Creating a trailblazing organisation with empowered residents who have a real say
Following the merger of Greenfields Community Housing and Colne Housing in 2020, Eastlight Community Homes is the largest Community Gateway association* in England and one of the largest housing associations in the East of England with over 12,000 units owned and managed in Essex and Suffolk.
As part of the merger commitments, Eastlight announced that it will build 1,300 extra homes in addition to the already planned 2,500 homes over the next five years and will invest in addition to its gross spend an extra £8 million to improve existing homes, while spending an additional £500,000 for community causes.
To ensure that residents have a real say and can influence the board’s decision-making, Eastlight set up a new Customer Influence Committee in May this year. With up to ten members the committee will oversee and support the Board, as well as provide input on key strategies such as for example Eastlight’s Community Empowerment Strategy and Service Delivery Strategy.
Private Placement fulfils all of Eastlight’s financing objectives
To raise funds for its post-merger development programme, Eastlight turned to NatWest to advise and arrange the housing association’s inaugural Private Placement post-merger.
Eastlight’s objectives for this transaction were clear:
- to achieve a minimum deal of £100m;
- to focus on 50% spot and 50% 12-month delayed funding;
- to realise a range of maturities;
- to obtain a competitive documentation package; and
- to establish Eastlight in the Private Placement market.
In its role as Sole Agent, the NatWest team marketed the transaction to a variety of UK and North American investors in order to maximise momentum and achieve the strong competitive tension required to help Eastlight realise its funding objectives. The deal team selected investors based on their track record in investing in the housing association sector, and in addition included a number of new investors, who had previously expressed strong interest in investment opportunities in the sector.
The Eastlight and NatWest teams prepared a detailed investor presentation and conducted a virtual roadshow with a group Investor Call, which was very well attended. An intense Q&A process followed, focused mostly on Eastlight’s development programme, merger performance, Covid-19 impact, Welfare reform, and building safety.
The comprehensive preparations paid off, with total offers of £620m coming in from ten investors. Given the strength of the order book, Eastlight was able to upsize the transaction to £120m and achieve its core financing objectives, including:
- very attractive pricing across a range of long dated tenors from 15-35 years;
- a deferral for 12 months at minimal cost and an ideal transaction structure;
- tight pricing reflective of Eastlight’s very strong credit proposition: the overall interest rate for the debut private placement will generate significant funding cost savings, totalling over £1m per year more than expected;
- gaining four new long-term North American institutional investors - key for future access to the US market.
Debut transaction allows Eastlight to develop strategic relationships with new investors
George Flynn, Corporate Financing & Risk Solutions, NatWest, commented on the transaction: “We’re delighted to have supported Eastlight with their inaugural Private Placement. The transaction’s competitive pricing and strong investor interest, including four new long-term North American institutional investors, is testament to Eastlight’s credit strength and management’s efforts during the distribution phase. It positions Eastlight very strongly with supportive investors and will enable our customer, together with its communities, to create affordable homes and great neighbourhoods. At NatWest we’re committed to the social housing sector, supporting housing associations in showcasing their credentials and optimising the approach to institutional investors.”
Emma Palmer, Chief Executive, Eastlight Community Homes, said: “Thank you to the whole NatWest team, helping us to achieve such a strong outcome. Our Board and Committee members are equally pleased with the investors we attracted, which allows us to develop a number of new strategic relationships.”
David Hall, Executive Director Resources, Eastlight Community Homes, added: "We were clear when we created Eastlight in July last year through a merger, that we would ensure residents felt the benefits of our increased scale. This private placement at a very competitive price is clear evidence of this and will go a long way to delivering our promise of providing 3,800 new homes between 2021 and 2026. We are very grateful for the support of our team of advisors who helped to complete this exciting deal for us. Our Private Placement debut marks an important step in our journey, setting a magnificent foundation to deliver on the ambitious commitments that we have made.”
* Eastlight is a registered social housing provider and is regulated by the Social Housing Regulator under the same regulatory framework that applies to other housing providers. Eastlight is established as a co-operative and community benefit society as its legal status. Eastlight is also established as a community gateway association – this means it has the National Housing Federation model rules but with additional clauses that promote greater resident involvement and engagement. The community gateway approach is intended to promote greater resident involvement and accountability and has strong alignment with the Governments policy intention to increase resident voice in the current white paper
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