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London housing association borrows £150m from North American investors
Large housing association One Housing has borrowed £150m from North American investors.
The London-based association said it approached the North American investors, including one US investor that is new to the social housing sector, as well as some in the UK.
The 17,000-home social landlord secured the funds over a variety of different maturity dates, ranging from 10 to 20 years in duration, saying it would use them to support its plan to build 5,000 new homes over the next 10 years as well as expand its care and supported housing offer.
Overall, the blended interest rate between the investors was just under 2.84%. One Housing said that £80m of the funds were raised on an unsecured basis.
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For the rest of the funds, the association used a ‘numerical apportionment basis’ structure, meaning it took the total number of homes being used as security and allocated a proportion to each lender without specifying which homes went to which lender.
One Housing said this was the first time that this kind of structure has been used in a private placement market transaction.
Ebele Akojie, chief financial officer at One Housing, said: “We have successfully raised £150m from the private placement markets at a blended interest rate of just under 2.84%. We were able to attract interest from investors achieving a significantly oversubscribed order book.
“This demonstrates investors’ confidence in the diversity of One Housing’s service offering and our commitment to sustainable growth.”
Mark Wells, head of structured debt capital markets in Europe, the Middle East and Africa at Mitsubishi UFJ Financial Group (MUFG), which was joint agent on the private placement with NatWest, added: “US investors again provided a competitive alternative to the UK market with significant funding flexibility, meaning One Housing achieved a very strong outcome despite challenging market conditions.
“We at MUFG were pleased to bring a new investor to the sector, and it is especially encouraging to see not only the increased demand for UK social housing in the US but also the ability of investors to meet borrowers bespoke funding requirements.”
Jonathan Clarke, managing director at Centrus, which was the independent advisor on the transaction, said: “This transaction represents attractive and flexible financing to support One Housing Group’s ongoing development programme.
“This transaction has been carefully planned, reflecting One Housing Group’s sophisticated approach to aligning their financing with their business and strategic plan needs.”
