Far East Consortium’s in-house construction arm DEX has reached the highest point of construction at the 80-home scheme, within the £4bn Victoria North project.
The development will include a mix of one and two-bed apartments as well as nine three-bed townhouses.
New Cross is one of seven neighbourhoods being brought forward as part of Victoria North, which is led by FEC with Manchester City Council.
The overall project plan is to deliver up to 15,000 new homes while reusing brownfield and underutilised land over the next 15 years. Progress is also being made on developments within Red Bank and Collyhurst.
Construction on New Cross Central, where 70% of homes have already been sold, is set to complete in autumn 2022.
Nick Whitehouse, delivery director at FEC, said: “The topping out of New Cross Central is an important milestone for us, not just as a focal point for the future New Cross neighbourhood but one of the first developments within Victoria North to approach completion.
“There has been a significant amount of regeneration in New Cross and we feel that New Cross Central will positively contribute to the area and act as a catalyst for further development.”
Other developments advancing in New Cross include Mulbury’s £32m, 144-home development on Oldham Road, funded by Cheyne Capital, and a £37m joint venture between Capital&Centric and Kamani Property Group on Swan Street.
Four years ago, the city council instigated a public realm strategy as the area became more of a focla point for city living.
Strelia advised Cheyne Capital on the deal. Perseus Group SA has secured senior and mezzanine facilities totalling EUR93 million. The loans, from funds managed and advised by Cheyne Capital, will be used to finance the conversion of the Hôtel du Couvent in Nice and refinance the existing debt of the Hotel Le Pigalle in Paris. The financing has enabled the successful exit of Platina International (Platina), Perseus’s long-term investor, which has been supporting the group since 2011. Valéry Grégo, Perseus’s founder and CEO, becomes majority shareholder. The Strelia team included Frédéric Heremans (Picture), Jean-Luc Dascotte, Thomas Pouppez et Samantha Kabeya.
Perseus Group has completed secured senior and mezzanine facilities totalling €93 million.
The loans, from funds managed and advised by Cheyne Capital will be used to finance the conversion of the Hôtel du Couvent in Nice and refinance the existing debt of the Hotel Le Pigalle in Paris.
Hotel du Couvent is a 16th century former convent that is being transformed into a luxury hotel. Le Pigalle is a lifestyle 4* property.
The financing has enabled the successful exit of Platina International Perseus’s long-term investor, which has been supporting the group since 2011. Valéry Grégo, Perseus’s founder and CEO, becomes majority shareholder.
What They Said
Valéry Grégo, Perseus’s founder and CEO, said: “2021 is a pivotal year for Perseus to secure these facilities, 10 years after the inception of Perseus. We are pleased to partner with Cheyne who have been instrumental in providing financing that suits Perseus’s long-term objectives of value creation, strategic vision and streamlined capital structure.”
Raphael Smadja, head of French real estate at Cheyne Capital, said: “While the hotel sector was severely hit by the COVID pandemic, we have seen a surge in demand since restrictions have eased and believe that under the careful management of the Perseus Group, both the Hotel Le Pigalle and Hotel du Couvent are well positioned to capitalise on this. We look forward to working with Valéry and his team in this venture.”
Perseus Group SA (Perseus) has secured senior and mezzanine facilities totalling EUR93 million. The loans, from funds managed and advised by Cheyne Capital (Cheyne), will be used to finance the conversion of the Hôtel du Couvent in Nice and refinance the existing debt of the Hotel Le Pigalle in Paris.
The financing has enabled the successful exit of Platina International (Platina), Perseus’s long-term investor, which has been supporting the group since 2011. Valéry Grégo, Perseus’s founder and CEO, becomes majority shareholder.
Cheyne Capital Management is investing £24m (€28.1m) to develop two UK care homes as part of its impact real estate strategy.
The state-of-the-art of facilities will provide 140 care beds, more than a third of which will be allocated to publicly-funded residents at rates set by local authorities and NHS clinical commissioning groups.
Both private-pay and publicly-funded residents will have access to identical facilities and care services, and Cheyne said this was consistent with its “tenure-blind approach” used through its real estate portfolio, which aims to reduce inequalities.
Construction has commenced on the first facility in Crewe, Cheshire, and a second scheme is to follow in Whitchurch, Shropshire, in the new year.
Ravi Stickney, CIO of Cheyne Real Estate, said: “Unlike with general-needs housing, where planners can impose on developers the delivery of a proportion of affordable homes, there is no requirement for the delivery of any affordable beds within new-build care homes. Typically, therefore, good-quality, secure and appropriately-fitted care homes are only available to the small percentage of people who can afford them.
“With this investment, we are looking to change that status quo by demonstrating that impact-led institutional investors like us can, and are willing to, cater to local authority and NHS needs by delivering a significant proportion of affordable beds within modern, purpose-built care homes.”
