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Last month North Star completed its long-held ambition to consolidate the Group’s legal structure and refinanced existing debt facilities via its first private placements. The restructure and refinance will help North Star develop 600 new homes over the next eight years, enabling us to build new homes and continue to invest in existing homes and communities. It places North Star in a strong position for the future.
Three Registered Provider’s (“RP”), Teesdale Housing Association, Darlington Housing Association, and North Star Housing Group (the previous parent RP) have transferred their engagements into Endeavour Housing Association, which has been re-branded North Star Housing Group. The resulting single RP is more financially resilient whilst benefiting from much simplified operations and governance.
The new funding, which was provided by Pension Insurance Corporation and Aberdeen Standard Investments, sees £110m, of which £10m is deferred by 24 months, raised via two notes comprising separate maturities with a weighted average life of c. 36 years, an attractive covenant package and all-in coupon. The £100m spot element of this funding has refinanced North Star’s treasury portfolio concurrent consolidation which sees five banks fully repaid with hedging break costs of c. £6m incurred. The £10m deferred funding, supported by a refreshed £25m RCF, fully funds North Star’s development ambition for at least the next five years.
This was a complex transaction completed during a period of significant economic uncertainty that nonetheless managed to take advantage of a window of stability to access low long-term interest rates. This provides North Star with a robust long-term financial platform from which to deliver its vision for the future.
North Star received financial advice from Centrus, working with management to develop strategy, supporting implementation, and arranging the private placement. Trowers & Hamlins advised on the legal financing aspects, including the property security elements which will underpin the new financing arrangements and governance elements linked to the consolidation of the group.
James Walder, Executive Director of Finance & Business Support at North Star Housing Group, commented that: ‘The completion of the treasury and group restructure is an important milestone for North Star Housing Group. We have a clear strategy to both invest in our existing assets and develop new homes. Delivering on our treasury strategy in these highly uncertain times has been a real achievement for North Star Housing Group and we look forward to delivering our ambitious plans for the future. We would like to thank Centrus and Trowers & Hamlins for their expertise, advice and support on this project.’