Notting Hill Housing Trust Kate Davies Chief Executive Paul - - PowerPoint PPT Presentation

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Notting Hill Housing Trust Kate Davies Chief Executive Paul - - PowerPoint PPT Presentation

Notting Hill Housing Trust Kate Davies Chief Executive Paul Phillips Finance Director Andrew Sugden Assistant Finance Director December 2012 www.nottinghillhousing.org.uk Disclaimer For the purposes of the following disclaimer, references


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www.nottinghillhousing.org.uk

December 2012 Kate Davies Chief Executive Paul Phillips Finance Director Andrew Sugden Assistant Finance Director

Notting Hill Housing Trust

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Disclaimer

For the purposes of the following disclaimer, references to this presentation shall mean these presentation slides and shall be deemed to include references to any related speeches made by or to be made by the management of Notting Hill Housing Trust (NHHT), any questions and answers in relation thereto and any other related verbal or written communications. This presentation may only be communicated or caused to be communicated in the United Kingdom to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or high net worth entities who fall within Article 49(2)(a) to (d) of the Order (all such persons being referred to as “relevant persons”). Any investment or investment activity to which this presentation relates is available only to relevant persons and will be engaged only with relevant persons. This presentation is being directed at you solely in your capacity as a relevant person (as defined above) for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior written consent of NHHT. The information in this presentation is confidential and subject to change without notice, its accuracy is not guaranteed, and it may be incomplete and is condensed. This presentation will be superseded by the final version of the prospectus or offering document relating to the proposed transaction and where there is a discrepancy between the information in this presentation and in the final offering circular, that contained in the final offering circular takes precedence. These presentation slides may contain certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, is not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although NHHT believes that the expectations reflected in such statements are reasonable, no assurance, representation or warranty can be given that such expectations will prove to be correct. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of the Issuer. It is an advertisement and does not comprise a prospectus for the purposes of EU Directive 2003/71/EC and/or Part VI of the Financial Services and Markets Act 2000 of the United Kingdom or otherwise. The definitive terms of the securities described herein will be described in the final version of the prospectus. Investors should not subscribe for any securities referred to herein except on the basis of information contained in the final form of the offering circular. When available, the final offering circular will be made available to the public in accordance with EU Directive 2003/71/EC and/or Part VI of the Financial Services and Markets Act 2000.

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Table of Contents

1.

Introduction

2.

Overview of Notting Hill Housing Group

3.

Development Programme

4.

Operational Review

5.

Financial Review

6.

Treasury Policies

7.

Expected Issue and Security Summary

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Bridges Wharf, Battersea Harmony, West Middlesex Hospital Myddelton Street, Islington

Introduction

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Key Messages

  • Notting Hill Housing Group (“NHHG”) operates predominantly in London, with its

roots in the Royal Borough of Kensington & Chelsea and the London Borough of Hammersmith & Fulham

  • A member of G15 group of London’s largest housing associations
  • As of 31st March, 2012 – 27,135 units under management with a vacant possession

value of £6.3 billion

  • Strong and long-standing management team
  • Largest HCA grant and development programme in London, supported by sound

financials and a measured approach to balance sheet management

  • Track record of successful development sales
  • Consistently strong credit rating of Aa3 by Moody’s
  • Maintained excellent regulator ratings for governance, management and

financial strength

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Overview of Notting Hill Housing Group

Colville Square, W11 Park Village, Camden Earls Court Mansions, SW5

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Overview and Recent Developments

  • Leading London Housing Association,

formed in 1963

  • Core business remains unchanged

with primary focus on general needs housing in London

  • Strong governance with a skilled and

experienced board

  • Operates within a highly regulated

sector

  • Flexibility to adapt to political change

and respond to Welfare Reform

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High quality assets in high demand areas

  • Completed sale of stock outside of

London which was acquired as part of Presentation Housing Association

  • Largest HCA allocation in London and

3rd largest in the country (£58m)

  • Committed funding in place to fund

development until 2015

  • Tapped 5.25% 2042 Bond in 2011 for

£120m, increasing size to £300m

  • Continued renewal of Board

membership

Overview Recent Developments

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Notting Hill Housing Trust (“NHHT”) The Issuer and major asset

  • wner

NHHG Group Structure

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Touareg Trust Student accommodation Notting Hill Home Ownership Shared

  • wnership

Notting Hill Commercial Properties Investment vehicle (for build for sale

  • peration)

Notting Hill Market Rent Market rent Registered with the HCA with Charitable Rules Presentation Market Rent Market rent

