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Shared ownership company to issue bonds
A shared ownership company funded by a council’s pension fund is preparing for a bond issue.
Heylo Housing, which was set up in 2014 by the Lancashire County Council Pension Fund to provide shared ownership homes, is looking for investors in its bonds via a subsidiary, Heylo Housing Secured Bonds.
The company plans to use the proceeds to build up a portfolio of assets, separate to the shared ownership homes owned by Heylo Housing.
The 10-year bonds will pay interest semi-annually at an interest rate of 1.625%, a figure which will be adjusted to take into account changes in inflation.
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Currently, Heylo Housing owns over £300m worth of properties, comprising 1,650 homes, and has another 1,300 other homes under contract.
Chris Hewitt, director at Heylo Group, said: “We’re delighted to announce the launch of our first retail eligible bond. Demand for affordable housing continues to intensify and we see a significant opportunity to grow our portfolio of occupied, part buy – part rent residential properties.
“We believe that the low volatility, long-term and inflation-linked cash flows generated by this attractive asset class, enable us to offer investors stable returns protected against inflation, with no deflation risk.
“We intend to deploy the proceeds of the bonds quickly and build on our strong track record of growing the portfolio and providing greater access to affordable homeownership.”
The bonds will be secured by an equitable mortgage over Heylo’s residential properties, a fixed charge on various assets of Heylo’s and a floating charge over all its assets.
Heylo bought housing association Three Conditions in March last year in order to make it easier to access Section 106 housing.
It also has a partnership with large housing association The Guinness Partnership, which maintains the homes Heylo owns and collects the rents.
As well as its private funding, it is also seeking to access some of the funding for shared ownership available from the government.
Update: at 14.39 on 10.10.18 This story was updated to clarify that it is Heylo Group’s funding subsidiary issuing the bonds.
