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Karbon Homes issues £100m of retained bonds
Large North East landlord Karbon Homes has issued £100m of retained bonds to fund the development of new homes and improve existing stock.
The 30,000-home landlord secured an all-in rate of 1.94% for the bond, which was heavily oversubscribed.
The bond attracted several investors that hadn’t previously invested in the social housing sector. Karbon said they were attracted by Karbon’s “deep roots in local communities” and the strong position it held after a series of mergers.
Karbon was formed through a merger of Isos Housing, Cestria Community Housing and Derwentside Homes in 2017.
This is the enlarged association’s second move into the bond market, following a £150m bond issue in 2018, with £100m being retained for future release.
The money will go towards achieving Karbon’s target of 500 new homes each year. Karbon will also use it to bolster its plan to invest £193m in its existing stock.
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Karbon holds stock across the North East of England and Yorkshire and is currently promoting its “Strong Foundations Strategy” to build new homes, provide excellent customer service and support strong, sustainable communities.
Chatham Financial Europe provided treasury advice for Karbon, while Trowers & Hamlins provided legal advice and Eversheds Sutherland gave property legal advice.
Paul Fiddaman, group chief executive of Karbon Homes, said: “As a profit-for-purpose business, we invest any surplus into building, improving and maintaining homes, and providing sustainable outcomes for customers and places.
“Combining a sound business head with a strong social heart, the issuance of our retained bonds ensures we continue to have the financial strength to deliver our ambitious strategy and build strong foundations for even more people.”
Kirsty Garrett, director, corporate DCM at Lloyds Bank, which managed the retained bond sales process on behalf of Karbon Homes, added: “Lloyds was delighted to support the Karbon team in successfully selling their £100m of retained bonds.
“After such positive investor interest for its inaugural £250m issue in November 2018, investors welcomed Karbon’s return to the bond market and were very engaged throughout the marketing process.
“Karbon’s credit profile, regional presence and experienced management team supported strong investor demand, enabling Karbon to price the £100m retained sale at a yield of 1.94%, resulting in more than £130m in proceeds.”
