thumbnail of Liverpool Community Homes Debenture 1

Liverpool Community Homes Debenture 1

Interest rate 9.0% a year
Term 5 yrs and 3 mths
Total Invested £2.06m
1054  investors
Maturity date 31 Mar 2025
thumbnail of Liverpool Community Homes Debenture 1

What does the company do?

Liverpool Community Homes plc is a project company setup by Octevo Housing Solutions Limited (“Octevo”) to finance and build social housing.

Octevo, 100% shareholder of Liverpool Community Homes, was set up in 2016 to identify and develop affordable housing using a business model designed to address the core procurement and funding barriers faced by a number of registered social landlords and some local authorities. Rather than requiring them to take on and fund the predevelopment, planning and construction risks and costs, Octevo would take on these costs and build and own the properties in return for a long term lease that would secure long term rental revenues for Octevo. This model is designed to allow private funding to increase the amount of small-scale, quality affordable housing for long-term social use.

Octevo’s objective is to build quality affordable homes that its registered social landlord or local authority partners will lease on a long term basis. In the case of this development, the leases are packaged up with one registered social landlord and will be effective for 50 years. A registered social landlord must abide by the UK’s regulation of social housing, which includes a cap on the amount of rent it can charge for affordable housing. Once the properties are built, the registered social landlord pays a single monthly rental amount in respect of all the homes and will manage the sourcing of, and ongoing relationship with, tenants (usually individuals and families on local authority waiting lists). It will be responsible for the ongoing maintenance of the homes as well as the collection of rent.

Why did the company raise money?

Liverpool Community Homes raised funding to construct properties as part of its Northwood development, situated in the Liverpool district of Knowsley. It is a re-development of a former public house and other surrounding land to build 10 semi-detached houses consisting of 2 2-bed houses for supported living and 8 3-bed houses for affordable living.

How does the company expect to repay the investment?

The level of affordable rents is regulated by the government and increases are linked to inflation (Consumer Price Index). This way of setting rent is designed to protect the affordability of the homes. Since the rent on these affordable homes is the responsibility of the registered social landlord and in some cases may also be guaranteed by the local authority, the income stream is relatively assured. This predictable, long term, inflation linked income stream is attractive to certain institutions, like pension funds, as it can match their liabilities over time.

Octevo’s model to repay investors is therefore to look to sell the rental income from the properties developed by Liverpool Community Homes (either on its own, or packaged with the rental income from other properties being developed) to a large investor. In exchange for an upfront lump sum, the ‘new’ investor receives the rights to the rental income after costs for the remainder of the life of the lease. This upfront sum would be used to repay investors.

If the company is unable to sell the rental income, the company may instead look to sell the homes themselves with the funds from the sale used to repay investors.

In the event that Liverpool Community Homes, the issuer of the investment, is unable to make the payments of interest or capital repayment due to investors, Octevo Housing Solutions (as the parent company of the group) is obligated to make the payments itself.

How is the company making an impact?

The UK has a shortage of suitable housing and in particular, a shortage of affordable housing available to people on social housing waiting lists. Octevo’s business model is designed to remove the barriers that are constraining registered social landlords and local authorities from delivering the number of new homes needed, and rapidly scale the the access to affordable, and high quality, homes.

In addition, for the properties developed as part of the Liverpool Community Homes project, Octevo has identified a number of measures to significantly reduce the net energy demand of the homes without prohibitive cost which will translate to valuable savings in energy bills for the new tenants. These include ground source heat pumps, solar panels, insulation, glazing and LED lighting.

Key terms

Issuer Liverpool Community Homes
Return 9.0% a year
Term period 5 years and 3 months
Start date 1 January 2020
Maturity date 31 March 2025
Capital repayment Lump sum on maturity
Amount raised £2,056,554.00
Return structure

Interest is paid every 6 months with the capital repaid as a lump sum on the maturity date.

Secured or unsecured Secured It is important to understand that security does not guarantee repayment of your investment or returns.
Security package

This investment has first ranking security over all of the assets of Liverpool Community Homes under a package of security documents including:

  • a security agreement (including fixed charges and a floating charge) over all of the assets of Liverpool Community Homes
  • a share charge over the shares of Liverpool Community Homes
  • a security assignment of contractual rights granted by Octevo over certain documents related to the construction contracts for the building of the homes (for example the architects)

Liverpool Community Homes plc has issued another debenture ('sDebenture 2) which funded the construction of the Huyton property development nearby. Together this results in a larger and more diversified portfolio of properties held by the company. Both debentures are on substantially the same terms. A priority arrangement has been set up such that: the debenture holders that funded the Huyton development will not benefit from the security over the Northwood development assets; and vice versa, the debenture holders that fund this Northwood development will not benefit from the security over the Huyton development assets. Any monies from the enforcement of security over all other assets of Liverpool Community Homes plc (as well as its shares) will be shared on a pari passu basis (ie. proportionally) between holders of both sets of debentures.

Early repayment options

The company can choose to repay the investment at any point from and including 1 January 2022, subject to paying an early redemption fee equal to half of the interest that would have been due between the early repayment date and 30 June 2022. There is no early repayment fee payable if the investment is extended beyond 30 June 2022.

