Housing association secures sector’s first sustainability-linked private placement

Believe Housing, which operates 18,000 homes, has secured the 32.5-year financing from the insurance giant’s LGIM Real Assets division as part of a broader refinancing of its legacy LSVT loan.

The transaction marks the first known sustainability-linked private placement for a housing association.

The rate on the financing was not disclosed, but LGIM Real Assets said pricing on the notes was linked to Believe’s “energy transition”.

A spokesperson for LGIM Real Assets said Believe would “benefit from a lower coupon” once it achieves the targets.

The mechanism is understood to work in a similar way to sustainability-linked loan products in the banking market, which an increasing number of housing associations are signing up to, where the borrower receives a set discount on the interest rate if pre-agreed environmental, social or governance (ESG) targets are met.

Last week Believe said it had become the first organisation in the sector to achieve the Carbon Neutral International Standard.

Steve Bolton, head of private corporate debt – Europe at LGIM Real Assets, said: “We’re delighted to place decarbonisation firmly at the centre of the investment, rather than something that’s talked about on the side-lines.”

Investors and funders are becoming increasingly focused on the environmental, social and governance (ESG) efforts of providers. Lloyds Banking Group said last month that at least a third of the £1.5bn social housing funding it is providing this year will be ESG-linked.