L&G’s £50m housing solution

Legal & General has provided its second loan to the social housing sector this year – a £50m facility to support Housing Solutions’ six-year pipeline of 1,600 affordable homes across the South East. The 40-year debt reflects an all-in cost of sub 5%. Typical loan asset cover levels in the sector are around 105%. L&G’s […]

Legal & General has provided its second loan to the social housing sector this year – a £50m facility to support Housing Solutions’ six-year pipeline of 1,600 affordable homes across the South East.

The 40-year debt reflects an all-in cost of sub 5%. Typical loan asset cover levels in the sector are around 105%.

L&G’s loan is secured against a pool of Housing Solutions’ existing social housing assets and is structured to allow for four separate drawdowns between December 2014and October 2015.

This more closely matches when the company needs the money, as opposed to the traditional bond market when all the money is drawn on day one. “The borrower didn’t want the cost of carry on the borrowing, whilst at the same time wanted certainty of cost of funds,” explained Alex Gipson, lending manager at Legal & General.

The term offers a good match for L&G’s long dated annuity liabilities, while the sponsor’s “strong operational cashflows, tight cost controls and a geographic focus mean its performance reflects a clear and enduring business model”.

The deal marks L&G’s fourth social housing transaction in total, after entering the sector in 2013. In February it issued a £40m, 25-year loan to Thames Valley Housing Association, and last year a £102m, 15-year loan to The Hyde Group.

The deal marks L&G’s fourth social housing transaction in total, after entering the sector in 2013. In February it issued a £40m, 25-year loan to Thames Valley Housing Association, and last year a £102m, 15-year loan to The Hyde Group.

It also recently secured a portfolio of over 4,000 housing units, let to Places for People, in a £252m sale-and-leaseback.

L&G has committed £455m to affordable housing over the past 18 months, and over £5.5bn to UK infrastructure to date, including residential regeneration, key worker and student accommodation, and care homes. Last month, it provided its first loan to the care home sector: a £51m, 10-year fixed rate debt facility to the LNT Group.

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Legal & General has provided its second loan to the social housing sector this year – a £50m facility to support Housing Solutions’ six-year pipeline of 1,600 affordable homes across the South East.

The 40-year debt reflects an all-in cost of sub 5%. Typical loan asset cover levels in the sector are around 105%.

L&G’s loan is secured against a pool of Housing Solutions’ existing social housing assets and is structured to allow for four separate drawdowns between December 2014 and October 2015.

alex gipson crp

This more closely matches when the company needs the money, as opposed to the traditional bond market when all the money is drawn on day one. “The borrower didn’t want the cost of carry on the borrowing, whilst at the same time wanted certainty of cost of funds,” explained Alex Gipson, lending manager at Legal & General.

The term offers a good match for L&G’s long dated annuity liabilities, while the sponsor’s “strong operational cashflows, tight cost controls and a geographic focus mean its performance reflects a clear and enduring business model”.

The deal marks L&G’s fourth social housing transaction in total, after entering the sector in 2013. In February it issued a £40m, 25-year loan to Thames Valley Housing Association, and last year a £102m, 15-year loan to The Hyde Group.

The deal marks L&G’s fourth social housing transaction in total, after entering the sector in 2013. In February it issued a £40m, 25-year loan to Thames Valley Housing Association, and last year a £102m, 15-year loan to The Hyde Group.

It also recently secured a portfolio of over 4,000 housing units, let to Places for People, in a £252m sale-and-leaseback.

L&G has committed £455m to affordable housing over the past 18 months, and over £5.5bn to UK infrastructure to date, including residential regeneration, key worker and student accommodation, and care homes. Last month, it provided its first loan to the care home sector: a £51m, 10-year fixed rate debt facility to the LNT Group.

 

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