NHHG Properties Units Social Rented 15,872 Shared Ownership Housing 4,406 Temporary Housing 2,298 Supported Housing 1,348 Student Accommodation 839 Market Rent 698 Intermediate Rent 54 Leasehold in Management 1,620

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Governance Structure

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Board Members Executive Management Team

Paul Hodgkinson (Chairman) Alex Phillips Sophie Warner Debra Yudolph Mohan Yogendran Sue Hunt Linde Carr Bukky Bird Kate Davies (Chief Executive) Paul Phillips (Finance) John Hughes (Development) Andy Belton (Operations) Andrew Muir (Corporate Services) Kath King (Asset Management) Alastair Moss

A broad range of commercial and operational skills

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NHHG Housing Stock by Location

As of 31 March 2012

Group Stock Map 27,135 properties under management

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Core Asset Base

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Average gross cost per social rented unit - £92,500

Borough Units Share of Total Hammersmith & Fulham 4,688 17% Kensington & Chelsea 4,281 16% Hounslow 2,688 10% Lambeth 2,593 10% Ealing 2,283 8%

Top five locations of NHHG assets (61% of all stock)

Bramham Gardens, Kensington & Chelsea, SW5 Fabrik, Brixton, SE5

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NHHG Housing Stock by Type

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2010 - Acquisition of Presentation 5,000 10,000 15,000 20,000 25,000 30,000 2006 2007 2008 2009 2010 Leasehold in management Supported Housing Student Accommodation Intermediate Rent Market Rent Leased Housing Temporary Housing Shared Ownership Social Rented

2008 2009 2010 2011 2012 30,000 25,000 20,000 15,000 10,000 5,000 Leasehold in Management Supported Housing Student Accommodation Intermediate Rent Market Rent Leased Housing Temporary Housing Shared Ownership Social Rented

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Development Programme

Great Eastern Quays, E6

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Affordable Housing Programme

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  • NHHG has received an allocation for grant of £58m. The basis of the programme is:
  • 1,244 rented, 1,066 shared ownership
  • Circa 93% of sites for the affordable housing programme are in our

control/ownership and 66% have planning permission in place

  • Affordable Rents capped at a maximum of £244 per week
  • Average rent is 65% of market (at 40% today)
  • 50% of relets converted to higher Affordable Rents, to increase income by

£3.4m per annum

  • No sales of existing stock to support bid
  • Going forward, overall target for NHHG development programme remains 1,200

homes p.a. but may increase to 1,500 (including commercial development)

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Map of NHHG Development Programme

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  • HCA grant will support development at these sites
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Recent Typical NHHG Development

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  • Lower Richmond Road, Richmond
  • Completed March 2012
  • 52 residential properties, 20 social

rent and 32 shared ownership

  • Two commercial units
  • Cost: £12.4m Grant: £6.8m
  • Shared Ownership Statistics
  • Average sales period: 3 weeks
  • Average first tranche: 43%
  • First tranche profit: £1m
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Operational Review

Bridges Wharf, Battersea, SW11

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Key Performance Indicators

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Measure 2011 2012 Comments Homes completed 895 1,580 High levels of completions to meet HCA 2011 cut off for "old" grant rate on a lot of schemes Sales time to completion (weeks) 7.8 14 31 March a peak - falling steadily ever since - now 9 weeks Rent collection rate 98.9% 100% Rent collection rates improving Rent losses due to voids 1.98% 1.60% Voids improving Customer satisfaction 67% 74% Customer satisfaction up from 58% to 74% over two years, but still a way to go

  • repairs contracts difficult
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Effects of Welfare Reform on Core Social Rent Business

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Issue Description NHHT Impact Under occupation Limits benefit payments to working age households deemed to be under-occupying We estimate that about £1.2m of income (1.2%) is at risk Benefits cap (From April 2013) The maximum benefit payable to a non working household will be £26,000 pa We estimate that amount at risk is about £0.6m Universal credit Housing benefit will be paid to tenants – phasing in from 2013 to 2017 Additional training to housing

  • fficers and improving
  • systems. Can comfortably

withstand a doubling of arrears Affordable rent Ability to charge higher rents Capped rents at £244pw The social rented housing business has an expected 2012/13 turnover of £97m (28%

  • f group turnover). It is prudently run and can withstand these changes.
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Welfare Reform – Key Statistics

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4% 49% 23% 24%

Social housing rent via Housing Benefit from tenants of working age Social housing rent via Housing Benefit from tenants not of working age Social housing rent not from Housing Benefit Other turnover

