FUNDING

AFFORDABLE

HOUSING – WHAT

ARE THE OPTIONS?

CHC's Governance Conference 2019

WAQAR AHMED,

GROUP FINANCE DIRECTOR, L&Q

2 | BECAUSE HOMES MATTER

• Formed in 1963

• London & South East

• Development Pipeline 100k Homes over 10 Yrs

• Community investment £250m

Image: Greenwich Peninsular

3 | BECAUSE HOMES MATTER

WHO ARE WE?

COUNTIES

4 | BECAUSE HOMES MATTER

DEVELOPMENT STRATEGY

25% Sub-

Market Rent

25% Market Rent

25% Market Sale

25% Sub-Market Sale

• £25bn over the next 10 Yrs

• 1/3 Joint Venture Partners

• Target breakeven

GLOBAL ACCOUNTS 2017/18

Housing sector

34

,50

0

46

,50

0

42

,00

0

41

,00

0

42

,00

0

£2.4bn

£3.0bn£3.3bn

£4.1bn

£3.7bn

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2014 2015 2016 2017 2018

Actual Completions

Surplus

£5

1b

n

£5

2b

n

£6

6b

n

£6

9b

n

£7

2b

n

2014 2015 2016 2017 2018

Total Debt* Based on Global Accounts

Key Metrics * 2017/18 2016/17

EBITDA MRI Margin 30% 32%

EBITDA MRI Interest

Cover174% 170%

Gearing 50% 50%

5 | BECAUSE HOMES MATTER

CREDIT RATING METRICS

5 Broad Factors -

- Institutional Framework

- Market Position

- Financial Performance

- Debt & Liquidity

- Management & Governance

6 | BECAUSE HOMES MATTER

50%15%

Additional 31%Social Letting Interest Cover

+£17bn

CREDIT METRIC: SOCIAL LETTINGS

INTEREST COVER – 156%

Social Lettings, £15.0bn

Social Lettings, £15.1bn

Social Lettings, £15.4bn

Sales, £2.8bn Sales, £2.6bn Sales, £2.6bn

Other, £2.2bn Other, £2.3bn Other, £2.5bn

Turnover, £20.0bn

Turnover, £20.0bn

Turnover, £20.5bn

2016 2017 2018

7 | BECAUSE HOMES MATTER

+85k homes

JOINT VENTURE PARTNERSHIPS CASE STUDY 1 – BARKING RIVERSIDE (East Region)

8 | BECAUSE HOMES MATTER

• Over 11k homes

• New train station

• Commercial & Community infrastructure

• GDV – £3.5bn

• 50/50 Social private tenure

9 | BECAUSE HOMES MATTER

JOINT VENTURE PARTNERSHIPS CASE STUDY 2 - GREATER BEAULIEU PARK (Counties Region)

• 4,000 homes 1/3 Affordable

• GDV–£1.5bn

• New Train Station

• Community infrastructure

CURRENT JOINT VENTURE PARTNERSHIPS

10 | BECAUSE HOMES MATTER

7,000 Homes £3.5bn CAPEX

JOINT VENTURE PARTNERSHIPSCASE STUDY 3 – TRAFFORD HOUSING TRUST (THT)

Image: Station Road, Delamere11 | BECAUSE HOMES MATTER

• Equity investment £80m

each partner

• 500 homes pa

• 50% affordable

• Joint ownership of

development and long term

affordable homes

• Sharing skills & expertise

BUILD LONDON PARTNERSHIPS -

Case Study 4

12 | BECAUSE HOMES MATTER

STRATEGIC PARTNERSHIPS - Case Study 5

• Homes England – 20k affordable

homes over 10 yrs

• GLA – 12k affordable homes over 4 yrs

13 | BECAUSE HOMES MATTER

WHAT MORE CAN WE DO..

0

50,000

100,000

150,000

200,000

250,000

300,0001

98

8

19

89

19

90

19

91

19

92

19

93

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94

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95

19

96

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97

19

98

19

99

20

00

20

01

20

02

20

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20

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20

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20

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20

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20

09

20

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20

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20

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20

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20

14

20

15

20

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20

17

Homes Completed by Developer by Year

PrivateEnterprise

Housing Associations LocalAuthorities

14 | BECAUSE HOMES MATTER

NO SINGLE ENTITY CAN RESOLVE THE

HOUSING CRISIS….