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Housing association borrows £100m from North American backers
Large Midland housing association Bromford has borrowed £100m in a private placement with five North American investors.
The 40,000-home association secured the placement which has a 20-year maturity and will have an overall interest rate of 3.01%. It will also be priced at 1.68% more expensive that the current cost of government borrowing.
Bromford is the latest housing association to secure funding from US and Canadian investors after Network Homes was able to secure £175m from six investors in January.
Inside Housing reported in January that a number of housing associations were turning to investors in North America due to volatility in the British bond market caused by Brexit.
Bromford’s deal comes after the housing association carried out roadshows across London, the US and Canada. It said the initial order book was three-and-a-half times oversubscribed.
Two of the investors involved in the placement have never previously invested in UK social housing. Both were were attracted by the association’s plans to deliver 14,000 new homes over the next decade, Bromford said.
Bromford secured a £300m bond to fund its development plan in April last year – its debut public bond. The 30-year bond was at a price of 1.35% above government borrowing.
Last month Bromford was revealed as one of Homes England’s strategic partners. The association secured £64.4m from the government’s housing delivery agency to deliver an additional 1,4000 new home starts by March 2022.
Bromford completed its merger with 4,000-home landlord Severn Vale in January. It was its second merger in a year after it joined forces with South West landlord Merlin last July.
Imran Mubeen, head of treasury and planning at Bromford, said: “We have been following the North American market for a while and were keen to leverage the sharper levels of pricing while diversifying our investor base.
“It was particularly important to engage with investors directly on the roadshows to highlight the strengths and opportunities associated with the UK social housing sector and the Bromford credit profile specifically.”
