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.