cartrefi Cymunedol Gwynedd (CCG) to Adra as part of a wider drive to modernise the company.