Notting Hill Housing Trust Investor Presentation
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Notting Hill Housing Trust Investor Presentation Kate Davies Chief Executive Paul Phillips Finance Director Andrew Sugden Assistant Finance Director February 2014 www.nottinghillhousing.org.uk 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 This presentation will be superseded by the final version of the prospectus or offering document relating to the proposed transaction and where there is a discrepancy between the information in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 offering circular. 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. Page 2 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 Page 3 Introduction Page 4 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, celebrating its 50th anniversary • A member of G15 group of London’s largest housing associations • As of 31st March, 2013 – 27,170 units under management with a vacant possession value of £6.8 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 • Successful development track record • Strong credit rating of A2 by Moody’s • Maintained excellent regulator ratings for governance, management and financial strength Page 5 Overview of Notting Hill Housing Group Folio, Islington, N1 Boatyard, Ealing, UB2 Exchange, Bermondsey SE16 Overview and Recent Developments Overview Events: Recent Developments • Leading London Housing Association, • Selected by LB Southwark for the formed in 1963 regeneration of the Aylesbury Estate • Core business remains unchanged • Celebrated our 50th anniversary with primary focus on general needs housing in London • Largest ever sales programme • Strong governance with a skilled and achieved in 2013 – beating targets by experienced board more than 10% • • Operates within a highly regulated Funding in place for all committed sector developments • • Flexibility to respond to political Will deliver HCA programme in full change and Welfare Reform High quality assets in high demand areas Page 7 NHHG Group Structure Registered with the HCA with Charitable Rules Notting Hill Housing Trust (“NHHT”) The Issuer and major asset owner Notting Hill Notting Hill Notting Hill Presentation Touareg Trust Home Ownership Commercial Properties Market Rent Market Rent Student Shared accommodation ownership Investment vehicle Market rent Market rent (for build for sale operation) Page 8 Governance Structure Board Members Executive Management Team Paul Hodgkinson (Chairman) Kate Davies (Chief Executive) Alex Phillips Paul Phillips (Finance) Sophie Warner John Hughes (Development) Debra Yudolph Andy Belton (Commercial Operations) Mohan Yogendran Andrew Muir (Corporate Services) Sue Hunt Kath King (Asset Management) Linde Carr Bukky Bird Mark Vaughan (NHHT) Alastair Moss A broad range of commercial and operational skills Page 9 NHHG Housing Stock by Location Group Stock Map 27,170 properties under management Page 10 Core Asset Base Top five locations of NHHG assets (61% of all stock) Borough Units Share of Total Hammersmith & Fulham 4,684 17% Kensington & Chelsea 4,287 16% Hounslow 2,685 10% Lambeth 2,640 10% Ealing 2,267 8% Average gross cost per social rented unit - £97,000 Isokon, Hampstead, RG5 Fabrik, Brixton, SE5 As at 31 March 2013 Page 11 NHHG Housing Stock by Type 30,000 Social Rented 25,000 Shared Ownership Temporary Housing 20,000 Leased Housing 15,000 Market Rent Intermediate Rent 10,000 Student Accommodation 5,000 Supported Housing Leashold Management 0 2008/9 2009/10 2010/11 2011/12 2012/13 Annual Accounts 2012-2013 Page 12 Development Programme Grange Walk, Bermondsey, SE1 Other Recent Successes • Selected by the London Borough of Southwark to lead on the redevelopment of the Aylesbury Estate – a project involving expenditure of over £800m over a 20 year period • Selected by the HCA for a £45m investment in 141 market rent homes to be purchased from the Berkeley Group • Allocated funds for 1,356 homes under the Mayor’s “building the pipeline” programme Page 14 Development Pipeline through to 2020 • Over 8,000 homes in identified programme • Grant allocations for 4,000 homes, to be delivered by 2017 • Secured 60% of sites for new programmes through to 2018 • Overall target for development is 1,400 homes p.a. Page 15 Map of NHHG Development Programme • HCA grant will support development at these sites Page 16 Recent Typical NHHG Development • The Meadows, Mitcham • Grant: £22m • Completion: April 2013 • Sales values: £150,000 to £240,000 • Mix: • First tranche sales achieved 41% • 110 Social Rent • Average sale price • 52 Shared Ownership • Shared ownership £73,000 • 50 Private Sale • Private sale £200,000 • Capital investment: £42m • Surplus £5.1m • Sales margin 36% Page 17 Operational Review Orbis Wharf, Battersea, SW11 Key Performance Indicators 2013/2014 2013/2014 Measure 2011 2012 2013 Q3 Target Homes 895 1,580 536 198 1,332 completed Sales time to completion 7.8 14 10 14 12 (weeks) Rent collection 98.9% 100% 99% 100% 100.5% rate Rent losses 1.98% 1.60% 1.60% 1.60% 1.20% due to voids Customer 67% 74% 75% 72% 78% satisfaction Page 19 Effects of Welfare Reform on Core Social Rent Business Issue NHHT Impact Under • We estimate that about £1.2m of income (1.2%) is at risk in this year. occupation • 949 tenants are affected • Increase in arrears of those affected from 8.2% to 10% but total arrears have fallen to 7.6% • 57% of tenants affected seeing an increase in arrears • £100,000 has been offset by discretionary housing benefit • 83% of those affected have paid some or all of the increase • We now expect to recover most of the £1.2m with about £0.4m lost Benefits cap • We estimate that amount at risk is about £0.6m in the current year. • 114 tenants affected but we expect to collect about £0.5m. Universal • Additional training to housing officers and improving systems. credit Working with London Credit Union and The Money Advisory Service • Can comfortably withstand a doubling of arrears • Welfare benefit advisor app with tenants Affordable • Capped rents at £246pw rent Page 20 Welfare Reform – Key Statistics Only 24% of turnover impacted by Universal Credit Social housing rent via Housing Benefit from 24% tenants of working age Social housing rent via Housing Benefit from tenants not of working age 49% 4% Social housing rent not from Housing Benefit Other turnover