Affordable later living providers call off merger

The Extra Care Charitable Trust and Housing 21 have agreed to abandon plans to merge. 

Birmingham-based Housing 21, which manages 22,000 affoerdable later-living homes and has a turnover of £224m, announced in March that it was in discussions with the Extra Care Charitable Trust (ECCT), a non-profit developer of retirement villages, about joining together into a combined group.

The decision to end the merger talks, communicated in a joint statement, comes two weeks after a credit ratings agency warned that the combination of the two organisations would damage Housing 21’s creditworthiness.

The statement said that, following detailed discussions, Housing 21 and the ECCT had agreed that “the two organisations can best serve their residents by remaining as separate entities and are therefore no longer intending to merge”.

It added: “Housing 21 and The ExtraCare Charitable Trust will each continue to develop and operate their own distinct models and services to enable older people to live better lives.”

>> See also: Removing the barriers to later living development

The organisations declined to comment further and did not explain the reasons for the change of heart.

At the end of July, ratings agency S&P had put Housing 21’s A- credit rating on “creditwatch”, meaning it believed that a rating change was likely in the next 90 days.

It said: “The creditwatch placement reflects our view that H21’s potential merger with Extra Care Charitable Trust (ECCT) would result in a combined group with weaker creditworthiness than Housing 21 on a stand-alone basis.

“Based on publicly available information, we consider that ECCT’s operating model carries higher risk than that of H21.”

ECCT, based in Coventry, is smaller than Housing 21, with 4,238 homes in 16 extra care villages and a turnover of £47m. It operates a lease-based model, under which it primarily sells homes to older people under long lease contracts and is obliged to buy the unit back when the lease terminates.

Bruce Moore, Housing 21’s chief executive, had been due to take on the role of chief executive of the combined organisation, with the pair stating the merger would allow them to strengthen their finances and build more homes.