Wednesday, 23 April 2014

Cosmo and Sanctuary strike historic deal

Sanctuary Group has completed its takeover of Cosmopolitan Housing Group, rescuing the financially troubled landlord from potential insolvency.

The merger has created the UK’s largest social landlord, with 94,000 homes owned and managed.

Cosmopolitan’s board agreed to the deal last night before it was signed late today by Sanctuary.

Cosmopolitan Housing Group and Chester & District Housing Trust, the landlord that merged with Cosmopolitan in December 2011, will become separate subsidiaries of Sanctuary. The merger was approved and supported by both the social housing regulator and Cheshire West & Chester Council.

Sanctuary has appointed new boards for all its new subsidiaries, including Cosmopolitan’s existing student housing arm, while retaining tenant and local authority membership.

Sanctuary stepped in as Cosmopolitan’s potential saviour in January after original merger partner Riverside pulled out of the deal following months of fraught negotiation.

David Bennett, chief executive of Sanctuary, has said his organisation will work with the regulator to establish how Cosmopolitan’s difficulties arose what lessons can be learned.

He added: ‘Our priority is to work with partners to deliver high quality value for money services that meet the needs of local communities.’

‘We only became directly involved with CHG in January this year, so I would like to take this opportunity to thank our professional advisors, funders, Cheshire West and Chester Council, and the HCA [Homes and Communities Agency] for their support in helping us achieve a successful outcome in a relatively short space of time.’

Matthew Bailes, director of regulation at the HCA, said: ‘This is good news for both organisations and for the sector as a whole. Sanctuary and CHG deserve significant credit for the way in which they have worked together to protect the social housing assets. Nonetheless, there is no getting away from the fact that Cosmopolitan was in serious difficulties. We will be taking a long hard look at the lessons from the case.’

The financial crisis at Cosmopolitan came about as a result of leases taken out to fund its 5,000-strong student housing business. These leases, which became loss-making for Cosmopolitan, were guaranteed by the group’s social housing assets.

The situation caused a liquidity crisis last summer which led to the group to the brink of insolvency. Short-term financing was arranged, while the HCA also proposed a ‘voluntary undertaking’, committing the group to a rescue plan.

Readers' comments (17)

  • It's been saved . . . good, presumably, but a 'historic deal'? That's over-egging it a bit, I think.

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  • Tony Cook

    A 'Housing Group' with near on 100,000 homes, it's surreal. How do the Board members of such a humongous bureaucracy find the means to genuinely relate to their tenants? I mean in any sense other than the illusory. The altitude of 'Directer' from 'front-line' staff will be so rarified as to constitute a disaster waiting to happen. We're safe for now but what if Sanctuary needs saving, what then? Constitute something even bigger yet and hope that works better?

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  • Sexton

    can being incompetent be assumed as historic?

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  • Sexton, I agree with you. Reward for creating a shambles. Tony, I agree with you too. This is a monster. Biggest is NOT best by any stetch of the imagination.

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  • sanctuary are like the Borg ...resistance is futile.

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  • I'm not sure that this is in the best interests of all parties. The bigger they are, the harder they fall, comes to mind here. I think these large organisations should be broken down into smaller manageable sectors, even if they come under the same 'brand name' because they will then be more accountable to their tenants (transparent) at a local level.

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  • Some of us can remember Mrs Thatcher wanting to break up council housing departments because they were large remote bureaucracies....

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  • Most of the commentators above seem to be forgetting that it was Cosmopolitan, a relatively small organisation, that failed and that Sanctuary is rescuing tenants from what might otherwise have been a long period of neglect and poor service.

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  • Joined at the Hip: The World Economy Interconnected and Interdependent.

    The Chinese bamboo shoot takes four years to germinate and take root. Visible above the ground is only a bulb during that time. In the fifth year, the bamboo can grow to eighty feet.

    The Issue is still control.

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  • It's aggravating-we have noting to do with Russia or Asia. We're just a little dometic business trying to grow,but we are beingprevented because of the way those governments run their countries.
    Douglas Hanson CEO of Rocky Mountain Internet, Inc., speaking to The Wall Street Journal after the 1998 meltdown forced him to postpone a 175 million junk bond issue.

    Control no matter the source or direction.

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