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AHF lends £95m more European money
Three housing associations have borrowed £95m of European money through Affordable Housing Finance (AHF), in the scheme’s sixth deal in a month.
Family Mosaic, Stonewater and London-based Gateway borrowed the money from AHF’s European Investment Bank (EIB) facility, with low borrowing costs as a result of government guarantees on the loans.
The past month has seen a flurry of activity from AHF, which has almost used up all of its remaining funds and is expected to come to an end in December.
Family Mosaic, which AHF described as “at an advanced stage of merging” with fellow London landlord Peabody, borrowed £50m of EIB funding at a floating rate of 0.178% over the six-month rate for lending between banks (Libor). The associations described the merger as complete in July.
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Piers Williamson, chief executive of AHF, said: “All three housing associations have priced significantly inside spreads being achieved on [housing association] standalone bonds. This comparison highlights the low-cost structure of AHF’s EIB financing and its ability to outprice other sector issuances. It’s just a shame all good things have come to an end!”
Stonewater drew down £25m at a fixed rate of 1.867%, which was 0.017% over the cost of 20-year government borrowing.
The 31,500-home association has been trying to access EIB funding of their own for some time, but John Bruton, finance director at Stonewater, admitted last month that progress had stalled as the EIB waited for assurances from the UK government.
Stonewater has obtained alternative sources of funding as that process has continued, signing a $150m loan with Pricoa earlier in the year and issuing fully retained bonds worth £250m two weeks ago.
Mr Bruton said of the AHF funding: “We are delighted to complete this loan. It will contribute to us building more than 300 affordable rent and homeownership units in locations across the South West, Midlands and East of England.
“While we also use other sources of finance, the very low interest rate we have secured from EIB means we can do more to meet the huge housing need that exists than if we only had access to commercial loans”.
Gateway, a 2,800-home association operating mainly within east London, borrowed £20m to help their plans to build 500 new homes by 2020.
