London landlord secures £250m PRS issue to fund development

The housing association said that while the funds raised by the issue would provide additional housing, it would not necessarily be for market rent through Folio London.

The seven-year tenor will allow the company to maintain flexibility over the future use of its market rent properties and align with the repayment profile of the group’s existing debt, it said.

As of March 2020, the company had just over £3.5bn of drawn debt and £475m of undrawn facilities, as well as £1.8bn of bonds in issue.

A note from Moody’s said: “Positive features of the transaction include the high-quality collateral portfolio with a Moody’s property grade of 1.5, low leverage with a Moody’s loan to value (LTV) of 52 per cent, low default risk and experienced sponsorship.

“Partially offsetting these strengths are the lack of amortisation, flexibility granted under the substitution criteria which allows 30 per cent of the initial property portfolio to change and the short-term negative macroeconomic impact of the coronavirus pandemic.”

NHG – which owns 65,000 homes, making it one of the UK’s largest social landlords – slowed down its development programme following a review in 2018.

Last year, the group completed 1,962 new homes, compared with 2,111 the prior year. Of these, 720 were for “low-cost” rent and 390 were for shared ownership. A total of 459 were for market sale, up from 121 completions of this tenure the previous year.

Earlier this month it also warned that a potential fall in house prices in London could hit its income from its homes for sale.