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Trafford strikes £275m funding deal
A Manchester-based housing association has struck a new £275m funding deal with two banks and two institutional investors, replacing a previous £145m facility.
The mixed-maturity deal for Trafford Housing Trust will see as much as £100m of new financing made available for joint venture partnerships, allowing for the development of 2,000 homes over the next four years.
The 9,000-home housing association said it now has a simplified funding structure, with more flexibility to realise its business aims, such as the successful delivery of its 50/50 housebuilding joint venture with L&Q.
The deal involves Lloyds Bank, Yorkshire Building Society, giant US investment firm Blackrock, and pension insurer the Pension Insurance Corporation (PIC).
Lloyds Bank is providing a revolving credit facility of £100m. Funds and accounts managed by direct and indirect subsidiaries of Blackrock are providing fixed-rate debt funding of £75m.
PIC is providing fixed-rate debt funding of £75m, while Yorkshire Building Society is providing a revolving, medium-term loan of £25m.
Helen Rourke, director of finance at Trafford Housing Trust, said: “The refinancing gives the trust more control over our assets and greater potential to invest in our strategy to deliver better homes for residents, and significant numbers of new homes of all types across the North West.”
Terry Frain, director at Savills Financial Consultants, which advised on the deal, said: “This groundbreaking deal is delivered in partnership with banks as well as institutional investors, with deliberately diversified maturities ranging from five to 40 years.”
The trust’s joint venture with L&Q aims to build around 500 homes each year, with an £80m investment from each partner over the four-year period to deliver 2,000 homes in Trafford and elsewhere in Greater Manchester.
Any profits generated from the joint venture will be re-invested in the local area to create more homes for local people in the years ahead.
Elizabeth Cain, debt origination analyst at PIC, said: “We have ambitious plans to partner with housing associations in 2017 and beyond and look forward to further investments in the sector.”
PIC is a specialist insurer of defined benefit pension funds. Its £75m loan will mature in three tranches in 2051, 2052 and 2056.
