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20,000-home South East RP agrees £150m funding with UK and North American investors
A large South East-based provider which manages more than 20,000 homes has agreed a £150m private placement with UK and North American investors.
Network has taken £70m of secured borrowing and £80m of unsecured borrowing (picture: Getty)
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The deal sees G15 member Network Homes take £70m of secured borrowing and £80m of unsecured borrowing from a small group of UK, US and Canadian institutional investors.
Maturities range from 15 to 30.25 years.
This includes an unsecured tranche “with the longest known tenor via private placement” in the social housing sector, Network said.
The placement is the latest in a recent burst of deals in the private capital markets, after an earlier flurry of large own-name issuance in mid-spring which tested the market following COVID-19 volatility, brought in pricing and showed robust investor appetite for UK housing.
Private deals have included a £100m deferred deal between Bromford and L&G in early June, and a £75m deal between Trident Group and Pension Insurance Corporation on 15 June.
Network’s deal, arranged by MUFG, was initially launched at a size of £100m but was upsized to £150m following strong demand on both sides of the Atlantic for both secured and unsecured notes. The order book was almost three times oversubscribed.
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The deal, which completed on 8 July, follows Network’s £175m private placement in January 2019, which was the sector’s first to include both secured and unsecured in the same transaction.
While the 2019 transaction featured only North American funders, with UK investors “unable to compete on price”, Network said, the latest transaction had a large UK order book.
This marked “significant progress on a journey to generate increased price tension through the inclusion of multiple investor bases, with even better coupons achieved than 2019 despite broader macroeconomic uncertainty and the impact of COVID-19 on credit markets”, it said.
Funding will be used to support Network’s social housing activities, including its current development pipeline for 2020 to 2023 of 2,800 new homes across London and East Hertfordshire.
Trowers & Hamlins were legal advisors to Network on the transaction, with funders’ legal advice from Greenberg Traurig and valuation by JLL. Prudential was the security trustee.
Commenting on the transaction, Peter Benz, executive director of finance at Network Homes, said: “The strong and positive engagement we had from investors demonstrates the confidence they have in our business model and governance.
“We have been helpfully guided by MUFG and are proud to have achieved this outcome in the midst of lockdown on both sides of the Atlantic. This new funding will be invested in building thousands of affordable homes for future generations of people who need them and improving the communities for our existing residents.”
Anup Dholakia, director of treasury at Network Homes, added: “I’m extremely pleased with the outcome of this innovative deal which was successfully concluded during unprecedented operational circumstances at the height of the COVID-19 pandemic.
“It represents fantastic value for Network Homes, and builds upon the success of our previous transaction through strong and flexible order books from both investor bases, with pricing comparable to public level issuances.”
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