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Yarlington issues £120m bond
A South West housing association has issued a £120m secured bond as it strives for growth over the next four years.
Yarlington Housing Group (YHG), which owns and manages around 10,000 homes across Somerset, Devon and Dorset, has agreed the deal at an interest rate 3.41%.
Specialist insurer the Pension Insurance Corporation, which regularly invests in social housing, has subscribed for £60m, paying an initial £1.14m and three future sums of £19.62m over the next three years.
YHG has deferred the other £60m for future sales in an attempt to lock-in current low interest rates while limiting the cost of carry. Traderisks acted as the arranger for the deal.
The deal comes after the landlord’s financial results showed a £14.8m net surplus for 2016/17, with an operating margin of 34%.
In April, it launched a new business strategy which will see its development accelerate by 50% over the next five years, and has started securing sites for delivery in Bristol for the first time.
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Gary Orr, chief executive of YHG, said: “We are delighted to have secured this additional long-term funding.
“The bond issue, and our financial results, places Yarlington in a strong and secure position to deliver our ambitious commitments.
“It reflects the confidence by the capital markets in Yarlington’s strategic and financial plans.”
Yarlington has an A2 credit rating from Moody’s and a baa1 Baseline Credit Assessment.
Allen Twyning, head of debt origination at Pension Insurance Corporation, said: “The investment provides an attractive risk profile in an area of high demand for social housing. In addition the maturity profile is well-suited to our liabilities.”
