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Housing association borrows £100m from pension insurer
Midlands-based Accord Housing Association has borrowed £100m from an insurer of pension funds.
The Pension Insurance Corporation, which pays the pensions of its policyholders, provided the funds in a private placement after Accord went through a full market tender process.
Accord chose PIC, a regular investor in social housing, because of its flexibility on when debts will need to be repaid, or ‘mature’. The deal has a range of maturities for different amounts spanning 30 years.
These varying maturities are designed to match PIC’s obligations to pay pensions in years where it is difficult to find cash from the public bond markets.
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The 13,000-home association aims to use the money, which is secured with housing assets, to repay existing loans and to fund the future development of 1,500 homes during the next five years.
It does not plan to draw down any of the money immediately, deferring this to reduce its upfront costs.
Stuart Fisher, executive director of resources at Accord, said: “We are delighted to have secured a £100m funding facility with a new investment partner PIC, an established and well-respected funder to the social housing sector.
“As part of our planned funding strategy, Accord has now raised £185m in the past two-and-half years and this new funding facility will be used to support Accord’s growth and development ambitions to deliver much needed new homes.”
Marno Jooste, debt origination manager at PIC, added: “We are very happy to have invested in Accord, a dynamic and ambitious social housing provider and I would like to thank everyone for the work that went into reaching this agreement.
“Sourcing long-dated cashflows is important to PIC as we look to back our long-term pension liabilities. Investing in social housing and other illiquid assets allows PIC to generate enhanced yield, helping us to secure more pension liabilities. This, in turn, means more trustees can guarantee their members’ pensions through buy-ins and buyouts, greatly improving their financial security in retirement.”
