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North East housing association secures £75m financing deal with L&G
One of the largest providers of affordable homes in the North East of England has agreed a £75m long-term financing deal with Legal & General (L&G).
The investment will support 16,000-home housing association Bernicia in delivering 650 homes in the region by 2023.
The association has also said it wants to use some of the money to better support communities and play a central role in the economic recovery of the North East following the COVID-19 crisis.
The deal follows several other significant recent investments in the North East by asset management giant L&G, which owns several housing businesses including registered provider L&G Affordable Homes.
These include deals worth £100m and £350m to support large regeneration projects in Newcastle and Sunderland respectively.
Centrus was the sole financial advisor to Bernicia, while Trowers & Hamlins acted for Bernicia on the legal aspects underpinning the deal.
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Steve Bolton, head of corporate private debt, Europe, at L&G, said: “Whilst we have seen a lot of change over the past few months, the fundamental need for good quality, affordable homes has not changed.
“If COVID has shown us anything, it’s that we all need a safe place to call home. COVID, and the actions taken to mitigate its spread, highlight the central role of the home in people’s lives.
“Legal & General is uniquely placed to invest annuity money into the UK economy, supporting its long-term pension commitments and creating real assets that provide jobs, housing, productivity and wage growth.”
Janette Longstaff, executive director of finance at Bernicia, said: “This important investment from Legal & General Investment Management – as the sole investor in the deal – represents a huge vote of confidence in Bernicia’s financial strength, as well as the wider North East economy.
“It allows us to secure long-term funding at very favourable rates, thanks to our strong financial standing and excellent governance.
“The funds, which will be provided in three drawdowns over a two-year period, allow us to not only meet our corporate strategic objectives, but to go much further, enabling us to explore strategic opportunities with our local authority partners, support local supply chains and create more opportunities for the people of the North East.”
Sam Goldman, director of corporate finance at Centrus, said: “We are delighted to support Bernicia on this landmark transaction, representing the fundamental strength of their business, long-term strategy and their position in and support for the North East.
“The structure provides cost-effective deferred funding with flexible covenants – a foundation that further supports Bernicia in achieving its long-term strategy.”
