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Bromford secures £200m sustainability-linked loan

News02 Jul 2024Michael Lloyd

Bromford has secured a £200m sustainability-linked loan (SLL) from NatWest that the landlord has said could generate “significant interest savings”.

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The new deal with NatWest is linked to Bromford-led targets focused on delivering new social rented homes and reducing Scope 1, 2 and 3 carbon emissions (picture: Alamy)
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Bromford has secured a £200m sustainability-linked loan from NatWest that the landlord has said could generate “significant interest savings” #UKhousing

The 47,000-home landlord, which last week revealed plans to merge with Flagship, said it will use the funds to help build 1,300 new affordable homes across the West Midlands and the west of England.

 

The loan has been split into two £100m tranches that mature in 10 and 11 years respectively. Interest rates were undisclosed.


‘Significant interest savings’

 

Imran Mubeen, director of treasury at Bromford, said the group had considered a return to the capital markets this year, but continues “to refresh and optimise our new funding strategy in view of prevailing market conditions”.

 

The new deal enables Bromford to generate “significant interest savings”, he said, because the loan uses the SONIA (Sterling Overnight Index Average) rate, which is currently much lower than gilt rates. 

 

“Ultimately, this means we can invest even more in our communities and customers,” he said. 

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Bromford’s loan with NatWest is the association’s seventh issue from its sustainable finance framework, which was published and accredited in 2021.

 

This deal is linked to Bromford-led targets focused on delivering new social rented homes and reducing Scope 1, 2 and 3 carbon emissions. These levels are reported by organisations aiming to reduce their greenhouse gas emissions.

 

Mr Mubeen said the loan also has the potential to generate more than £1m of interest savings if the association successfully meets its sustainability targets.

 

Around 89 per cent of its homes are now at Energy Performance Certificate Band C or above, according to Mr Mubeen. 

 

He also pointed to the fact that Bromford created the first green loan in the sector with NatWest in 2019. 

Development

 

Amanda Swann, director of development at Bromford, said that the loan will help with its target to be building 11,000 new homes by 2032, with 65 per cent at social and affordable rent tenures.

 

According to its results for 2023-24, Bromford completed 1,191 affordable homes during the year, a drop from 1,265 in the previous year. This included 551 homes for social rent and 308 homes for affordable rent.

 

“With demand for affordable housing showing no signs of decreasing, we are committed to playing our part in tackling the housing crisis by continuing to build affordable homes,” Ms Swann said.

 

In March this year NatWest announced its ambition to provide £5bn of funding to the social housing sector to December 2025.

 

Paul Eyre, head of residential and housing finance at NatWest Group, said that the new Bromford deal brings the group’s progress against this to £1.7bn.

 

On the deal, Bromford received legal advice from Devonshires, Clarke Willmott and Trowers & Hamlins, while Addleshaw Goddard acted on behalf of NatWest.

 

Over the past year Bromford has secured more than £650m of sustainable finance to deliver the objectives set out in its sustainable finance framework.

 

This ranges from the delivery of new affordable, more energy-efficient homes to coaching more customers into employment and training and reducing the organisation’s gender pay gap.

 

In February, Bromford secured £75m of funding through its first SLL to be linked to reducing repairs.

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Picture: Alamy
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Climate changeDecarbonisationDevelopmentEnergy efficiencyESG/impact investmentFinanceFunderHousing Association/RPNet ZeroWest Midlands
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