M&G completes £114m private placement with Scottish landlord
M&G Investments has completed a private placement with a third registered social landlord in Scotland, in its biggest deal north of the border to date.
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The investor agreed the £114m funding, which has a weighted average of 25 years, with Dumfries & Galloway Housing Partnership (DGHP), now a part of Wheatley Group, as part of a major refinancing process.
It follows a £40m private placement to Queens Cross Housing Association in February 2019 and £45m to Link Group in 2014, and marks M&G’s first loan to Wheatley Group.
The deal, which completed on 16 December, came just two days before 10,300-home DGHP formally joined the larger group in a ‘constitutional partnership’, following a process that involved a ballot of tenants in November.
The new finance was obtained to enable DGHP to refinance existing bank debt, which it said “posed some constraints on its development and investment plans”.
In an interview with Social Housing published today, Steven Henderson, group finance director at Wheatley Group, said that the legacy terms “restricted the level of new build homes in particular they could deliver”.
DGHP also signed a new 10-year £35m revolving credit facility with RBS on 13 December, to provide liquidity in support of its development plans, which will see it build 1,000 social rented homes over five years.
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The new finance from M&G includes a six-month unsecured period, which was designed to enable the funding to complete swiftly to facilitate the timely completion of the partnership.
The funding is split into three tranches with different maturities – £45m (15 years), £24m (24 years) and £45m (35 years ) – which Mr Henderson said was designed around the timing of the group’s existing loan repayments.
Commenting on the private placement, Mark Davie, head of social housing at M&G Investments, said: “We are pleased to be supporting DGHP and Wheatley in the next step on their journey. They have a clear vision and ambition to deliver affordable homes to those in the area they serve.
“Through its wider activities, Wheatley supports the social well-being of its communities, for example in areas such as employment, tackling poverty, digital inclusion, education and sports and the arts.”
He added: “This is a new relationship for us, our third financing agreement with a registered social landlord in Scotland, and will generate cash flows that are secured against residential property for our pension fund investors.”
Bill Robertson, chair of DGHP, said: “This affordable loan facility is great news for tenants and communities in Dumfries and Galloway.
“Working as a partner in Wheatley allows us to do much more than we could before and this deal with M&G is one of the first steps in realising our plans to bring hundreds of new affordable homes to the region.”
Alastair MacNish, chair of Wheatley, added: “We are delighted DGHP has secured this fantastic deal with M&G which will enable them to take forward their new build plans for the region. It’s a huge vote of confidence in DGHP and the region, in Wheatley Group and the affordable housing sector in Scotland.”
The coupon and margin on the funding were not disclosed.
Pinsent Masons provided borrower’s legal advice on both deals, with funders’ valuation from Savills and funders’ legal advice from Brodies. Addleshaw Goddard provided legal advice on the M&G deal alongside Brodies.
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