LHP secures £30m ESG-linked RCF as part of refinance exercise

Amy Dean, treasury manager at LHP, told Social Housing that the funding will be used to support “significant asset investment” in its existing properties.

The new facility is a sustainability-linked loan, offering up to 0.05 per cent margin reduction on achieving three mutually agreed KPIs. LHP said these are currently in negotiation and will be in place by the time it looks to draw on the facility.

The provider said that the ESG inclusion is the first for the social landlord and that it will align with its social purpose as well as providing further flexibility. 

The facility also includes a 15-year term option. The security will be a mix of EUV-SH and MV-T with around 1,462 properties as the security, which are currently in the process of being charged.

Centrus acted as sole advisor to LHP and arranged the RCF, and Savills provided the funder’s valuation.

Anthony Collins advised on the corporate and legal aspects, including security, for LHP while Pinsent Masons served as the funder’s legal advisor.

Kathryn Price, executive director of finance at LHP, said: “We are delighted with our new relationship with Danske. The new facility, as well as helping maintain our strong levels of liquidity, has helped facilitate the removal of restrictive covenants. This leaves LHP in a significantly stronger position to deliver our planned investment strategy and deliver better homes for our customers.”

Terri McCullagh, corporate banking manager at Danske Bank UK, said: “Danske Bank has been the lead bank provider of finance to the social housing sector in Northern Ireland for many years and we have been growing our presence in the sector in the rest of the UK.

“We are pleased to start 2023 with a significant transaction in England, which will support the provision of much-needed rental and shared ownership homes to people and communities in Lincolnshire.”

Tom Miller, assistant director at Centrus, said: “The facility has helped to unlock increased capacity that will ensure LHP are able to maintain high levels of investment in their stock.”

LHP is rated G1/V2 by the Regulator of Social Housing (RSH).

The regulator confirmed the provider’s existing grades in November 2021 and 2022 after upgrading the landlord from G2 to G1 the previous year.

In November 2020, it said recent engagement had provided assurance that LHP had improved its controls and processes for ensuring the accuracy of business plan data, board reporting and regulatory returns.

The RSH said that the provider’s approach to stress-testing and mitigation strategies demonstrated board ownership and that its business-planning process and timetable had been reviewed to enhance board involvement and oversight.

According to its annual report, LHP posted a surplus of £6.5m in 2021-22 after a loss of £7.8m the previous year.

Turnover increased by £200,000 to reach £54.9m while interest and financing costs fell by £17.1m to £7.1m.