Japanese bank provides 10-year £75m facility to HA in its third sector deal

Paul Gray, chief financial officer at BPHA, said the facility with Mitsubishi UFJ Financial Group’s (MUFG) ‘offered competitive terms, fitted well with our debt maturity requirements and will support our ongoing development of new homes’. BPHA plans to build 500-plus new homes per annum for the foreseeable future.

Mr Gray said one of the key points from MUFG was that they could offer a revolving credit facility (RCF) for more than a five-year duration with fixed pricing agreed up front. As is fairly typical, the HA draws upon RCFs to fund building of new homes and then pay these down through funds raised from the debt capital markets.

‘We have had excellent RCF support through some of our existing banks but these were typically of five-year tenor, and therefore in practice every two or three years, we tend to renegotiate to extend these to maintain liquidity and reduce refinancing risk. It was therefore very attractive to be able to agree a 10-year tenor with MUFG.’

MUFG entered the sector in 2015 offering five to 10 years’ secured lending through either term loan or RCF. Bank of Tokyo-Mitsubishi UFJ - part of MUFG - provided part of a £265m syndicated loan facility to older people’shousing organisation Anchor Trust. It did a bilateral seven-year £75m facility for Family Mosaic in April 2016.

Mr Gray added that the bank’s approach has been to engage with a limited number of HAs who they saw as better credits and fitted with their own strategic plans.

He said: ‘Since these HAs were assessed to be lower risk MUFG were able to offer finer margins over LIBOR and lower non-utilisation fees than other banks, and they were also able to offer RCFs of longer duration and with fixed pricing. Though confidential, BPHA are very satisfied with the competitive terms agreed.’

Robert Bartlett, executive director at MUFG, said: ‘BPHA was one of the first RPs we approached last year and we are delighted to have been able to put this facility in place. The BPHA management team has given us a great deal of confidence in being able to navigate the business through the ongoing changes within the sector.’