Bromford strikes £50m deal with LGIM in first- of-its-kind financing for social housing
Bromford revealed it had struck a new financing deal with Legal & General, providing the housing association with £50 million to help it deliver more than 12,000 new energy efficient and affordable homes by 2031.
The partnership with Legal & General Investment Management’s (LGIM’s) private credit team is a first of its kind for the social housing sector, said Bromford, and has involved re-couponing its existing £100m private placement with LGIM, originally agreed in 2020.
That original funding has already contributed towards the delivery of 3,400 new affordable homes and energy efficiency improvements on existing homes, the company added.
READ MORE: Bromford secures new £75m sustainability-linked loan with international funder
Bromford’s director of treasury Imran Mubeen said: "In an elevated rate economy with limited market activity, we are facing into new challenges and we must rise to meet them with innovative thinking to deliver fresh solutions.
"Working with LGIM to retrofit our legacy private placement created a more agile pathway to new funding without the full weight of new legal documents, a full security charging cycle or an extended roadshow."
He added that the transaction immediately strengthened Bromford's liquidity and would be complemented by further funding later this year.
"We still have over eight thousand households on local authority waiting lists across our core geographies, and the delivery of new energy efficient homes is a core component of our framework and new corporate strategy with its focus on scale, place and impact," said Mubeen.
Steven Bolton, head of corporate private credit, LGIM Real Assets, added: "This funding demonstrates how we can work collectively to invest in the UK’s towns and cities and deliver new, much needed social and affordable homes."
The re-couponing was supported by Newbridge Advisers LLP and releases £50 million as immediate cash proceeds.
It is to be repaid over 40 years with an amortising repayment curve, well suited to the long-term horizon of LGIM’s pension clients.
The new funding represents Bromford's first proceeds under the company's updated 2023 Sustainable Finance Framework, published in June this year.
Grant Vaughan, partner at Newbridge Advisers LLP, said: "We would encourage other housing associations to follow Bromford’s lead and examine potential opportunities with their investors to restructure legacy funding to create new routes to the market."
In a separate statement, Bromford said it had submitted plans to redevelop 56 of the association's existing properties in Berkeley Close, South Cerney, Gloucestershire and replace them with 84 energy efficient homes.
It said 65 of the new homes will be available for social rent, while the remaining 19 will be available on its part-buy, part-rent shared ownership scheme.
The plan involves transforming the existing five acre site into a mix of one-bedroom flats, one and two-bedroom bungalows and one, two, three and four-bedroom houses.
Subject to approval by Cotswold District Council, Bromford hopes to start work demolishing the existing properties in early 2024.
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