Savills was instructed after the client needed to maximise asset value on former LSVT stock for Martlet Homes, a core Hyde subsidiary focused on providing affordable homes in the South East.
The 6,000 homes had previously been valued using the Existing Use for social housing valuation basis. New legislation in the form of the Housing and Planning Act allows social housing stock to be traded without requiring the prior approval of the regulator. The client was therefore keen to obtain the benefit of a higher value provided by market value as part of a new bond issue. The need to produce best value within a tight reporting timescale and maintain investor confidence was important.
Transactional evidences are not yet available for large scale transactions of stock with social tone. Savills therefore applied a discounted cashflow approach to groups of properties at a neighbourhood level. The valuation allowed for the injection of sales receipts from void properties and rental uplift to the optimum rent within affordable criteria. Savills were able to run numerous scenarios applying granular analysis to maximise the potential value arising. Savills worked with Hyde and the bond runners to inform and shape the understanding of the potential for MV as this new market emerges.
The valuation was enhanced by circa £100 million and a 35-year bond issue of £400 million achieved a coupon of 3 per cent. It was given a credit rating of A+ by standard and poor.
Our multidisciplinary teams including housing research and residential capital markets allowed a view of MV at local level, balanced against broader trading experience. This result will significantly enhance our client’s ability to produce higher volumes of homes in London and the South East region.