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industry news


Merger watch: HA mergers advancing T


he spate of social landlords merging to create bigger businesses with stronger balance sheets continues with more


deals being struck, although there was also a notable casualty. The four years of one per cent annual rent


cuts imposed by the Government together with a drive to make operating efficiencies and invest savings in bigger development programmes appears to be fuelling the current trend. But two housing associations in the North


West have bucked the trend by agreeing a ‘ de-merger’ after Symphony Housing Group and Cobalt Housing announced the latter was leaving the group “in the best interests of its tenants.” Symphony is the largest social housing


provider in the North West with 41,000 homes. Apart from Cobalt, it consists of Contour Homes, Hyndburn Homes, Liverpool Housing Trust, Peak Valley Housing Association and Ribble Valley Homes. Peter Mitchell, chair of the 6,000 home Cobalt


Housing, explained: “The board has worked with Symphony to ensure a positive future for all tenants, and is delighted to have reached an agreement. Cobalt is committed to working with our partners to build on our current good performance, to deliver the best possible services to our tenants.” Bronwen Rapley, chief executive of Symphony


added: “Symphony and Cobalt will remain neighbours and partners and will continue to work together to achieve our shared goal of seeing Liverpool and its communities succeed.”


Top spot


Earlier this year Places for People Group completed its takeover of Derwent Housing Association, making Derwent a subsidiary of the larger housing association, which is vying with the newly formed Clarion Group for the top spot in terms of properties owned and managed. Derwent, with its 25,000 homes in the


Midlands, has become a subsidiary of the 150,000-home PfP group. This follows a difficult period for Derwent following its downgrading for both viability and governance in the middle of 2016. The Homes and Communities Agency was


concerned about the association’s ability to manage its financial exposures, including its


liability on interest rate swaps. At the time its chief executive Peter McCormack said the assocation’s board was drawing up an action plan to regain compliant status as quickly as possible. Meanwhile Guinness has expanded into


a 65,500 home organisation after taking Crewe based Wulvern and its 5,500 homes in Cheshire and Staffordshire, and 200 staff under its ownership. Catriona Simons, group chief executive of


The Guinness Partnership, said: “We were thrilled to be chosen by Wulvern as their merger partner, to continue their tradition of outstanding customer service.” Sue Lock, formerly chief executive of Wulvern,


is now director of strategy and policy for older people at Guinness. She said: “This merger will deliver clear benefits for our customers, as well as delivering more new homes across Cheshire. The merger process has been very smooth and I am delighted to be taking up a new role at Guinness.”


Midlands


New Charter Group is in negotiations with Adactus Housing Group to form a 33,000 home landlord spanning the North West and the East Midlands. New Charter has 19,500 homes, while Adactus


owns 13,000 properties. Ian Munro, chief executive of New Charter,


said: “This is a merger of equals. It’s very early days yet. We’re in a position to produce significant savings to plough into producing new homes to help solve the housing crisis.” The newly merged organisation would have a


combined turnover of £174.4m and a surplus of £18.3m, based on both providers’ accounts for 2015/16. Across the Irish Sea, two Northern Irish


housing associations have merged with 4,000 home Clanmil taking over Hearth Housing Association, which has specialised in restoring approximately 100 homes of architectural significance since 1978. Historic properties include Wallace Park Gate


Lodge and homes on Camden Terrace in Belfast, along with a number of restored schoolhouses, unique almshouses and distinctive townhouses throughout Northern Ireland. Steve Amos, chair of Clanmil, said: “The


merger is good news and increases the potential


for more dormant and derelict spaces to be transformed into much-needed social homes. It will build on both organisations’ excellent reputations, our track records and our shared passion for restoring older buildings, enabling us to meet a wider range of housing and community needs.


Costs


A possible unforseen cost of merging was also demonstrated when two of the biggest housing associations in the country were downgraded by the credit-rating agency Moody’s after the completion of their mergers. Clarion Group, formed through the merger of


Affinity Sutton and Circle, was downgraded from Aa3 to A2 because of its “weaker credit profile” following the merger and the “increased risk” from its development ambitions. L&Q, which now manages 90,000 homes after


merging with East Thames, was downgraded to A2 negative from A1 negative because of a “weaker credit profile” for East Thames and the planned increase in debt to fund an “ambitious” development programme. Over at Clarion, Mark Rogers who had been


chief executive of the Circle Housing Group, decided to stand down from his deputy chief executive role at the new organisation due to a duplication in executive duties.


More HA mergers


As the trend towards fewer and larger social landlords continues, another set of mergers between housing associations have been announced in the north and south of England. In Hampshire, a new 30,000 home


landlord to be called Vivid, formed by joining together First Wessex with Sentinel, has got the


nod of approval from the Homes and Communities Agency. Several hundred miles up country in Durham,


a three-way merger involving Isos Housing, Cestria and Derwentside Homes will see a 23,500 home landlord formed. This will be one of the largest social landlords in the north east,


8 | HMM March 2017 | www.housingmmonline.co.uk


with plans to develop a further 1,350 homes over the next five years. West of London, stock transfer association


Bracknell Forest Homes are to merge with Maidenhead based Housing Solutions to establish a 14,500 home housing association in Berkshire.


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