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Large Scottish housing association borrows £50m
One of the largest housing associations in Scotland has borrowed £50m from a major institutional investor to support its development programme.
Link Group, which manages 9,400 homes across Scotland, secured the funds from investor Canada Life Investments on a 20-year basis.
The money was structured with a guarantee provided by a company called Assured Guaranty and its affiliate Assured Guaranty Municipal Corporation.
Link intends to use the money to support its development programme, which is intended to deliver 3,200 homes over the next five years.
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Neil Hall, director of finance and corporate services at Link, said: “In line with the Scottish government’s commitment to building more affordable housing, we have an ambitious development programme and this funding package will help us to deliver these homes.
“Link is a financially robust group and we need to ensure any financing we secure is reflective of our strong credit profile. Cost and certainty of funding were our two key areas of focus, and this financing, structured by Newbridge Advisors, delivered on both.”
Canada Life Investments has made a number of relatively small-scale investments in the social housing sector, including £30m in February and £70m in May last year to Scottish associations Cunninghame Housing Association and Clyde Valley Housing Association, respectively.
It is part of the Great-West Life Group, which manages £800bn of assets from a wide variety of sectors across the globe.
David Marchant, chief investment officer at Canada Life Investments, said: “We are delighted to enter into this transaction with Link Group.
“We have a long track record lending to the social housing sector providing a variety of funding solutions and look forward to working with Link and Assured Guaranty over the term of this private placement.”
The loan has been given an AA rating by ratings agency Standard & Poor’s (S&P), above Link’s own rating of A+. S&P downgraded Link’s outlook in December last year from stable to negative.
According to the agency at the time, Link’s ambitious development programme could see its financial profile deteriorate and Brexit uncertainty could apply further pressure to the association.