See the Debenture Deed for details of all circumstances in which the option for early repayment may be exercised.

Documents

Debenture Deed
Download PDF The debenture deed sets out the legal agreement and terms for this investment.

Payment schedule

This table gives a breakdown of what is due to be paid back on this investment, based on an example investment of £1,000.

Payment schedule table
Payment date Capital repayment Interest Total
30 June 2020 £0.00 £29.91 £29.91
31 December 2020 £0.00 £30.24 £30.24
30 June 2021 £0.00 £29.75 £29.75
31 December 2021 £0.00 £30.24 £30.24
30 June 2022 £0.00 £29.75 £29.75
31 March 2025 £1,000.00 £238.80 £1,238.80
Total £1,000.00 £388.69 £1,388.69

Updates

These updates tell the story of the investment over its life and include information reported to investors by the company or council behind the investment. The updates are provided for informational purposes only and do not constitute an inducement or invitation to invest. Information provided at the time of publishing may no longer be accurate.

Please read the full update here

Dear investors,

This is a short update from Liverpool Community Homes to confirm that following the acceptance of our proposal by investors, the funds from the bridging finance partner have started to be drawn down and the work to complete the unfinished properties at the Northwood development is underway.

Similar proposals to complete the homes were put to investors in the second Debenture offer from Liverpool Community Homes which funded our Huyton development, as well as investors in our sister company Merseyside Assured Homes. No proposal has yet been put to investors in Pax Apartments as the properties are complete and tenanted.

Our proposal was also accepted by investors in Merseyside Assured Homes with work also now underway on site. However, disappointingly, the proposal to investors in the second Debenture from Liverpool Community Homes that funded the Huyton development was rejected by the majority debenture holder. The Huyton development will now likely be sold in its current unfinished state. The impact of this for you is that we will have a smaller portfolio of completed properties across Pax Apartments, Merseyside Assured Homes and Liverpool Community Homes which may be less attractive to buyers of the future rental income which could impact the price they are willing to pay.

We will provide further updates in due course to report on the progress over the anticipated 12 months that we expect these works to take as well as any developments on discussions around the portfolio’s future income sale, or if necessary a sale of the properties.

Yours sincerely,

Directors of Liverpool Community Homes

Thank you to all those who have voted on the proposal from Liverpool Community Homes.

In order for the proposal to be agreed, investors holding 75% of the Debentures had to vote in favour of a Special Resolution — this threshold has been met and the proposal has therefore been accepted.

  • In favour: 77.4% (824 investors)
  • Against: 0.9% (12 investors)

What happens next?

With the vote passed, the new directors of the company will now look to finalise the process of receiving the new funding and then start work to complete the properties as soon as possible - the full details of the proposal can be found here.

The maturity date for the investment is now 31 March 2025, however funds from either selling the properties or the rental income would be expected to be paid out to investors sooner. Updates will continue to be provided to investors as the process of completing the homes progresses.

Liverpool Community Homes has asked investors in Debenture 1 to vote on a proposal that would allow the company to:

  1. Take out a new loan to fund the work required to complete homes at the Northwood development.
  2. Once complete, look to sell the homes on the open market or sell the income from keeping them as social housing.
  3. Extend the investment until 31 March 2025. Funds from either option above would be expected much sooner and would be paid out to investors, however the longer extension gives more time to attempt to recover additional amounts from Octevo to repay any outstanding amount.

The new directors of Liverpool Community Homes believe completing the homes, even with the additional cost of construction and the new loan funding, represents the best route to maximise the amount that is returned to investors. The alternative, selling the homes in their current unfinished state, is expected to return a significantly smaller amount. The proposal sets out the figures and reasons for their recommended approach.

The terms of the investment can only be changed with the approval of investors by voting on a special resolution. In order for the proposal to be accepted, investors holding at least 75% of the debentures must vote in favour.

What do you need to do?

  1. Read the proposal from the company which sets out more details about the plan to maximise the amount repaid to investors.
  2. Read the Special Resolution which is the legal document you are voting on.
  3. Voting has now closed.

The new directors of Merseyside Assured Homes have made available a recording of the webinar held on Wednesday (31 May 2023) for those who were not able to attend on the day.

The directors introduced themselves to investors and provided more detail on their backgrounds and motivations for taking on the role, as well as talking through the current status of the Merseyside Assured Homes properties and their proposal.

You can view the recording here (the passcode to view the webinar if needed is: 7&BBA8zR).

Please read the full update here

Please read the full update here

Dear investors,

We apologise that you haven't heard anything from us for a while and nothing since our shareholder Octevo Housing Solutions (Octevo) went into administration, particularly with the upcoming maturity date for your investment on 31 December 2022. With the company’s previous director Robert Macmaster also declared bankrupt and as the principal individual behind Octevo, it has been taking time to understand the full picture. Jeremy Friedlander, the remaining director, has not been active day to day in the business.

