Bromford agrees £200m sustainability-linked loan with NatWest
Bromford has secured a £200m sustainability-linked loan with NatWest, which the association said will be used to build more than 1,000 new affordable homes.
The 47,000-home landlord, which last week revealed plans to merge with Flagship, said the loan will enable it to build 1,300 new affordable homes across the West Midlands and West of England.
The deal is expected to “generate significant interest savings”, said Imran Mubeen, director of treasury at Bromford, because it takes advantage of the difference between the Sterling Overnight Index Average (SONIA) swap and the gilt curve.
The loan is tied to targets focused on delivering new homes for social rent and reducing carbon emissions. It will be split into two £100m tranches, maturing in 10 and 11 years respectively.
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Bromford will receive a discount on its interest payments if it meets the targets.
Mr Mubeen said: “The loan has the potential to generate over £1m of interest savings if we successfully meet our sustainability targets, which may challenge even the most sceptical of juries to reconsider the financial and broader benefits of sustainability linked loans.”
Bromford’s sustainability targets have expanded from a focus on Energy Performance Certificate ratings to Scope 1, 2 and 3 carbon emissions, he added.
Amanda Swann, director of development at Bromford, said: “This loan from NatWest will allow us to continue our development programme to meet our ambition of building 11,000 new homes by 2032 with 65% at social and affordable rent tenures.”
In March, NatWest pledged to lend £5bn to the UK social housing sector up to the end of 2026.
Paul Eyre, head of residential and housing finance at NatWest, said the loan to Bromford brought the bank’s “progress against this to £1.7bn”.
Proposals for Bromford’s tie-up with Norfolk-based Flagship have been agreed by the boards of both providers, Flagship said on 26 June.
The merger would release “significant additional financial capacity” for the organisations, the association added, “above what either party could achieve alone”.
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