The homes will be operated by Anavo Group, which was established in early 2020 and now runs 11 homes. Cheyne said Anavo uses innovative architecture, an evidence-based care programme and technology to improve residents’ quality of life.
“We chose to partner with Anavo because we admire their mission to challenge the stigma of ageing and the perception of what living in a care home looks and feels like,” Stickney said.
“We look forward to working together to deliver on this shared vision which puts inclusivity and quality of life at the forefront of its aims.”
Tom Brookes, co-founder of Anavo, said: “We are excited to work with Cheyne Capital to create these homes and we look forward to building a long-term partnership. Cheyne very much understood our objectives and the key drivers for delivering high quality care.
“We have a strong pipeline of additional sites in locations with high demand for purpose-built care homes and a number of these have secured planning with construction to start in 2022.
“Our purpose is to create a real connection between the physical environment and our ground-breaking care approach, which will make a huge difference to empowering the people in our services.”
Cheyne Capital Management has announced a £24 million investment into two state-of-the-art care homes. Construction has commenced on the first facility in Crewe, Cheshire, with a second scheme to follow in Whitchurch, Shropshire, in the new year.
In total, the investment will deliver 140 new care beds and, crucially, 35% of the beds will be allocated to publicly-funded residents at rates set by local authorities and NHS clinical commissioning groups. Consistent with Cheyne Impact Real Estate’s ‘tenure blind’ approach throughout its property portfolio, which aims to reduce inequalities, both private-pay and publicly-funded residents will benefit from identical facilities and care services.
The homes will include open, welcoming and accessible spaces and will be based at the heart of the community with a range of innovative amenities which can be enjoyed by the residents’ families and people from the local area.
The homes will be operated by Anavo Group which was established in early 2020 by Tom Brookes, Jamie Braganza, and Edward Moore. Anavo Group currently operates 11 homes UK wide and benefits from a highly experienced Senior Management Team who have commissioned a number of Outstanding rated homes. Anavo aims to provide care for older people in homes through the use of innovative architecture, an evidence-based care programme and the latest technology to improve every resident’s quality of life. Ensuring the Group’s homes become a focal point for the local community via Anavo’s ‘inside-out’ operational model is crucial to its care ethos.
Ravi Stickney, CIO of Cheyne Real Estate says: “Unlike with general needs housing, where planners can impose on developers the delivery of a proportion of affordable homes, there is no requirement for the delivery of any affordable beds within new-build care homes. Typically, therefore, good quality, secure and appropriately-fitted care homes are only available to the small percentage of people who can afford them. With this investment, we are looking to change that status quo by demonstrating that impact-led institutional investors like us can, and are willing to, cater to local authority and NHS needs by delivering a significant proportion of affordable beds within modern, purpose-built care homes. We chose to partner with Anavo because we admire their mission to challenge the stigma of aging and the perception of what living in a care home looks and feels like. We look forward to working together to deliver on this shared vision which puts inclusivity and quality of life at the forefront of its aims.”
Cheyne Capital Management is investing £24m (€28.1m) to develop two UK care homes as part of its impact real estate strategy.
The state-of-the-art of facilities will provide 140 care beds, more than a third of which will be allocated to publicly-funded residents at rates set by local authorities and NHS clinical commissioning groups.
Both private-pay and publicly-funded residents will have access to identical facilities and care services, and Cheyne said this was consistent with its “tenure-blind approach” used through its real estate portfolio, which aims to reduce inequalities.
Construction has commenced on the first facility in Crewe, Cheshire, and a second scheme is to follow in Whitchurch, Shropshire, in the new year.
Ravi Stickney, CIO of Cheyne Real Estate, said: “Unlike with general-needs housing, where planners can impose on developers the delivery of a proportion of affordable homes, there is no requirement for the delivery of any affordable beds within new-build care homes. Typically, therefore, good-quality, secure and appropriately-fitted care homes are only available to the small percentage of people who can afford them.
“With this investment, we are looking to change that status quo by demonstrating that impact-led institutional investors like us can, and are willing to, cater to local authority and NHS needs by delivering a significant proportion of affordable beds within modern, purpose-built care homes.”
The homes will be operated by Anavo Group, which was established in early 2020 and now runs 11 homes. Cheyne said Anavo uses innovative architecture, an evidence-based care programme and technology to improve residents’ quality of life.
“We chose to partner with Anavo because we admire their mission to challenge the stigma of ageing and the perception of what living in a care home looks and feels like,” Stickney said.
“We look forward to working together to deliver on this shared vision which puts inclusivity and quality of life at the forefront of its aims.”
