A housing association has crossed the Pond with its latest investment deal, securing £100m of private funding from investors in the UK – and the United States.
Bromford has agreed the secured, sustainable private placement with three investors to fund its ambitions to build more homes and deliver its sustainability programme.
The 46,000-home housing association launched a transaction to the market earlier this month for a new private placement, and received bids from both new and existing investors based in the UK and North America.
Eleven investors, including five potential first-time investors to Bromford, submitted bids in excess of £700m across the requested tenor curve – duration – from 10 years to 30 years.
Imran Mubeen, Bromford’s director of treasury, said: “These funds will enable us to continue to invest in the delivery of much-needed new affordable housing across the West Midlands and West of England. They will also fund our broad and ambitious sustainability programme, which includes decarbonising more of our existing homes, improving diversity across our organisation, and coaching more of our customers into employment and training.”
In the three years since Bromford’s previous capital markets issue, the organisation says it has delivered over 3,400 new energy efficient homes, retrofitted over 1,300 homes to EPC C or above, migrated its repairs fleet to over 100 low carbon vehicles, hired 100 apprentices and graduates, reduced its gender pay gap to 6.5% and delivered over 2,500 customer interventions to generate over £250,000 of additional income to support its customers through the rising cost of living.
The £100m will help fund the Gloucestershire-based organisation’s on-going development programme, which aims to complete 12,000 new homes over the next eight years.
Market committed
Mubeen added: “With a bid book over seven times oversubscribed, and with offers across every point of the tenor curve at attractive spreads, this deal affirms that the capital markets absolutely remain open for housing associations who have a robust business plan, and a compelling sustainability narrative.
“The positioning of our leading credit ratings, and importantly, how we continue to drive our ratings to unlock balance sheet capacity to deliver new homes, carbon retrofit works, and our flagship neighbourhood coaching model, resonated with the investor community.
“In an elevated rate environment, and with significant offers at tenors of 10 years and 12 years, we printed this deal at the shorter dated end of the curve, leaving the longer tenors open for lower rate funding in the future.”
Lloyds Bank acted as sole placement agent on the deal, with Newbridge Advisors LLP providing treasury advice and Trowers & Hamlins LLP legal advice to Bromford, while Addleshaw Goddard LLP acted as counsel for investors.
Rory Brown, director of private placements at Lloyds Bank, said: “The heavily over-subscribed transaction reflected the highly rated and highly regarded position of the issuer in the market, and was testament to the strength of the Bromford story – providing sustainable, affordable homes to their customers.”
Grant Vaughan, partner at Newbridge Advisors LLP, added: “We were pleased to have advised Bromford on their latest tranche of capital markets funding. This demonstrates Bromford’s access to a broad range of liquidity, seeing strong demand from both UK and US investors. This is a testament to their financial and operational strength, enhanced through their ongoing dedication to investor relations which was reflected in the size of the bid book and the universally positive investor endorsement they received.”
Image credit: SmartPhotoLab – Shutterstock
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