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Associations borrow £60m from EIB as AHF winds down
Two housing associations have borrowed £60m from the soon-to-end government-backed aggregator using funds from the European Investment Bank (EIB).
Affordable Housing Finance (AHF) – whose loans are guaranteed by the government, allowing them to provide cheaper finance – agreed two loans from its £1bn of EIB funding to Optivo and Aster.
Optivo, one of the UK’s largest housing associations with 44,000 homes, will borrow £25m at a fixed rate of 1.755%. Aster, meanwhile, has agreed £35m (of a £50m loan) at 1.798%.
The money will be drawn from the £1bn facility that AHF has from the EIB, a historic loan allocated before the 2016 referendum on the UK’s membership of the EU.
To date, £578.5m has been drawn from it, but AHF sources say that the rest of the money has been fully allocated and that 13 more borrowers will draw down the remainder before December.
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Piers Williamson, chief executive of AHF, said: “The agreed deals are a testimony to EIB’s importance and housing associations’ thirst for competitive financing. These loans will help to provide the affordable housing sector with a better, more diverse stock.”
Mr Williamson also manages The Housing Finance Corporation (THFC), which provides a similar service to AHF, but without the benefit of government guaranteeing the loans. At the end of July, THFC priced its first bond since AHF began providing loans.
Tom Paul, director of treasury and risk at Optivo, added: “We’re pleased to have drawn the last of our AHF funding at a fraction over the benchmark gilt. These funds, together with those already drawn, are supporting our ongoing programme of investing in new social housing.
“The AHF programme has reduced our cost of capital by 1% and enabled us to do more than we would have otherwise done.”
Chris Benn, group finance director at Aster Group, said: “This latest funding from AHF comes at a highly competitive rate that recognises Aster’s strong A+ credit rating and will finance the development of 650 new affordable homes.
“The package forms part of Aster’s diverse funding mix, which also utilises financing from banks, bond proceeds and income from homes sold on the open market to increase the provision of high-quality affordable housing in the south of England.”