Tom Brookes, co-founder of Anavo, said: “We are excited to work with Cheyne Capital to create these homes and we look forward to building a long-term partnership. Cheyne very much understood our objectives and the key drivers for delivering high quality care.
“We have a strong pipeline of additional sites in locations with high demand for purpose-built care homes and a number of these have secured planning with construction to start in 2022.
“Our purpose is to create a real connection between the physical environment and our ground-breaking care approach, which will make a huge difference to empowering the people in our services.”
Altogether, 17 ABIC member companies have each taken on responsibility for a mile of the trail through the KBB’s Adopt-A-Spot programme.
Volunteers who sign up for the scheme agree to take their chosen beauty spot under their wing and keep it in good shape, spending several hours a week picking up trash.
Cynthia Cox, of Cheyne Capital, an alternative investment fund management firm, spearheaded the initiative.
After getting the green light from ABIC’s executive director, Richard Winchell, Ms Cox approached Craig Burt, the acting director of the department of parks, with a proposal that ABIC take over responsibility for the entire trail.
Ms Cox said: “After we received permission from the Government, Craig Burt set out the initial sections.
“He worked with his teams to ensure pick-ups of large items that KBB and the companies flagged.
“Recently, they have been active at cutting back invasives and he and his team are always available.”
ABIC plans to liaise with schools, churches, clubs and other organisations to broaden community involvement in the programme.
Mr Winchell outlined why ABIC members wanted to get involved.
He said: “For almost 60 years, KBB has addressed many of Bermuda’s needs including working to reduce illegal dumping and littering along the Railway Trail.
“ABIC promotes a sound business environment for international business and the Bermuda community and we are very pleased that 17 ABIC members have partnered with KBB to help maintain the quality of the Bermuda Railway Trail experience.
“The Railway Trail is the green necklace that connects all of Bermuda – thanks to everyone engaged in this important project.”
Mr Winchell also thanked Ms Cox and Cheyne Capital for identifying the opportunity and “leading this important work”.
The move was praised by KBB’s executive director, Katie Berry, who said that ABIC’s efforts had energised the Adopt-A-Spot scheme.
Ms Berry said: “The Railway Trail is Bermuda’s biggest open space. It is unique in that it winds from one end of the island to the other through neighbourhoods allowing people a safe place to walk, exercise and take their children.
“All of Bermuda is not far from a section of the trail. With use comes litter and we know that the most used sections of the trail have the most litter. Having volunteers out regularly who are committed to that particular section is invaluable.
“It keeps the litter under control but also it allows KBB to address illegal dumping and other issues such as overgrown vegetation and overflowing bins.”
Ms Berry said that the programme had been running for many years but needed “a new infusion of engagement”.
She added: “The KBB board felt strongly that the premise of engaging people to care about an area of the island they love or live near was the right idea – we just need more people to get involved.
“Getting companies and their employees involved would provide a regular rotation of volunteers along the trail – cleaning up but also a set of eyes on each part of the trail feeding back information about the state of the trail.
“ABIC and Cynthia connected me with a group of companies who were interested and ready to commit, saving KBB hours of time. These types of introductions make all the difference to a tiny non-profit like KBB.
“Each ABIC member company who has adopted a section of the trail is doing something different; each section has different needs. For example, some areas are more heavily used and littered than others and some companies are smaller than others.
“KBB is working really hard to engage the public through various programmes and education to get people to care. There is no doubt when people feel someone cares, they are more likely to care as well.
“Having ABIC and the Railway Trail project organisations support is the best example of this. Together we care about Bermuda – the environment and the communities we live and work in.”
KBB is now pushing for organisations to adopt public parks – another area it claims needs to be addressed.
Ms Berry said: “KBB is so much more than just cleaning up. It’s also about education and creating community and pride across neighbourhoods. We are lucky to have a tribe of KBB champions who assist with looking after the trail, for whom we are so thankful – they are unsung heroes.
“It is wonderful to magnify their volunteer work with the assistance of ABIC and this project. When individuals, organisations and community groups come together positive things can happen.”
Far East Consortium’s in-house construction arm DEX has reached the highest point of construction at the 80-home scheme, within the £4bn Victoria North project.
The development will include a mix of one and two-bed apartments as well as nine three-bed townhouses.
New Cross is one of seven neighbourhoods being brought forward as part of Victoria North, which is led by FEC with Manchester City Council.
The overall project plan is to deliver up to 15,000 new homes while reusing brownfield and underutilised land over the next 15 years. Progress is also being made on developments within Red Bank and Collyhurst.
Construction on New Cross Central, where 70% of homes have already been sold, is set to complete in autumn 2022.
Nick Whitehouse, delivery director at FEC, said: “The topping out of New Cross Central is an important milestone for us, not just as a focal point for the future New Cross neighbourhood but one of the first developments within Victoria North to approach completion.
