Wheatley Group draws down £72m from European Investment Bank

News27 Apr 2020Sarah Williams

Major Scottish social housing provider Wheatley Group has topped up its available liquidity during the COVID-19 crisis by drawing down £72m of funding from the European Investment Bank (EIB).

The European Investment Bank, in Luxembourg (picture: Getty)

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Wheatley Group draws down £72m from its European Investment Bank loan facility as it looks to bolster liquidity during #coronavirus #ukhousing #socialhousingfinance

The drawdown comes from a £185m facility agreed in July 2018, the largest for a Scottish housing association to date.

Wheatley Group, which owns or manages more than 81,000 homes, drew down its first £85m from the facility in October 2019, at what it described as a “sub-1.5 per cent” interest rate.

The latest tranche, which leaves £28m in the pot, was taken out at a rate of under 1.70% fixed over 22 years.

Steven Henderson, director of finance at Wheatley, told Social Housing that the drawdown was timed in part to support the organisation during the coronavirus pandemic.

He said: “We were keen to ensure the organisation had a strong level of liquidity given the broader risk context with COVID-19."

The EIB is owned and run by the EU nations, and prioritises projects for its members. It has invested more than £4bn in UK social housing and urban renewal schemes in the past decade, and has been a key partner of long-standing funding aggregator The Housing Finance Corporation (THFC).

Since the UK referendum in favour of leaving the EU, a handful of housing associations have succeeded in progressing their agreed loans with the EIB.

Sovereign became the first to do so in February 2017 when it acheived sign off for a £150m loan, with the EIB then saying at the time that it was "business as usual" accross its £1bn pipeline within UK social housing.

In December 2018, the EIB approved a long-standing application for a £100m loan to Stonewater. In November 2019, the bank signed off £150m of finance for Peabody through a facility originally approved by the bank’s board in autumn 2015 for the provider’s legacy organisation Family Mosaic. In December, Notting Hill Genesis had an £85m tranche signed off from an original £300m facility agreed in May 2016 through legacy organisation Genesis Social Housing.

Mr Henderson told Social Housing that the EIB "continued to be very supportive, including in respect of drawdowns”. He said that Wheatley "wanted to lock in the advantageous rate".

Dumfries & Galloway Housing Partnership (DGHP) joined Wheatley Group through a ‘constitutional partnership’ in December, also completing a £149m funding package to refinance legacy debt. The funding included a new £114m private placement with M&G Investments, the investor’s first loan to the Wheatley Group.

Commenting on today’s drawdown, Mr MacNish added: “Despite today’s unprecedented challenges, we continue to provide the people we work for with the support they badly need in these difficult times.

“This latest investment by EIB, at such a low interest rate, is a considerable boost to these efforts and a huge vote of confidence in our group, our staff and in Scotland.”