Development in difficult times. Julian Foster Director of resources (responsible for both finance & development) Cross Keys Homes Ltd

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1 Development in difficult times Julian Foster Director of resources (responsible for both finance & development) Cross Keys Homes Ltd

Aristotle (322 384 bc) Bring your desires down to your present means. Increase them only when your increased means permit.

2 Aristotle ( bc) Bring your desires down to your present means. Increase them only when your increased means permit. Aristotle Different men seek after happiness in different ways and by different means, and so make for themselves different modes of life and forms of government. Aristotle It is not once nor twice but times without number that the same ideas make their appearance in the world. Aristotle In all things of nature there is something of the marvellous. Aristotle

Socrates (469 399 bc) I am not an Athenian or a Greek, but a citizen of the world.

3 Socrates ( bc) I am not an Athenian or a Greek, but a citizen of the world. Socrates, from Plutarch, Of Banishment Greek philosopher in Athens Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity. Socrates

4 Cross Keys Homes 2004 Peterborough stock transfer 10,000 homes in management top decile performance customer satisfaction developing since 2007 HCA investment partner 2011 collaboration agreement with LA AHP programme 385 new homes inc extra care scheme

5 Development programme 561 units completed to date of which 468 in Peterborough 212 on site under NAHP 80 on site funded by LA expect to have 189 ex 385 on site by March 2012 under AHP

6 Carbon challenge (Vista) 295 new homes code affordable homes bidding to manage whole development once complete challenge to help tenants engage with new technology

7 Carbon Challenge - Vista

8 Carbon Challenge - Vista

9 Funding position refinanced 2007 with bank synd facility 210m drawn 168m sufficient finance for AHP but want to do more reluctant to renegotiate but will have to best in sector funding costs 2009/2010 (Social Housing) currently 4.4%

10 Banks current appetite banks forced to match maturities of balance sheet banks unwilling to lend long term if long term, re-pricing clauses POSITION WORSE SINCE LAST YEAR

11 Banks current position currently losing > 2m pa on CKH trying to sell loan books HA loans not a priority reduce debt or term HAs will bite the bullet in the end

12 Newcastle Building Society applying for increased costs clause withdrawn from new lending requesting 0.43% on 30 million from CKH ~ 130k per annum 20 other borrowers now joined in legal negotiations using KPMG/ Trowers/ Devonshires Test case other banks waiting!!

13 Interest rates base rate 0.50% 0.50% 3 month LIBOR 0.74% 0.99% 10 year gilt 3.15% 2.61% 30 year gilt 4.22% 3.52% 30 yr RPI linked gilt 0.83% 0.43%

14 Fixed interest bonds 30 year gilt 3.52% (3.96%) margin over gilt 1.50% (1.00%) total bond ~ % (5.00%) CKH % (5.40%)

15 Funding options wholesale bonds (syndicate option?) retail bonds (but <10 years) private placement pension funds insurance companies (sale and leaseback RPI deals eg Derwent Living) HA market maturing all the time

16 Bonds or private placement Bond PP tradeable X rating X pricing 10 yr n/a < 4.00% pricing 30 yr 5.00% 5.00% UK investors issue costs exp cheap

17 Retail bonds new 2011 marketed to HNW individuals Tesco, Places for People, National Grid PfP deal started 50m got 140m at 5% now yielding 4% attractive National Grid inflation linked deal < 10 year term expensive compared to private placement

18 Funding challenges security scarce! unsecured debt attracts premium size? - CKH small / new LSVT just in surplus cost of carry (surplus cash) fixed rate/index linked issues swaps needed?

19 Household growth

20 UK population demographics

21 House price and mortgage repayments to income

22 Regional summary United Kingdom std Price: 162,109 quarterly Change: -0.5% annual Change: -3.5% East Anglia std Price: 162,089 quarterly Change: +3.5% annual Change: -2.2%

Planning, development and financing new build

Planning, development and financing new build Sustained investment in housing of all types 24 th October 2013 Simon Smith Introduction Overview of the traditional New Build Local Authorities Landscape