The company has now appointed Rod Black as a director to assist Jeremy given the amount of work that is required across Octevo's subsidiary companies to return capital to investors (he has also joined the board of our sister companies Pax Apartments and Merseyside Assured Homes) after a review of the potential conflicts given his other roles at Propifi Capital and Kentish Homes.

We wish to inform investors that we will not be able to make the final interest payment and return of your capital on 31 December – the company does not have the funding in place to do so.

We had hoped to give you a much fuller update before year end including a proposal on how and when we plan to be able to pay the amounts due to investors. However the administration of Octevo has created added complexities for the group and with only a drip feed of information we are concerned about making statements that subsequently prove to be inaccurate or incomplete. However, we want to assure you that there is significant work going on in the background and that the company is working hard to progress a range of options to generate value for our investors, alongside the efforts of the administrator of Octevo to keep ownership of Octevo's London development in the group to cover any remaining liability to you.

We will be in touch in the new year once we are in a position to give an accurate overview and with our intended plan of action to return as much capital to you as possible, as quickly as possible.

Best regards,

Jeremy Friedlander and Rod Black

Directors of Liverpool Community Homes Plc

Please read the full update here

The interest payment that was due on 30 June 2022 has now been paid (1 day late). The delay was caused by a banking delay, with transfer initiated by Liverpool Community Homes on 30 June but the funds only received with Abundance on 1 July.

Please read the full update here

Please read the full update here

Please read the full update here

An investment return from Liverpool Community Homes Debenture 1 was paid today.

Liverpool Community Homes has made its third Cash Return payment today - this is the delayed payment due on 30 June 2021. The payment was delayed due to an error by the company's bank which then took a number of days for the bank to resolve and authorise the bank transfer. For an update from the company on site progress, please see below.

Please read the full update here

The delay to the Liverpool Community Homes interest payment is due to the company's bank requesting additional information which meant the payment had to be re-authorised in branch. The transfer of funds to Abundance has now been re-authorised with the bank, however the money has not yet been transferred by the bank. Liverpool Community Homes continue to chase the bank to understand the reason for the further delay and will provide an update on the expected payment date once they have a response from its bank.

An investment return from Liverpool Community Homes Debenture 1 was paid today.

Please read the full update here

An investment return from Liverpool Community Homes Debenture 1 was paid today.

Due to the Covid-19 pandemic and the lockdown restrictions put in place, we decided along with the contractors to establish gas, water and electricity services on site at an early stage. On our sites for Merseyside Assured Homes and Pax Apartments (for which we also raised funds on Abundance), we experienced delays due to network utility installations, notwithstanding, the complete shutdown of the construction industry and its supply chain.

With the above in mind we have made an early start on service connections with a view that should the pandemic re-escalate, we already have the services installed and therefore construction can continue even with a depleted workforce and not lose as much downtime on sites as we have previously experienced.

We hope that with restrictions lifting further in July that the contractor can make up some lost time and its workforce can be increased resulting in only a short delay to the overall build programme (providing of course that a second wave pandemic does not hit us).

Since the lockdown started we have had to put a halt to works on our construction sites. Currently construction is still frozen due to unavailability of material supplies and workers are understandably unwilling to risk social contact until the scale of the virus spreading is reduced. Our contractors are drawing up plans for a reduced and staggered return on some trades as long as social distancing and protective measures are put in place. How quickly we can restart is unclear as we await details of how the lockdown restrictions will be lifted.

The contractor is looking at a possible skeleton staffing for a return a week today to start on at least one site where safe distancing can be achieved without compromising their workers safety. They are consulting with their Health & Safety executive on all the protective measures to ensure that all guidelines are followed.

Prior to the official lockdown we had 27 tenants identified for interview to live in our finished homes, sadly we only managed to see 4 of them before lockdown. There are a number of prospective tenants wishing to put down rent deposits but, until lockdown is relaxed, interviewing cannot be conducted safely. We still anticipate strong demand for our homes, so once conditions allow interviews will be resumed.

This sums up the current situation for Octevo and its projects, and updates on any further developments will be provided accordingly.

To date (25th March) we have been able to continue to work on the various sites we are developing but are now seeing things grind to a halt and so are expecting some delays. At this point it is not possible to draw any conclusions, but we hope the delays will be only a matter of weeks.

On our construction sites, contractor availability has been decreasing due to illnesses, travel restrictions, availability of equipment and supplies and for health & safety reasons. Builders merchant’s and plant hire companies are closing which will have knock on effects on the wider construction industry. We are able to continue work on a few minor and essential jobs but will have to delay most of the work.

For properties that are finished, we are having to stop doing viewings because potential tenants are no longer attending scheduled ones and the Councils are suspending new viewings for the time being.

These are unprecedented and uncertain times but beyond the COVID-19 crisis the continued and growing need for social and affordable housing remains – so we will continue to do our best to help meet that demand. We will continue to follow government guidance and strive to get back on track where it’s safe to do so and keep you updated of any material developments.

An investment return from Liverpool Community Homes Debenture 1 was paid today.

This investment closed today.

Please read the full update here

Please read the full update here

Please read the full update here

Liverpool Community Homes Debenture 1 opened for investment today.