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L&Q sees interest rate rise on £300m bond after missing ESG target

Large London landlord L&Q has started paying higher interest on a £300m bond after it failed to hit a key emissions target.

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Waqar Ahmed
Waqar Ahmed: “We had to make tough decisions on budgets everywhere, especially where there may have been an impact around costs passed on to residents”
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L&Q sees interest rate rise on £300m bond after missing ESG target #UKhousing

The 109,000-home group revealed that it has missed reducing its so-called Scope 1 and 2 greenhouse gas emissions by a targeted 20% between 2020 and 2024. 

L&Q blamed the failure on a pause in buying renewable electricity.

Waqar Ahmed, the group’s outgoing finance director, said: “Widespread disruption to the wholesale energy markets caused the price of renewable energy to soar.

“This coincided with the cost of living crisis and therefore we had to make tough decisions on budgets everywhere, especially where there may have been an impact around costs passed on to residents.”


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Energy use in its buildings is the biggest contributor to these types of emissions, according to the group. 

L&Q’s sustainability report showed that its Scope 1 and 2 emissions were 33.81 ktCO2e in its 2023-24 financial year, which was 3% higher than an agreed KPI target. 

As a result of the missed target, the landlord’s interest rate on the £300m bond will increase from 2% to 2.125%. The increase took effect on Monday (30 September). 

Mr Ahmed, who announced this week plans to step down from L&Q, said the result was “disappointing”.

But he added: “We still saw cumulative emissions reductions to the periods ending 31 March 2022 and 2023.”

The 10-year bond was completed in early 2022, which at the time L&Q said was the social housing sector’s first sustainability-linked bond. 

Last week the G15 landlord reported an annual post-tax surplus of £117m on turnover of £1.12bn.

However the audited surplus figure was £30m lower than an unaudited figure disclosed in May

The adjustment came mainly due to a £21m impairment on fixed assets and £3m impairment release on current assets under development, L&Q said. 

Despite the drop in the audited surplus figure, it was still a near threefold increase year-on-year.

This was primarily due to a lower net impairment charge of £18m, compared to £109m the year before. L&Q also saw a £30m drop in the value of its investment property, against an £85m fall in its 2022-23 financial year. 

The audited figures also revealed an increase in the proportion of income the landlord received from operating social housing. Turnover from social rents was 63% of the group’s income, compared to 56% the previous year. 

Revenue from outright market sales fell by 46% year-on-year to £84m, L&Q’s annual report showed. 

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