Small proportion of turnover impacted by Universal Credit

  • Of those tenants that pay rent directly already, 54% pay by direct

debit/standing order and 26% by swipe cards

  • This provides a useful benchmark for our tenants’ behaviours and we

hope to replicate this upon implementation of Universal Credit

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Financial Review

Myddelton Street, Islington

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  • Operating surplus before interest of

£47.7m

  • Group surplus of £31.6m
  • Gearing (Loans/Housing at cost)

remains low at 42% versus G15 average of 45%

  • Successful sales programme
  • Committed, undrawn funding lines

available of £225m (at 31 March 2012)

Financial Highlights

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Year Ending 31 March 2012 Historical 5-Year Performance

  • Income from Lettings up 36%
  • Reserves up from £183m to £262m
  • Housing assets valued at cost up

96%

  • Homes under management up 45%
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NHHG Key Financial Statistics

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Group highlights - five year summary 2011 2010 2009 2008 For the year ended 31 March Restated Statistics Operating Surplus (£m) 40.9 29.7 19.1 30.8 Housing Assets at Cost (£m) 2,226 2,130 1,279 1,223 Operating Margin 16% 14% 12% 16% Rent losses (void and bad debts as % of rent and service charges receivable) 1% 4% 4% 4% Rent arrears (gross arrears as % of rent and service charges receivable) 12% 14% 10% 11% Gearing (total loans as % housing properties at cost) 37% 38% 34% 27% 2012 47.7 2,404 22% 2% 11% 42% Surplus after Interest and Tax (£m) 9.8 8.1 5.9 19.8 31.6

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661 London Road, Hounslow

Treasury Policies

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Summary of Debt and Liquidity Position

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NHHG Debt Maturity Profile

Summary of NHHG Debt Position at 31 March 2012

  • Average life of drawn debt:

21 years

  • Average cost of drawn debt:

4.03%

  • Average drawn bank debt margin:

0.58%

  • Total Borrowings:

£1,008m

  • Undrawn facilities:

£225m

  • Cash Balance:

£16m

  • No cross default between NHHT and other Group companies

Loan Covenants

  • NHHT Interest Cover Covenant is 113% (actual was 240% at 31 March 2012)
  • NHHT Gearing Covenant is 65% (actual was 38% at 31 March 2012)
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Summary of Treasury Position as at 30 November 2012

Strong interest rate management is optimised with the use of derivatives Maintain prudent level of variable rate debt (greater flexibility for sales receipts) Circa 7,000 unencumbered properties remain in NHHT after bond issue

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Latest NHHG Debt Position NHHT Debt Mix Position

  • Fixed

62%

  • Floating

28%

  • Inflation linked

10% Facilities (£m) Drawn (£m) Undrawn (£m) Group 1,244 997 247 NHHT Only 832 672 160

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Expected Issue and Security Summary

Nevern Square, Earl’s Court, London

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Potential Transaction

  • Issuer

Notting Hill Housing Trust

  • Deal size:

£250 million

  • Maturity [20 – 25 years]
  • Moody’s Rating:

Aa3 (negative outlook)

  • Security:

Secured on 1,927 properties Secured investors rank senior to Social Housing Grant

  • Asset Cover:

105% EUV-SH, 115% MV-ST

  • Information Covenants:

Compliance certificates, accounts, meetings on request

  • Use of Proceeds:

General Corporate purposes

  • Bookrunners:

Barclays, Goldman Sachs and Lloyds Bank

  • Security and Bond Trustees:

Prudential Trustee Company Limited

  • Expected timing of issue:

Following completion of the roadshow (subject to market conditions)

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Summary of Bond Security

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  • 1,927 properties with

value as security for bondholders

  • All secured properties

within London

  • Social rent, keyworker

rent and supported housing units

  • £616m - indicative

vacant possession value

  • £366m – value as bond

security

Number of Units Value for Bond Security Purposes Secured Amount EUV–SH 100 6.6 6.3 MV–T 1,764 359.7 312.8 Nil value 63 nil nil Total 1,927 366.3 319.1 Number of Units Social Rented 1,812 Supported Housing 32 Keyworker Rented 20 Nil value 63 Total 1,927

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Conclusion

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  • A diverse prime property portfolio
  • perating within London – 61% of

properties in 5 core London locations

  • Operates within a highly regulated

sector

  • Strong financial business with

borrowing capacity to invest in future high value housing development

  • Conservative and well managed
  • peration underlined by a strong

credit rating from Moody’s at Aa3

  • Portfolio value of £6.3bn on a vacant

possession basis

  • Well equipped to respond

to political changes

Swanscombe in Holland Park W11

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Questions

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