L&Q secures £525m in its largest sustainability-linked loan
L&Q has secured £525m through its largest sustainability-linked loan (SLL) to date as it aims to build 8,000 new homes by 2024, with half to be affordable.
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The 105,000-home group has agreed the funding deal, which is part of a refinancing, with Lloyds Bank. It is the largest SLL Lloyds has agreed with the social housing sector, more than doubling the previous highest loan of its kind with Platform.
The rate on L&Q’s loan and the term length were not disclosed.
Under the terms of the borrowing, L&Q will be offered margin discounts based on two key performance indicators (KPIs).
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One KPI involves L&Q achieving an “average” Energy Performance Certificate (EPC) rating of C on all its homes by April 2024. L&Q said a year ago that it expects to spend £1.9bn over the next seven years on improving its existing homes, which will include decarbonisation and fire safety work.
It comes as social landlords are expected to have all their homes at EPC C as a minimum by 2030 to help the government meet its net zero target of 2050.
The other KPI relies on L&Q delivering half of the 8,000 homes as ‘affordable’, which is the same target linked to a £300m ESG-linked bond that L&Q agreed in January.
L&Q has a longer-term aim to deliver 30,000 new homes by 2030, after it slashed its housebuilding target last year.
Martin Watts, director of treasury at L&Q, said: “This funding will help us on our net zero journey, allow us to achieve the objectives of our corporate strategy and have a positive impact on our residents.”
L&Q said it has also recently signed up to the Sustainability Reporting Standard for Social Housing, which covers 48 criteria including net zero targets, affordability and safety. The initiative was launched in late 2020, aimed at helping social housing providers access investment based on their ESG credentials.
L&Q also launched a sustainable finance framework last September to access loans and bonds based on its environmental credentials.
The landlord’s net debt stands at £5.3bn, as of the end of March 2022, according to its latest accounts.
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