Tuesday, 28 March 2017

Lenders and landlords aim to strike a deal before Christmas

Subsidiary to ‘stabilise’ Cosmopolitan mulled

Riverside is exploring plans to set up a stand-alone business unit for the homes previously owned by Chester and District Housing Trust if its proposed merger with Cosmopolitan Housing Group goes ahead.

Negotiations between Riverside and lenders over a deal to rescue the troubled landlord are continuing with a target of completing the process by the second week of December.

Inside Housing understands that Riverside’s plans include establishing a new subsidiary within the group for the 6,300 homes owned and managed by CDHT before the latter merged with Cosmopolitan last year.

Cosmopolitan’s remaining 3,400 social homes would then be integrated into Riverside’s existing structure.

However, the 54,000-home group could look to find a buyer for the 4,000 student properties in the Cosmopolitan portfolio.

Sources close to the situation have confirmed that Riverside would look to exit from any liabilities associated with Cosmopolitan. The group’s financial difficulties, which came to light over the summer, are understood to
student housing arm.

Another option would be to bring the whole of Cosmopolitan Housing Group into the business as a subsidiary.

As Inside Housing revealed last month, Riverside stepped in as a potential saviour of Cosmopolitan amid fears it was close to breaching its loan covenants because of on-balance sheet guarantees offered to its student housing investors.

These deals were struck several years ago but only came to light after last year’s merger with CDHT.

The Riverside tie-up is now thought to be dependent on the two associations’ funders agreeing not to significantly alter the terms of their loans.

Earlier this month it emerged that Lloyds Banking Group would not seek to reprice £104 million of loans to CDHT.

A spokesperson for Riverside said due diligence was underway but that the association was not rushing to meet a specific date. She said: ‘One idea we are considering is to bring in Cosmopolitan Housing Group as a discrete subsidiary within Riverside’s group structure. This would allow CHG to stabilise its position within the shelter of Riverside.’

In numbers

6,300
homes owned or managed by Chester and District Housing Trust

£104 million
CDHT total debt before Cosmopolitan merger

14,000
homes owned by Cosmopolitan

£95 million
Cosmopolitan’s total debt as of 2010/11 (before merger with CDHT)

54,000
homes owned by Riverside

£702 million
Riverside’s total debt, including £605 million of bank loans

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