“There has been a significant amount of regeneration in New Cross and we feel that New Cross Central will positively contribute to the area and act as a catalyst for further development.”
Other developments advancing in New Cross include Mulbury’s £32m, 144-home development on Oldham Road, funded by Cheyne Capital, and a £37m joint venture between Capital&Centric and Kamani Property Group on Swan Street.
Four years ago, the city council instigated a public realm strategy as the area became more of a focla point for city living.
Real Estate Credit Investments plc (LON:RECI) is the topic of conversation when Hardman and Co’s Analyst Mark Thomas caught up with DirectorsTalk for an exclusive interview.
Q1: Your recent report on Real Estate Credit Investments sits behind a disclaimer. What can you tell us about that?
A1: It is just the standard disclaimer that many investment companies have. In essence, for regulatory reasons, there are some countries (like the US) where the report should not be read. It is not a simple asset class, and the report should only be looked at by professional/qualified investors.
Q2: Your recent report reviewed RECI’s sensitivity to rising rates. What can you tell us about it?
A2: In this note, we explore RECI’s low sensitivity to a rising rate environment by analysing i) borrower revenue sensitivity, ii) borrower debt sensitivity, iii) RECI’s portfolio risk mitigation techniques, iv) the MTM on the bond portfolio, v) the impact of RECI’s own funding mix, vi) international diversification), vii) previous share price experience, viii) sentiment to the stock, and ix) potential opportunities that may arise.
This reinforces the message in our last two notes that RECI’s business has shown limited downside during the COVID-19 crisis. We use a case study of a hotel exposure to illustrate how Cheyne’s management of challenging relationships materially reduces the final loss.
Q3: You talk of the borrower sensitivity to both revenue and debt. What exposures did you find there?
A3: Interest rates are most likely to be increased to take some heat out of the economy, and so dampen inflation. This will affect borrowers to varying degrees, with the biggest impact on those who are dependent on discretionary spend.
As at October 2021, nearly 50% of the book was Core/Core+, which means that it is steadily income-generating. Where an exposure is higher-risk, the lending criteria are tighter (by way of example, as at October 2021, the average LTV for development exposures in the top 10 was c.10% lower than the portfolio as a whole).
In some of the sectors, which may be regarded as having above-average borrower earnings risk, slides 17-20 of RECI’s October update provide useful and detailed information on why its specific exposures are not as bad as the sector exposure as a whole, and we review those in the note.
Q4: And how does RECI mitigate the risk of rising rates?
A4: Firstly, its high yields reflect intellectual capital, as well as risk. It is much easier to pass on a 50bp increase in benchmark rates if you are charging 8%-9% than if you are charging 2%-3% – so having a high-yielding book makes it less sensitive to market rate increases.
Second, the duration of lending is short – the average life of the loan book (£298m) at end-September was just 1.5 years.
Third, we have previously outlined the key cultural difference, whereby RECI staff “own” their loans, and are not employees of a large, faceless organisation, who might be likely to move on before problems emerge from their lending decisions.
Fourth, the turndown rate is high, at c.90%.
Fifth, the trend to covenant-lite lending seen in many larger corporate markets has not been prevalent in RECI’s markets.
Sixth, Cheyne typically does deals of between £50m and £200m (or currency-equivalent), so the equity contributor is usually a professional investor likely to take rate sensitivity into account.
Finally, we highlight the geographical diversity of RECI’s exposure, with the UK now accounting for 56% of funded fair value.
Q5: Your report also included an interesting case study of how Real Estate Credit Investments managed a hotel exposure through COVID-19. Can you elaborate on this?
A5: When COVID-19 struck, Cheyne immediately determined that risk was difficult to price, and paused all new deals. In the UK, it focused on its existing book of around 30 positions, and relatively quickly identified that a key risk lay in hotel exposure. Cheyne had closed the case study hotel deal a year earlier, but it was a complex situation, with 10 interested parties (each with different interests, jurisdictions of the parties, security, etc). It is testament to Cheyne’s expertise and reputation that it was chosen to lead the restructuring negotiations. Inter alia, these included taking control of the equity and re-financing all the senior debt, restructuring the parental support and equity, partially paying down the existing senior debt, and discussions with other operators in case the existing tenant failed.
After six months of intensive negotiations, in December 2020, a deal was struck, which saw the economic loss from COVID-19 spread between all parties and a financing package agreed on which the business could proceed. For RECI, it added some time to the duration of the loan, and saw a small reduction in effective spread, but it also saw an IRR at c.1.5x the dividend cost. Since the restructuring, trading has been better than planned. In our note, we go into why Cheyne was uniquely placed, resourced and skilled to manage the restructuring.
Lukasz Finance 