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Scottish housing association borrows £40m
A Scottish housing association has borrowed £40m from Pension Insurance Corporation (PIC), which insures pension funds.
Eildon Housing Association, which is based in the Scottish Borders, took the £40m in debt that will mature in 2053 and 2055, intending to use the money to support its development plan. The landlord plans to build 750 new homes by 2021.
It is the first Scottish housing association to complete a private placement deal with PIC, which has invested £1.5bn in the UK social housing sector more widely.
Eildon will defer drawing down £15m of the loan until 2020 in order to, it said, provide “certainty of debt cost”.
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The insurer said that the fact it will mature in two different years is set to match PIC’s pension liabilities in years where it is difficult to source cashflows in public bond markets.
Nile Istephan, chief executive at Eildon, said: “This is a very important partnership for Eildon and we are delighted to have secured PIC’s investment.
“These funds are crucial as we seek to build 750 new homes. I want to thank the PIC team for their flexibility and proactive approach in helping close this deal.”
Liz Cain, senior debt origination manager at PIC, said: “This is our first private placement investment with a Scottish housing association and we are very pleased to have worked with the team at Eildon to complete it.
“We were impressed with their strategic focus, standards of governance and long-term approach.”
The transaction was arranged by the bank Santander, which is often active in loans to the UK social housing sector and has itself previously lent money to Eildon.
Tony Fordham, head of private placements at Santander, said: “Santander has enjoyed a long relationship with Eildon and has supported them with committed lending since 2000.
“We are very pleased to have facilitated a competitive private placement process, enabling Eildon to raise £40m from PIC, so they can continue with their programme of building affordable housing across the Scottish Borders. Investors were attracted to Eildon’s very sound financial performance and strong management team.”
